Mr. Seamus Coffey:

On housing, it is not necessarily the view that we would be building too many houses but that perhaps we are doing too much with the overall resources in the economy. The unemployment rate is at 6% and housing output looks like it will increase. The question is how we go about doing that and where the workers will come from with the necessary skills to undertake the work. In a sense, if we want to do more on the investment side, we should possibly do less on the consumption side. It is about balancing what the economy is trying to do versus what the economy can do, and trying to avoid situations where one has quite large cyclical turns in the economy. Given the nature of housing and the potential for rapid changes, it is one sector that can have a big impact on the economy. Our view is that we should be cautious about what is happening, we should observe what is happening and if off-setting measures are required, we should be willing to consider introducing them.

On the fiscal space that was found last year and the additional spending, the budget was framed last year with a €200 million breach of the expenditure rule built in. It was not that suddenly fiscal space was found or the calculation changed. It was just that the Government put together a package of measures that actually breached the expenditure benchmark and it is likely to breach it by even more given some of the measures that have been introduced throughout the year. Is this at the limit of prudent economic and budgetary management? Perhaps, and it may even be stepping over it, but the fiscal rules do identify that. In our report we flagged that there is potential for a significant deviation of the fiscal rules across 2016 and 2017 so that the policy choices that have been introduced could potentially have an impact. I think the Department of Finance and the Government have acknowledged that through this margin of compliance that they have applied for 2018. One way to address the problems that a significant deviation could achieve is, first, not to have the significant deviation in the first place, so they could introduce additional policy measures for 2017 that avoid that happening or, as it seems the choice is, to hit the medium-term objective and then no additional sanctions or requirements can be placed on the country. The summer economic statement as set out suggests that the choice would be perhaps to incur that significant deviation - it is still only a risk and we will judge it on outturn data early next year - for 2016 and 2017 on the basis of the additional spending plans that the Government has announced. If that happens, then an assessment will be made, but if the assessment then shows that we are reaching the medium-term objective for 2018, no additional steps will be taken.

Where it would become an issue is if we have a significant deviation across 2016 and 2017 and we are not hitting the medium-term objective, MTO, for 2018, but how to address that is a matter for the Government.

Regarding tax expenditures, the research and development tax expenditure is quite large. The Department of Finance has undertaken an assessment of it and of the increase in it in recent years. There is potentially what we might call a deadweight loss. Are we spending much more on this tax credit than we are getting through additional activity? The report of the Department of Finance suggests there is a deadweight loss but because of the additional activity it generates, it is one that we can carry. In terms of its assessment, I would recommend members read the report of the Department of Finance about whether there is value for money there.