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

As Members will be aware, our tax forecasts are unchanged in the recent stability programme update, SPU. In view of the strong tax revenue performance since the publication of the SPU, this increase is realistic and within the parameters of prudence. However, I should point out that not all of this additional tax revenue is of a recurring nature.

The summer economic statement highlights the benefits that will be achieved from this Government's policy approach in managing the public finances. These positive developments are clearly seen in our debt levels. Our general Government debt-to-GDP ratio peaked at over 120% of GDP in 2012. My Department is now projecting a debt ratio of 88% of GDP for this year, which is below the euro area average, with the debt ratio set to decline further to 72% by 2021. This means that more of our resources can go towards paying for a fairer society rather than servicing the debt.

With regard to fiscal space, this document sets out that the estimated indicative fiscal space from 2017 to 2021 is in the region of €11.3 billion. For next year, it is currently estimated that there will be just shy of €1 billion available for additional expenditure increases and taxation reductions. This will be distributed in line with the programme for Government, with a split of at least 2:1 between public expenditure increases and tax reductions. My ministerial colleague Deputy Donohoe will outline the expenditure issues.

I wish to mention that we have also included provision for a rainy day fund. I believe it is crucial that we plan for the future and that we are ready for any unforeseen events that may occur. With this in mind, I am pleased to state that a contingency fund will be established and it will be known as a rainy day fund. After achieving our medium-term objective in 2018, from 2019 onwards €1 billion will be remitted to the fund each year. I believe this is very prudent. I plan to bring forward a paper at the end of this year or early next year and I will welcome input from colleagues in all parties as to the detail of this rainy day fund and on the triggers that would be desirable before this money could be spent.

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