Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

236. To ask the Minister for Finance his plans to make a detailed response to the findings in the Irish Fiscal Advisory Council's latest report; and if he will make a statement on the matter. [23089/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Fiscal Assessment Report is being considered by my officials. While I have already given some initial views on issues raised by the Council in recent parliamentary questions, as is normal, a comprehensive response to the Fiscal Council on all of the pertinent issues will be published in the coming weeks.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

237. To ask the Minister for Finance if he agrees with the Irish Fiscal Advisory Council that the plan in the Stability Programme Update 2015 is not in line with the requirements of the domestic budgetary rule or the preventive arm of the Stability and Growth Pact, on a forward-looking basis; and if he will make a statement on the matter. [23090/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, from 2016 onwards, the public finances in Ireland will be subject to the requirements of the preventive arm of the Stability and Growth Pact (SGP). The European Commission assesses compliance with the preventive arm on the basis of two complimentary pillars. First is the minimum annual improvement in the structural balance and the second is compliance with the expenditure benchmark. The minimum improvement in the structural balance and the expenditure benchmark are in theory designed to be complementary, although differences between the two metrics can emerge from time to time.

IFAC noted that the fiscal projections contained in the Stability Programme Update (SPU) did not show Ireland complying with our requirements under the SGP; in other words, that the improvement in our structural balance is below the required 0.6 percentage points in 2016.

However, SPU estimates show that for Ireland compliance with the expenditure benchmark pillar is consistent with delivering a lower suggested quantum of structural adjustment in 2016. This somewhat counterintuitive outcome was explicitly addressed in the SPU, and emphasises the material problems posed by some of the technical aspects of the rules.

Finally, it should be noted that compliance with the requirements of the SGP is ultimately assessed on the basis of analysis undertaken by the European Commission. In this context, the recent assessment of the SPU published by the European Commission as part of the European Semester process finds that 'on the basis of information in the 2015 Stability Programme Update re-calculated according to the common methodology, progress towards the MTO is in line with the requirements of the preventive arm of the [Stability and Growth] Pact'. The assessment by the Commission also finds that 'the rate of expenditure growth net of discretionary revenue measures, as planned in the SPU, is expected to be in line with the requirements of the expenditure benchmark pillar'.

In summary, therefore, the projections in the SPU are consistent with the requirements of the Stability and Growth Pact.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

238. To ask the Minister for Finance if he agrees with the Irish Fiscal Advisory Council that the budgetary projections in the stability programme update 2015 do not present a full picture of the likely costs of demographic ageing and cost pressures in delivering existing programmes, as well as not taking into account explicit Government commitments to reduce taxes; and if he will make a statement on the matter. [23091/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Spring Economic Statement (SES) and the corresponding Stability Programme Update (SPU) outlined that fiscal space of the order of €1.2 to €1.5 billion is expected to be available for Budget 2016. The fiscal projections contained in those publications are based on a technical assumption of a budgetary package of €1.2 billion in 2016 which will be split evenly between expenditure increases and tax reductions.   

For the post-2016 period, the published fiscal projections reflect a no-policy-change scenario from an expenditure perspective, other than provision being made for a €300 million increase in gross voted expenditure per annum to offset demographic pressures.

In addition, given the forecast improvements in the labour market with unemployment forecast to fall from 9.6% in 2015 to 6.9% in 2020 certain Live Register savings and savings from efficiencies and policy measures will make funds available to meet expenditure and other priorities.

However, the production of fiscal forecasts reflecting policy beyond 2016 requires specific decisions on the allocation of fiscal space for each year. Options include whether it should go wholly to expenditure (current / capital) or tax cuts or a combination of these and the iterative nature of forecasting over a four year period means that the range of potential fiscal projections is significant.

When Government has fully considered the appropriate use of the available fiscal space, this will be reflected in the fiscal forecasts. 

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

239. To ask the Minister for Finance if he agrees with the Irish Fiscal Advisory Council that post-2016, the medium-term projections for expenditure and tax revenue in the stability programme update 2015 do not fully meet the requirements of a medium-term fiscal plan, as envisaged in the Government’s budgetary framework; and if he will make a statement on the matter. [23093/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Fiscal Council noted that the provision of indicative fiscal space for the forthcoming Budget was a welcome development in terms of fiscal transparency. Indeed, this sets the scene for the National Economic Dialogue to be held next month. 

The post-2016 forecasts in the Stability Programme Update and the Spring Economic Statement reflect an increase in expenditure of €300m per annum to offset demographic pressures and indexation of the income tax system at an estimated cost of €300m in a full year. This adds to the realism and credibility of the forecasts. 

However, the production of fiscal forecasts reflecting policy beyond 2016 requires specific decisions on the allocation of fiscal space for each year. Options include whether it should go wholly to expenditure (current / capital) or tax cuts or a combination of these and the iterative nature of forecasting over a four year period means that the range of potential fiscal projections is significant.

When Government has fully considered the appropriate use of the available fiscal space, this will be reflected in the fiscal forecasts.