Shane Ross (Dublin South, Independent)
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3. To ask the Minister for Public Expenditure and Reform the action he plans to take in response to the recent warnings from the Irish Fiscal Advisory Council regarding public expenditure. [26505/15]

Shane Ross (Dublin South, Independent)
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What action does the Minister intend to take in response to the recent warnings from the Irish Fiscal Advisory Council, IFAC, about public expenditure?

Brendan Howlin (Wexford, Labour)
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The Government established the Irish Fiscal Advisory Council to provide an independent assessment of the fiscal stance in each budget and stability programme as part of the new medium-term budget framework. Given the Government's priority to ensure the ongoing sustainability of the public finances, I welcome the independent perspective provided by IFAC. As this House is aware, we have undergone a significant period of fiscal retrenchment and the fiscal adjustment has enabled us to return sustainability to the public finances, created jobs and created the conditions to support a return to economic growth. On the spending side, gross voted expenditure was reduced from its peak of just over €63 billion in 2009 to €54 billion in 2014. During that period, current spending was reduced by nearly 10% and capital spending was reduced by half.

The spring economic statement in April outlined that fiscal space of the order of €1.2 billion to €1.5 billion is expected to be available for budget 2016. Fiscal projections in the statement and the stability programme update are based on a technical assumption of a budgetary package of between €1.2 billion and €1.5 billion in 2016, split evenly between expenditure and tax reductions. IFAC noted that giving information about the level of indicative fiscal space for the forthcoming budget was a welcome development in terms of fiscal transparency. The post-2016 forecasts in the stability programme update and the spring economic statement reflect a no policy change scenario. As highlighted by IFAC, a consequence is that the forecasts show a decline over the medium term in the overall ratio of spending to GDP and do not include provision for increases in areas such as pay bill, welfare or capital. However, the no policy change scenario would involve a structural adjustment considerably higher than is required under the Stability and Growth Pact, and, as stated clearly in the spring statement, it is the Government's firm intention to make only the minimum adjustment required under the pact rules in these years. This means that additional fiscal space will be available and the Government will decide on it case by case. It will be a matter for the Government to decide at budget time.

Shane Ross (Dublin South, Independent)
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I thank the Minister for his reply. The problem is that the fiscal advisory council has continually made statements and issued 11 reports but the Government picks and chooses what it likes from those reports but does not take much notice of anything that it does not like. The council has indicated that the Government is ignoring, in its own forecasts, the tax and expenditure statements it has already made for 2016. There is no question that we will reach our deficit target of 3% this year but the council has argued that for 2016, the Government has refused to acknowledge its own forecasts of spending pressures, tax reductions and other very important matters. This would affect the budget adjustment, which the Minister has correctly stated is €1.2 billion to €1.5 billion. The fiscal advisory council has argued it would be far more appropriate at a level of nearly half that number, or €700 million. Does the Minister intend to take that advice or ignore it?

Brendan Howlin (Wexford, Labour)
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Is the Deputy a social democrat now in his latest reincarnation? On my way from Wexford I have seen posters about retaining a swimming pool. The Garda station was his campaign last year. The Deputy opposes every expenditure reduction, so I am interested as to whether he is academically interested in reducing spending or if it is an actual interest.

In each of the past four and half years of this Government, we have set out our deficit targets and fiscal strategy to achieve those. We have achieved them all comfortably. The advice we had last year from IFAC and others was that we needed a more robust reduction in expenditure than we provided. Last year, we did not reduce expenditure but rather increased it slightly, as the Deputy knows. We will still comfortably meet the deficit target. The target set out in the budget of 2.7% has been revised to 2.3%, as the Deputy knows, in the spring economic statement. Assuming that the budgetary parameters do not alter between now and August, we will set out what will happen next year. After that, each Government will make a determination of the split, for example, between taxation and expenditure. That will be a matter to be debated in the election.

Shane Ross (Dublin South, Independent)
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I thank the Minister as he has answered my question fully, although he did not mean to. It is quite simple. He is going to ignore completely the advice of the fiscal advisory council. It specifically indicates that the structural deficit requirement reduction is 0.6% but the Government will come in at 0.3%. The council has specifically warned about the real questions about the credibility of projections for Government spending. It is a fairly tough indictment from an independent body and I wonder if there is any point in it existing if the Government is going to ignore those pieces of advice that it does not like for electoral reasons. The fiscal council has been understanding and indicated that it understands why the Government is acting like this. It is for electoral reasons. It has said as much in almost totally decoded language.

I congratulate the Minister for informing the House that the IFAC is now a redundant body. When the Government gets a report from IFAC, does it meet its representatives formally to receive and discuss the report?

Brendan Howlin (Wexford, Labour)
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The Deputy does not need a Minister at all as he answers his own questions.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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It is more efficient. It is an efficiency measure.

Brendan Howlin (Wexford, Labour)
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There is really no point in being here at all. The Deputy is either completely deaf or he has decided that he does not like the answer he has heard. He has put words into my mouth that I certainly did not say. If he listened to what I said, he would know that I welcome the creation and advice of the IFAC. We do not necessarily accept all advice that we get. The Deputy is quite absolutely wrong on the basic point. The advisory council has stated that our movement towards structural balance will be of the order of 0.3% and the Government has stated that it will meet our requirement, which is a movement of not less than 0.5%. The arbiter of this - the referee who determines the level - is the European Commission, and its evaluation of the spring economic statement is that the movement will be 0.8%. We can take the figures and choices and, so far, the Government has been right.