Dr. Gabriel Fagan:

I fully acknowledge Deputy Burton's arguments regarding the need for building up capital stock in a number of areas of public infrastructure, especially in housing. However, the rules, as they are laid out, do not impose restrictions on the composition of expenditure. To some extent we can address those issues by re-balancing expenditure, for example, from current to capital expenditure. Other alternatives include revenue raising measures. The rules do not tell us that we cannot spend on capital expenditure. They hold that we must adhere to the broad benchmark. That leaves many choices which are political in nature. The Central Bank cannot say that the Government should reduce this type of expenditure and increase another type of expenditure. That is not the mandate of the Central Bank. However, we should note that within the rules there is scope for the restructuring and re-balancing of expenditures and, if necessary, revenue raising measures to fund additional expenditures, if that is deemed desirable.

Mr. Quinn will address the question on the fiscal space.