Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I propose to take Questions Nos. 17 and 30 together.

A key consideration in relation to the scope for independent borrowing by institutions in the higher education sector is whether the subsequent expenditure funded by the borrowings is classified as falling inside the general government sector and, therefore, whether it impacts on the general government balance.  A detailed framework is in place under EU law, implemented at national level by the CSO, for classifying what entities in the economy are part of or outside of the general government sector and how their expenditure impacts on the general government balance. It is, therefore, not just a matter for the IOT sector in term of whether institute can borrow. One of the questions is how that borrowing would be classified on the national balance sheet.

Universities have traditionally enjoyed autonomous borrowing powers on account of their classification as outside general government.  Borrowings by universities are off-balance sheet and do not impact on general government debt and this reflects a combination of the autonomy of such institutions and their capacity to generate own income, allowing them to meet the so-called "market test". However, these considerations do not apply to IOTs.  Unlike universities they are classified as inside general government. Consequently, their expenditure impacts on the general government balance and their borrowing contributes to the general government debt.

The Deputy referred to the impact on the rental sector and accommodation. I have some appreciation for this matter because of the prominence and scale of DIT within my constituency and I am aware of the accommodation needs of students and the impact that has on the rental sector.

The Minister for Housing, Planning, Community and Local Government recently published the Housing (Miscellaneous Provisions) Bill 2016 which includes an enabling provision that would facilitate higher education institutes to borrow moneys from the Housing Finance Agency for the purpose of financing student accommodation provision. However, we still have to resolve the issue of how that borrowing would be classified and the impact it could have on other expenditure plans by the State.

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