Dara Calleary (Mayo, Fianna Fail)
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19. To ask the Minister for Public Expenditure and Reform the implications for expenditure plans in 2017 and beyond of the result of the British referendum on European Union membership; if he will emphasise growth-friendly projects in spending plans, particularly in the Border regions; and if he will make a statement on the matter. [20001/16]

Dara Calleary (Mayo, Fianna Fail)
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I wish to tease out the implications for public expenditure plans and the capital programme of the Brexit vote and an anticipated slowdown in our economy, as well as the withdrawal of the UK from various EU programmes such as INTERREG.

Paschal Donohoe (Dublin Central, Fine Gael)
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Planning for the potential implications of the result of the referendum on the UK's membership of the European Union is particularly challenging. Until Article 50 is invoked by the UK, the precise timescale for the UK's withdrawal from the EU is not known. The economic impact of the UK's exit from the EU will also very much depend on the nature of the new arrangements to be agreed between the UK and the EU.

The Government has adopted a contingency framework, co-ordinated by the Department of the Taoiseach, to map out the key issues that will be most important to Ireland. Priority issues identified in the framework include UK-EU negotiations, British-Irish relations, Northern Ireland, trade, investment and North-South Border impacts. As outlined in the framework, the impact on enterprise and trade in Border counties will be monitored closely.

The summer economic statement, SES, published last month, sets out the Government's medium-term strategy for sustaining economic growth and for budgetary policy. The proposed budgetary strategy for 2017 is not expected to change materially following the result of the UK's referendum on EU membership. The majority of components feeding into the expenditure benchmark calculation for 2017 are included the European Commission's 2016 spring economic forecast and, based on the forecasts in the SES, the 2017 budgetary strategy is consistent with compliance with the balanced budget rule.

As noted in the summer statement, the Department of Finance will prepare a full macroeconomic projection in advance of budget 2017. The public capital plan published last September set out an Exchequer spend of €27 billion over six years. This includes key investments in transport, education, health and enterprise. In every part of the country where these are delivered, they will boost our competitiveness, sustain jobs and upgrade our social infrastructure.

Dara Calleary (Mayo, Fianna Fail)
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The €27 billion plan was based on conditions and on economic growth figures which have to be reviewed in the context of the decision. It has been nearly two weeks since the British took their decision so is there to be any review of the growth figures? What will that review mean for the capital plan?

The European regional development fund has committed €240 million to the INTERREG programme from 2014 to 2020. I know a date has not yet been set and Article 50 has not yet been triggered but we have to assume that it will happen before 2020, if it is going to happen. In this context, has specific attention been given to programmes such as the Narrow Water bridge, the A5 and the Border programmes?

The pressure exporters are under following the weakness of sterling will impact on corporation tax and VAT returns. This may be a matter for the Minister for Finance, Deputy Michael Noonan, but what are the projections for both, going forward?

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy's first question was on how the change in the UK's status will affect our economic projections.

The Deputy is correct. Two weeks have elapsed since the vote took place, but we have not seen a new Prime Minister elected in the United Kingdom, and it is only when a new Prime Minister is elected and his or her Government determines a negotiation strategy with the European Union that it will be clear what the relationship will be with the Single Market. The Bank of England and the Chancellor of the Exchequer, George Osborne, have made statements regarding what they will do to affect their domestic economy, but those statements were only made yesterday. The net outcome of all of that is the question the Deputy asked me regarding what the effects will be. To restate, we believe that it will not affect our plans for 2016 and 2017. Any effect on our medium-term prospects will be taken into account in the run-up to the budget in October, when we will give a further indication of where we stand, but the Minister for Finance, Deputy Noonan, has indicated that he believes the effect on national income growth would be 0.5%, with two different factors driving that.

Robert Troy (Longford-Westmeath, Fianna Fail)
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Thank you, Minister.

Paschal Donohoe (Dublin Central, Fine Gael)
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I think I have 35 seconds left.

Robert Troy (Longford-Westmeath, Fianna Fail)
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I did not start the clock on time, so your minute is up. You will be allowed to reply one more time.

Paschal Donohoe (Dublin Central, Fine Gael)
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Would you allow me to answer the second question the Deputy put to me, please?

Robert Troy (Longford-Westmeath, Fianna Fail)
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You will be allowed to speak again, Minister. We have to keep to the time so that everybody gets an opportunity to speak.

Paschal Donohoe (Dublin Central, Fine Gael)
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I would make the point that it is not my fault that the clock started late. I am doing the Deputy the courtesy of trying to answer the questions he put to me.

Robert Troy (Longford-Westmeath, Fianna Fail)
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You will have another opportunity to speak.

Dara Calleary (Mayo, Fianna Fail)
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Has the clock started? I will give the Minister the chance to give a full response to that question.

The Minister committed to a review of the capital programme for 2017. Will that review now take account of the referendum decision and the particular impact that decision will have on specific parts of the country? Will it affect the entire country? I have already called for an all-Ireland response to it at local authority level, but a specific response will be needed for the Border region. In terms of the capital programme, will the Minister facilitate a review that will encourage employment-friendly projects in that region?

Paschal Donohoe (Dublin Central, Fine Gael)
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To go back to the earlier question the Deputy put to me, the effect will become clearer in the run-up to budget 2017. The summer economic statement outlined that the cause of any change in national income would be the change in our trading relationship with sterling and having a greater understanding of what the relationship would be between the UK and the Single Market in particular.

Regarding the earlier question the Deputy put to me on INTERREG and the PEACE programmes, whose importance he acknowledged, on the Friday morning when the result was announced, we contacted the Commission about this. I met my officials who have responsibility for that area, and tomorrow morning I am meeting the Minister for Finance in the Northern Ireland Executive, who has responsibility for these areas, to discuss the effect of the UK decision on the INTERREG and PEACE programmes. We remain committed to the commitments the Government has put against those programmes because, as the Deputy will be aware, the majority of funding for those projects comes from the European Union. It is a matter that we and the Northern Ireland Executive need to work through closely.

The Deputy asked me if the change in the UK's membership of the EU will have an effect on the capital plan. We have acknowledged that it will inject uncertainty into our medium-term prospects. The linear consequence of that is that it will have an effect on Government plans, but I have been very clear - the Minister for Finance, Deputy Noonan, has made similar points - that what we then need to examine-----

Robert Troy (Longford-Westmeath, Fianna Fail)
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Thank you, Minister.

Paschal Donohoe (Dublin Central, Fine Gael)
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-----is our plans in the context of how they respond to what has happened in the UK. Capital investment to increase productivity and the growth potential of the economy is how we need to respond, and I will be taking specific account of the Border counties.