Mr. Seamus Coffey:

We received a query regarding the analysis undertaken by the Commission. Our reply is in the process of being produced. We have to check various things because it is not our analysis that is being assessed.

Regarding the broader question the Deputy asked about the breach of the expenditure benchmark, we point out in our report that if one takes the AIB transaction into account, the expenditure benchmark would have been breached, but at the time the policy was set, one-offs were not taken into account for the expenditure benchmark. When the AIB transaction was classified in April 2016, the fiscal council came out and stated in both the fiscal assessment report of that June and the prebudget statement prior to that budget that the fiscal space generated by the reclassification of the AIB transaction should not be used to increase spending. Yet in the budget, it was. In July we had additional spending and the budget had additional spending on the basis of using that AIB transaction.

In terms of what the fiscal council wanted, we did not want to see the increases in spending that were allowed by the classification of the AIB transaction and we were explicit about that. However, when it comes to the letter of the law, when the budget was set and when the spending was increased, the one-offs were not taken into account in the expenditure benchmark. It is a bit of a flaw in the fiscal rules in that we have a structural balance rule which takes into account one-offs and up to now we have had the expenditure benchmark which did not. Fixing it is a remedy that the fiscal rules need, but that remedy was not agreed until December 2016 and it was not published in the set of rules used for assessing the fiscal rules until April of this year. Therefore, we are talking about policy decisions taken in July 2016 and in October 2016 for a decision not reached until December 2016. We disagree with the increases in spending that happened on a technical level. We do not think they generate deviations from the fiscal rules.