Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Deputy Conway-Walsh. The activity of the Housing Finance Agency, HFA, is included in the forecasts published in the SPU. As the nature of the agency's activity is to borrow or raise funds to support housing delivery through on-lending to local authorities, approved housing bodies, AHBs, and so on, the majority of its accounts are financial transactions and do not impact the general government balance. This is because on-lending is ultimately a movement of cash from one government entity to another. The HFA sees a reduction in cash and an increase of loan assets while the AHB or local authority sees an increase in cash, matched by a loan liability. However, once this lending is used by a general government agency such as an AHB or local authority to fund expenditure, it is recorded as a general government expenditure, negatively impacting the general government balance. Since the majority of the on-lending is to fund housing delivery, the expenditure tends to be gross, fixed capital formation.

In addition, the HFA impacts the general government balance by an amount equal to the difference between its receipts, interest received, and the expenses, interest paid, staff costs and operating costs in an accounting period. In a compilation of the general government forecasts for the SPU, a survey of general government agencies, such as the HFA, AHBs and local authorities is completed in order that forecasts will include planned expenditure linked to HFA lending. Officials in my Department survey general government agencies for a specific purpose, to fulfil a mandate to compile the general government forecasts and publish the aggregate level, as required by our legal reporting obligations. The method by which the data is collected and compiled mirrors practices in the CSO. Similarly, the CSO publishes at an aggregate level. Therefore, we cannot provide data at an individual level from a government agency.

On the impact of general government debt, as the general government accounts are on a consolidated basis, any inter-government lending or borrowing is subject to consolidation. However, borrowing by the HFA from the private sector will have an increase on general government debt. I know it is quite technical in detail.