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

Even within the net expenditure rule, you can spend however much you want, but you have to raise revenue to match it. It is a binding rule. It is a net expenditure rule. You have to set out your medium-term path for the duration of the parliament of that country. In the case of Ireland, it is five years. There is the opportunity for a reset following a general election, when a Government is formed. That is binding. This was agreed at European Union level because I think it is important that we have discipline across the European Union when it comes to fiscal policy. In the lead-up to the summer economic statement and, ultimately, the budget process in the autumn, the Minister, Deputy Donohoe, the Government and I have to consider carefully what is in our view an appropriate net expenditure path for Ireland, given that, under the economic governance framework, which is agreed at EU level, there is no longer any distinction between core or non-core, current or capital or temporary or one-off expenditure. It is all treated the same.

We have considerable work and much thinking and planning to do about what we regard as being an appropriate net expenditure path for Ireland. It is quite technical. The net primary expenditure means government expenditure net of interest expenditure, discretionary revenue measures, spending on programmes funded by the Union, cyclical elements of unemployment benefit expenditure and other expenditure items outside the control of Government. Both Departments need to work through our assessment of the make-up of overall projected expenditure for this year and what is an appropriate basis to develop a net expenditure rule for Ireland for the coming years. There is, of course, as the Deputy acknowledged, the opportunity for a reset following a general election.