Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

This is an area I approach with great caution and it is important to be careful about how we handle it. One of the key factors in the horrific banking crisis that countries all over the world had to deal with was the establishment of all kinds of entities that were off-balance sheet and ended up having a causal effect on the quality of balance sheets. That was mostly the case in respect of banks rather than nations. Just because something is off-balance sheet does not mean it will not have some effect on how the creditworthiness of an entity is evaluated. That is one of the defining lessons we have had from what happened to banks.

We need to be clear that if something is off-balance sheet, it must be definitively off-balance sheet not just for next year and the year after but for the medium term because large amounts of capital expenditure being reclassified and coming on-balance sheet have a significant effect on the ability of the State to go ahead with plans to which it is committed. I will not proceed with projects unless we have that absolute certainty because if that were to change, it could cause immense difficulty in the future.

The Deputy asked about the status of projects on and off-balance sheet and she mentioned a number of funds and what we have done about them.

I know that many of the organisations to which the Deputy refers have to deliver a commercial rate of return on activities and projects for which they are lending. I am certain that that is the case, even though they are bodies for which the Minister for Finance has responsibility. My working assumption is that the activities of many of them will be on balance sheet.

Going back to something on which I touched briefly with Deputy Dara Calleary, we are considering using housing projects as pathfinder projects to see if can we secure absolute clarity from bodies such as EUROSTAT and the European Commission on what is on and off balance sheet. We are doing this and using housing projects not just because of the level of social need that we know that we have to meet but also because many of them generate a rental income which should give more flexibility in how they are accounted for. I am being very cautious because I do not want to find myself in, or put a future Government in, a situation involving an investment of hundreds of millions of euro that I believe or it believes is off balance sheet and where the position changes, causing great difficulty for the Government of the day.