Tommy Broughan (Dublin Bay North, Independent)
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1. To ask the Taoiseach when the first estimates of GNI*, gross national income, will be produced by the Central Statistics Office; the frequency with which this series will be produced; and the discussions that have taken place with the EU and EUROSTAT in this regard. [19958/17]

Regina Doherty (Meath East, Fine Gael)
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The Central Statistics Office, CSO, convened the economic statistics review group, ESRG, in September 2016. The report of the group was published on 3 February 2017, along with the CSO’s response to the report. The focus of the ESRG was to identify a suite of analyses or indicators which would provide a better understanding of the domestic components of our highly globalised economy.

While GDP, gross domestic product, and GNP, gross national product, continue to be the international standard indicators, the development of a new level indicator, called GNI*, has been proposed by the group to address the specific nature of the Irish economy. GNI* is designed to exclude from gross national income, GNI, the depreciation attributable to relocated capital assets and the impact of re-domiciled firms. In doing so, it will aim to measure more closely domestic economic activity. This should provide useful information for analytical and economic modelling purposes such as budgetary forecasting.

The CSO will implement the review group’s recommendations on an incremental basis and will publish annual current price estimates of GNI* for the years 1995 to 2016 with the annual national income and expenditure 2016 results scheduled for mid-2017. The CSO plans to develop quarterly estimates of GNI* in 2018 with the estimates calculated at current and constant prices, namely adjusted for inflation.

EUROSTAT was international observer on the ESRG. The ESRG report was presented and discussed at the February 2017 European statistical system committee meeting of directors general of national statistical offices. It was subsequently discussed at a high level EUROSTAT task force on globalisation which includes directors of macroeconomic and business statistics.

The CSO has also made presentations on the ESRG report at EUROSTAT working groups on national accounts, balance of payments and business statistics. The report is helping to inform discussion of how globalisation is measured in European statistics.

Tommy Broughan (Dublin Bay North, Independent)
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I thank the Minister of State for her response. The revision of our 2015 national accounts was embarrassing for the CSO and the Government. The significant jump in our GDP, based on the impact of globalisation and the transfer of whole balance sheets of multinationals and intellectual property assets to Ireland, was unusual and awkward for the Government, as well as embarrassing for the CSO. Obviously, our economy is very globalised and it was the first in which the impact of this was seen dramatically.

The work of the ESRG under the Governor of the Central Bank, Philip Lane, will allay concerns with our European partners that we are still not indulging in leprechaun economics. It will also allay concerns that when we issue figures for GDP and GNP, they can be taken as reasonably accurate.

Will the Minister of State indicate whether the 2010 standard and the balance of payments sixth edition manual is being applied to our national accounts? The fact the size of the economy jumped by 26% in 2015 with following growth for 2016 had fundamental impacts on the fiscal rules and fiscal compact, as well as the burden the country has to undertake regarding its European obligations. This has been discussed at the budgetary committee. Does the Minister of State know if our European partners understand this fully? Have all the recommendations from the Central Bank Governor in this regard been implemented?

Michael Moynihan (Cork North West, Fianna Fail)
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Several questions emerged from last June’s 26% increase in economic growth. The CSO gave us confidentiality reasons as to why a rational reason could not be given for this. Is there any anticipation of fluctuations for the 2016 report which could lead to another mockery of Ireland’s economic growth rates? Will a sound economic rebuttal be available to answer how the figures were arrived at? I understand the CSO and the Government were able to explain the figures to the European Union. Were there any corrections to the commentary made by some European institutions about last year's figures? Were there any acknowledgments from these institutions that they were wrong?

Regina Doherty (Meath East, Fine Gael)
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With regard to Deputy Broughan’s question about leprechaun economics, Mr. Lane was clever in so far as when we established the ESRG, he invited two members of EUROSTAT to sit on the committee to ensure they would be party to all of the hearings and analytical data that fed into why we were creating GNI*.

There was a rational reason for the growth rate. The 26% increase in the 2015 figures was due to the consequential impacts of the relocation of entire balance sheets to Ireland and related activity. The scale of the relocations in 2015 was substantial and added €300 billion worth of capital stocks to Irish balance sheets. The net effect of the sales of those products produced abroad under the contract of those relocated headquarters added to Ireland’s balance sheet of trade in goods and services in the national accounts. This doubled from €35 billion to €70 billion. Although there was a significant jump in 2015, the relocation and repatriation of intellectual property was not new. It started as far back as 2012. It is anticipated we will have growth or a reduction in these figures year on year. This is why EUROSTAT was invited to sit on the ESRG. This was to discuss the rationale behind the new analytical data of GNI*.

Although there were some disparaging remarks made not just by our European counterparts but some of our own home-grown economic experts, it was not leprechaun economics. It was a reflection of the repatriation of headquarters into the country and the additional intellectual property rights registered here.

We will continue to report the statistics, as was done in 2015, every year, with the exception we discussed earlier from 2005 to 2015.

Tommy Broughan (Dublin Bay North, Independent)
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We always had a series on net national product taking account of depreciation. Why did that accounting system not catch some of those massive inflows? The Lane committee's report indicates GNI* will be produced and we will have a number of other structural indicators, with the quarterly publication of the gross value added and net national product. Will all of those happen and will we be able to monitor this position much more carefully in future? With the advent of President Trump and concerns that people have about the impact of his policies on foreign direct investment in this country, it may be less of a problem for us in future. We look forward to the publication of GNI*. Does the Minister of State believe our European colleagues will take it seriously or will they simply look at gross domestic product and gross national product as the fundamental indicators? None of the rest of those countries has had the experience of having to create this totally new series of accounting.

Michael Moynihan (Cork North West, Fianna Fail)
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In June, when the disparaging commentary was being made by some of the European institutions, was there clarification or discussion between the State's Departments and European institutions on the fluctuations? What was the response from the European institutions that made disparaging remarks at the time?

Regina Doherty (Meath East, Fine Gael)
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To answer Deputy Broughan's question, the gross domestic product, GDP, will continue to be the denominator for the deficit and debt ratios under the fiscal compact rules. GNI* will just be an alternative denominator for use below the line in the ratio analysis when aggregates such as deficit, debt or investments are being expressed as a percentage of the indicator of the size of the economy. This new analytical data, GNI*, is unique to Ireland. To answer the questions of both Deputies, the European Union institutions just recognise that it is unique to Ireland's highly globalised market. It is obviously not something they will follow suit on and do for their own relative markets. We will be producing the data on a quarterly basis until we catch up but thereafter it will be on an annual basis. Once we complete by the middle of this year the catch-up quarterly reports from 2005 to 2015, we will issue the reports on an annual basis from 2018 onwards.