Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to the debate on the summer economic statement, which was published yesterday. The statement sets out the economic backdrop as we begin the process of preparing budget 2019. It is fair to say that the economic picture in mid-2018 is pretty positive in overall terms. We want to ensure we make the right decisions to sustain this country's economic growth in a sustainable manner. No one wants to see boom and bust, We want to see a period of steady economic growth. If a country like Ireland could sustain annual economic growth of between 3% and 4%, and use the fruits of that economic growth to deal with many of the serious challenges in our society, we would be doing a good job.

There is a need to recognise the position our party is in and what we have done for the country to facilitate and sustain a minority Government over the past two years by means of the confidence and supply agreement. At a challenging time, especially on the external front, that agreement has been an important source of stability for our country. The value of that needs to be recognised.

We are four months out from budget 2019. It is important in the lead up to it that we make the right decisions for the people who elected us and whom we represent. Based on the summer economic statement, the budget day package will be in the region of €3.4 billion, not €800 million. It happens to be the case that there are very significant pre-committed lines of expenditure of €2.6 billion which are important matters in respect of capital expenditure, demographics, public sector pay and so on. It is a €3.4 billion budget and, if we were to add the €900 million that others wish to spend plus the €500 million earmarked for the rainy day fund, we would be looking at a €5 billion budget. That would be directly contrary to the advice of the Irish Fiscal Advisory Council, IFAC. Yes, the Government does not have to take its advice. It is a matter for the elected Government of the day to make budgetary decisions. However, we do have to take account of the advice it has given. The fiscal council has been very clear as to what is an appropriate budgetary stance in respect of 2019, namely, a package in the order of €3.5 billion. Anything more expansionary than this suggested maximum limit is not likely to be appropriate. The fiscal council goes on to say that from its point of view it would be even more desirable if a more conservative approach was adopted. I do not agree with that but I do agree with the need to continue to reduce the deficit.

If this budgetary stance is put into effect, the general Government balance next year will be 0.1% of a deficit and the structural balance will be 0.4% of a deficit, which would meet our medium term objective. If we were to spend the extra €1.4 billion, the general Government deficit would be in the order of 0.6% and the structural deficit would be approximately 0.9%.

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