Tommy Broughan (Dublin North East, Independent)
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7. To ask the Minister for Finance the status of Ireland's yield in growth, taxation and general Government revenue from the European Union quantitative easing programme; the impact on Ireland when the quantitative easing programme concludes; and if he will make a statement on the matter. [1275/16]

Tommy Broughan (Dublin North East, Independent)
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Over the past year I have asked many questions of the Minister in regard to the expanded asset purchase programme. Has the Department of Finance undertaken any real work to track the impact of quantitative easing on specific areas of the economy? Obviously, the growth rate in 2015 was very welcome, as was the additional revenue in taxes. Did quantitative easing not play a significant role in that, or has any attempt been made by the Minister to quantify it?

Michael Noonan (Limerick City, Fine Gael)
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Under the European Central Bank, ECB, expanded asset purchase programme, often referred to as quantitative easing, QE, the eurosystem, comprising the ECB and the national central banks of the euro area, has been purchasing €60 billion of public and private assets per month and plans to do so until at least March 2017, or until inflation returns to levels consistent with price stability, defined as inflation close to 2%. Purchases of sovereign debt began on 9 March 2015.

While it is difficult to estimate directly the beneficial impact of QE on growth rates here since this policy began, it is nevertheless clear that QE has boosted nominal growth, and this is one factor behind the strong tax and general Government revenue growth in 2015.

Assessing what the final impact to the Irish economy will be by the time the QE programme concludes is also difficult to estimate at this stage, not least because of the contingent nature of the end date. The ECB has stated that QE will conclude only when euro area inflation returns to levels consistent with price stability. This outcome will help businesses across Europe to enjoy better access to credit, boost investment, create jobs and thus support overall economic growth, which should offset the impact of withdrawing QE. Thus, by helping to create jobs and supporting overall economic growth in all euro area countries, including Ireland, the withdrawal of QE will signal the resumption of more normal growth activity in the euro area.

Tommy Broughan (Dublin North East, Independent)
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The Minister said it was very difficult to estimate. Last April or May, the Minister gave me a similar reply, and said he might be able to produce some kind of figures. He is indicating that the withdrawal of QE would have a very significant impact. The figures he and the CSO recently gave us on growth rates until 2021 show a significant decline in growth down to 2017 and 2018 for whoever forms the next Government. Is it likely that the withdrawal of QE will have this significant impact, or is it possible that QE will go on in some shape or form?

The Governor of the Central Bank of Ireland, Professor Philip Lane, and the governing council of the ECB are the people who take the key decisions on it. To what extent does the Irish Government impact on decisions?

Michael Noonan (Limerick City, Fine Gael)
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We can attempt to measure the effect of QE. In the October 2014 budget, the growth estimate for 2015 was 4%. We put some money back into the economy, which increased demand in the domestic economy and drove the 4% higher. In 2015, two tail winds occurred which had not been accounted for in the budget. One of these was QE. Although I had campaigned for it for three years, I did not expect it to be introduced as early as March 2015. I thought it would be introduced in autumn 2015. Therefore, we had not factored it into the budget. The second tail wind was the unexpected decline in energy prices at the start of 2015.

If we take it that it would have been reasonable to expect growth of approximately 5% for 2015 as a result of the budget, QE has had some impact on the fact that growth was 7% in 2015. QE kept interest rates down and, more importantly, reduced the exchange rate of the euro. As a result, our export sector exported more and earned more money. However, it is very difficult to quantify.

Tommy Broughan (Dublin North East, Independent)
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Looking back, it is a pity in some respects that Mario Draghi and his colleagues did not embark on a QE programme earlier. The major down side to QE in the British and Japanese experience has been an increase in inequality. Owners of assets tend to do very well, going back to the point Deputy Healy made about the Credit Suisse report. Is this a concern for the Minister?

Michael Noonan (Limerick City, Fine Gael)
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It is a matter of monetary policy, and while I have much control over fiscal policy through the budget, monetary policy is for the ECB and the national central banks. Monetary policy is for the new banking union, driven by the people in Frankfurt. I advocated QE when it was very unpopular to do so in Europe. I campaigned for it for approximately three years and, eventually, a majority moved on side making it possible for Mr. Draghi and the people in Frankfurt to move, without objections in the German constitutional courts, to implement QE.

QE seems to be working. Europe is slowly rising and across all countries, including Greece, there is positive growth, which many people attribute to QE. The commitment is that it will continue until 2017, when it will be reviewed to see if it will be continued. I cannot see it as a permanent feature of monetary policy. It will end at some stage. The most serious internal risk to our prosperity is the size of our debt, and we must keep pushing it down. The risk arises not from the debt itself but the interest on the debt. If QE is removed and interest rates increase, it will have an adverse impact. We need to be better positioned on the overall burden of debt by 2017, which we will be.