Mr. Sebastian Barnes:

Two issues arise there. One is in terms of compatibility with the rules. At the moment, the rules are in a slightly strange position because the exceptional circumstances clause has been enacted. That clause will be lifted. There is also a lot of discussion around reform at the EU level. What we have done in this report is we have assessed, if the rules do come back in, whether what we see in the SPU would be broadly compliant. In terms of the numbers it is compliant. The question is really about the policies that go behind them.

Looking more broadly at the question around the fiscal position and getting back to budget by 2025, as the Deputy said, this is really where the medium-term strategy is required. Getting back to budget balance seems like a reasonable objective over that period, with the economy growing and also because of the need to get debt down. If we accept that, carrying on with the current policies would perhaps lead to a small deficit or an all-round balance. Maybe a little bit of fiscal adjustment would be needed but it would not be massive.

As the Deputy said, the big issue is how other things are funded. That has been complicated. Our estimate is the Government committed not to apply increases to around one third of the tax base. That includes income tax, for example. The areas mentioned for revenue increases are quite small, with the exception of PRSI, which is a bigger tax head. However, as the Economic and Social Research Institute, ESRI, showed very nicely last week, a 1% increase in PRSI rates still just raises approximately €600 million. It is not huge when compared with the estimated cost of implementing Sláintecare, which is of the order of €3 billion. These are the pressures.

On the spending side, the Government has also committed not to cut spending on around half of the overall spend. These big pressures are why the Government will have to decide how it will reconcile those things. Will it increase taxes, try to cut spending in other areas or not go ahead with some of the priorities it has talked about? The Government really needs prioritisation. It is difficult because health, housing and climate are all areas where there is much agreement that things need to improve. How that is delivered will be very difficult given the way the Government has set things up.