Dr. Robert Sweeney:

A golden rule has been suggested by many people in order to exclude public investment . This would mean that if a member state had an obligation to reduce net expenditure because it was in breach, net expenditure would not include public investment. That would have been one way of getting around it. There will be a potential extension of the adjustment period from four years to seven if a member state agrees to undertake essential climate investment. There are difficulties with defining what constitutes climate investment. As the Senator mentioned, 60% and 3% are there because of treaty and, realistically, they will not change.

It might have been got around by something along the lines of what was suggested in November 2022, which involved agreed adjustment paths negotiated between the Commission and the member state but did not involve the tight metrics that have apparently been reintroduced since last week, such as the 0.5% adjustment rule, the net expenditure rule that the state should not exceed potential outputs and the rule that debt will have to be lower after a four-year period than at the beginning. What was suggested in November 2022, namely, a movement away from hard quantitative rules, would have been the best way to get around it because such rules make it difficult to meet climate targets. There is always the incentive for member states to prioritise current expenditure over public investment because the benefits of public investment are not yielded until some time in the future whereas current expenditure increases or decreases are felt immediately. There would be an incentive, even if leeway was granted for public investment, to reclassify current expenditure as investment and so on. There is an argument around what constitutes public investment. Is paying public sector workers such as teachers investment? It is not typically thought of as such, but surely it is an investment in the future. I would have preferred, given we have to retain the 60% and 3%, to go along the lines suggested in November rather than the quantitative metrics introduced in line with last week and then having a golden rule introduced on top of that.