Seán Fleming (Laois-Offaly, Fianna Fail)
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4. To ask the Minister for Public Expenditure and Reform the expected annual scope for additional expenditure in future years; the projected growth rate on which this is based; the circumstances in which this scope would be increased; how departmental expenditure overruns will be dealt with now that Ireland is in the preventive arm of the Stability and Growth Pact; and if he will make a statement on the matter. [40742/15]

Seán Fleming (Laois-Offaly, Fianna Fail)
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What is the expected annual scope for additional expenditure in future years and the projected growth rate on which it is based? What are the circumstances in which this scope would be increased? How will departmental expenditure overruns be dealt with now that Ireland is part of the preventive arm of the Stability and Growth Pact?

Brendan Howlin (Wexford, Labour)
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The major progress achieved in securing fiscal stability means that from the beginning of next year Ireland will exit the corrective arm of the Stability and Growth Pact and become subject, as the Deputy knows, to its preventive arm. The core of this fiscal rule is the medium-term objective to achieve a balanced budget in structural terms, whereby allowances are made for once-off temporary factors and the impact of the economic cycle on the public finances. Compliance with the medium-term objective will require improvement in the structural budget at a rate greater than 0.5% of GDP each year until the medium-term objective is achieved. 

As the Deputy is very well aware, the second pillar of the fiscal rules relates to the expenditure benchmark which supports the achievement of the medium-term objective by explicitly setting the rate, aligned to the estimated potential growth rate of the economy, at which aggregate public expenditure can grow, other than when the relevant expenditure is funded through discretionary revenue measures.

From next year onwards, increases in overall general Government expenditure must be based on the requirements of these pillars of the preventive arm of the Stability and Growth Pact. This is the law. The ministerial expenditure ceilings for next year have been set in a context that will deliver on this objective. From 2016, this means that additional resources in excess of these ceilings may only be allocated in a manner that is consistent with the pact. Consequently, unplanned expenditure leading to Supplementary Estimates from 2016 may not be met by additional revenue arising from the economic cycle but rather would need to be met through expenditure savings, efficiencies elsewhere or additional taxes. 

The current estimates of the gross and net fiscal space for the period to 2021 were set out in the budgetary tables on budget day. These estimates are not final but comprise forecasts based on the number of projections, including GDP deflators, benchmark reference rates and convergence margins forecast by the Department of Finance for each of the years beyond 2016. The actual deflator, reference rate and convergence margin values used by the Commission to assess compliance with the rules each year beyond next year will be based on its estimates as set out in the forecast in each relevant year.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Minister. The Department of Finance documents on budget day indicated a €500 million fiscal space would be available in 2017. I have never seen a document produced by the Government on fiscal space which has ever turned out to be anywhere within €1 billion of the actual mark. We will take this remark as genuine in so far as it was made, in the full knowledge that nobody ever expects it actually to happen. Will the Minister give us the actual rate for the growth about which we are speaking?

It used to be a ten year average and we are told it has changed. Could the Minister give us a more precise explanation? Even the fiscal council was unaware of those changes some time ago. The Minister said the once-off income we had this year, like the corporation tax, could not be used for Supplementary Estimates in future years.

Brendan Howlin (Wexford, Labour)
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They are not once-off, as the Revenue has confirmed.

Seán Fleming (Laois-Offaly, Fianna Fail)
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The Minister does not know they will happen next year. The Government took this once-off money from the multinationals to increase spending, because it could. However, the Minister has said it will not be allowed next year and that if a Supplementary Estimate is required, it will have to be funded by additional taxes or charges. Could this include extra charges in the health service to make up for overruns in the health service?

Brendan Howlin (Wexford, Labour)
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The Deputy is correct in that the Department of Finance is conservative in determining the fiscal space. His criticism is that we have done better than we expected every time we made a projection. Had we erred on the other side, the country, as well as the Deputy, would have something even stronger to say. We have been prudent and, perhaps, overly conservative in estimating the pace of recovery. We have an additional €2 billion in tax revenue over what we forecast for this year. It is not once-off. We are 70,000 shy of 2 million people at work. Next year, we will have more than 2 million in work. It is a permanent feature of the economy, please God. As the Deputy saw in the plan we published last week, we intend to have an additional third of a million more people in work over the coming years. This will generate additional revenue. It is not once-off. It can be used to deal with the expenditure pressures we have discussed. The Deputy should not talk about windfall or once-off money. The Revenue has indicated that the corporation tax is not a once-off.

Seán Fleming (Laois-Offaly, Fianna Fail)
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The Minister is not quite right. The biggest element of the extra tax that came in this year was corporation tax, of which 80% comes from the multinational sector. Nobody in the Government has any control over what cheque the multinationals feel like writing here to suit their global requirements. Although it is out of our control, the Minister is factoring it into future plans. When the figures came out, the Department of Finance officials said they could not fully explain them.

Given the recent terrorist attacks in Paris, if France needs a Supplementary Estimate next year to deal with the crisis, is the Minister saying EU rules will not allow it to happen? Is he saying if various European countries need additional funds to deal with the immigration crisis, the EU rules will prevent it from happening? Let us be real. Every expenditure ceiling the Government introduced here was made redundant the next time it was examined. While there are rules, how flexible are they when push comes to shove?

Brendan Howlin (Wexford, Labour)
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Ireland has been very vigorously engaged in the base erosion and profit shifting, BEPS, process with the OECD. Many corporations want to ensure they are very solid regarding it and it is a new and welcome paradigm in corporation tax payment. Given that we are a very clear and transparent country regarding the rate of corporation tax we pay, more and more companies will decide to pay their corporation tax in Ireland, and it will be a permanent feature. The Deputy’s question whether the Stability and Growth Pact rules are flexible enough is very valid. Like everything in the EU, it will be a matter for discussion. The Deputy asked a very relevant question, whether France would be allowed to break the rules in order to provide for the security of the state. Personally, I think France will do it. We must address it at European level. We want to apply the rules because they make sense but they must also be flexible enough to deal with issues such as those the Deputy has set out.