Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Again, I thank the Deputy for his question. The budget will be on this day in two weeks so we are getting close.

Budget 2016 will be the first budget framed under the reformed and strengthened preventive arm of the Stability and Growth Pact. As published in the spring economic statement, fiscal space of €1.2 billion to €1.5 billion will be available for new expenditure or revenue measures in budget 2016. This estimate of fiscal space was designed to ensure compliance with the fiscal rules, particularly the expenditure benchmark pillar. This quantum of fiscal space and the breakdown agreed by the Government is already well known, namely a 50:50 split between revenue and expenditure. This formed the basis for discussion at the national economic dialogue, held in July, at which there was broad consensus that budgetary demands would have to be met from this package.

The exact size of the fiscal space will be finalised in the coming weeks, taking into account various inputs, such as the projected inflation rate — the GDP deflator — any discretionary tax measures and other elements of general Government expenditure outside central government.

With regard to the carryover effect of measures previously introduced or due to expire in 2016, this estimated cost of just over €0.3 billion was taken fully into account in the calculation of the estimated fiscal space of €1.2 billion to €1.5 billion.

A budgetary package of €1.2 billion to €1.5 billion will provide for increases in key expenditure areas and lower the high tax burden on the squeezed middle. I reiterate the importance of delivering a budget that is consistent with the pre-announced fiscal space. The quantum is appropriate from an economic and fiscal policy perspective, a view which is shared by the Irish Fiscal Advisory Council, as stated in its recent pre-budget statement. This will give further confidence to the markets that the Government remains committed to sensible and prudent fiscal policy.

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