Mr. Michael Tutty:

On investment, we talked earlier about the fiscal rules and investment and the fact there is a clamour in many countries at the moment to say, particularly with interest rates so low, that we should be investing more and not be limited by the fiscal rules. There is some flexibility there in the fiscal rules on investment. It is very limited and it applies only where one is making a major investment that is equivalent to a structural reform, namely, reforming an area through capital investment and it will bring returns to the Government over the future years. It is very limited; it only applies to 0.5% of GDP on a once-off basis so it is not really relevant.

The real difficulty in trying to exclude investment is that there are many items that are regarded as investment which may not be bringing much of a return and then other things that are classified as current expenditure, for example, in the education area, that really do have a return. Trying to do it on a general basis and defining what should and should not be allowed in would always be a difficult matter. In my days in the Department of Finance many years ago, there was always a difficulty of trying to look at the rate of return on investment. John FitzGerald and the ESRI were doing a lot of work in this area for us on Structural Funds and trying to identify rates of return etc., so it is possible. One would get back to what John McHale was saying earlier that even if one looks for some flexibility, one would still have to look at the overall deficit in the country and determine whether that level of deficit was appropriate. It may be appropriate to do a little bit more on investment and increase the deficit but one certainly could not say that any amount of investment, no matter how much or what it is being spent on, should be added to the existing deficit. We are required and need to get our deficit down. Once we have achieved balance or close to balance, we will have much more flexibility for investment and other things.