Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is a matter that must be discussed with the troika. For the purposes of this exercise, somewhat in excess of €1 billion annual savings arising from the promissory notes new arrangement is inputted here as if all of it will be dedicated to reducing the deficit. On that basis one gets the 2.2% figure. Obviously, however, if there are additional savings or if there are costs elsewhere as the year goes by it would be a matter for Government decision. We have not decided yet. There are no savings this year because the cost of the liquidation cancels the savings, but there are savings of approximately €1 billion each year from 2014.

There is, however, something very simple to which the Deputy and colleagues might not have averted. Let us suppose I were to use all of those savings on social welfare or tax, for example, by cutting income tax by €1 billion. I would need the €1 billion savings the following year to sustain the tax at the new level to which I had cut it. On the other hand, if I were to use it for capital spending, I can keep spending it every year. If I use the €1 billion to build schools, health centres or whatever else one regards as necessary social and economic infrastructure, after the first building project is completed and the children are out of the prefabs and in the school, I can spend the following year's savings again in that area. It is much smarter to use this, if we are going to use it, on capital rather than current expenditure.

There are some things in current expenditure which would also have a jobs and growth impact. An example is something we discussed in the committee recently and in which Deputy Boyd Barrett had a strong interest, eco-friendly homes, the insulation of homes and so forth. Any type of grant aid for that comes from current expenditure. If one did something about repairing country roads, which probably need extra money now, that also comes from current expenditure. It would not have to be all capital expenditure. However, I am sure colleagues in the Government will be looking for a slice of it. I am not sure whether next year is the year for that or whether we should press on with the adjustment next year and perhaps do something later. It will depend on how the year develops and how we can use it best to restore and grow the economy. Those are the considerations with which I will work as the year passes and we get more information.