Maurice Quinlivan (Limerick City, Sinn Fein)
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202. To ask the Minister for Finance further to his response at the Committee on Housing and Homelessness to this Deputy's question regarding flexibility in the fiscal rules for capital investment and subsequent reports regarding the new programme for Government which provides for a cumulative additional €4 billion and given the favourable treatment of capital under the fiscal rules, the way the expenditure benchmark will be impacted by this proposed increase in capital expenditure and the scope for increases in capital expenditure to 2021 due to the flexibility vis-à-vis capital expenditure and the smoothing of investment over a number of years; the way in which this increase in capital expenditure will impact on the recent capital expenditure projections contained in the Stability Programme update for 2016, (details supplied); and the amount by which he expects the €3.8 billion capital allocation for housing to increase. [10041/16]

Michael Noonan (Limerick City, Fine Gael)
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To avoid penalising spikes in government investment in Gross Fixed Capital Formation (GFCF) the European Commission allows this investment to be averaged over a four year period, meaning that an increase in GFCF will only use one quarter of the fiscal space that an equivalent increase in current expenditure would use in the first year. Basically, GFCF is smoothed over four years under the expenditure benchmark.

GFCF of general government consists of annual government investments, deducting disposals, in fixed assets retained for its own use. Fixed assets are tangible or intangible assets as defined by and in accordance with the European System of Accounts (ESA 2010). The annual general government GFCF outturn is produced by the CSO and is published as part of the Government Finance statistics.

In the Stability Programme Update submitted to the European Commission at the end of April, the Government adopted a revised medium-term budgetary objective (MTO) of -0.5% of GDP. This is expected to mean that Ireland will reach its MTO a year earlier, thereby increasing the level of fiscal space over the perion to 2021 by c.€1.5 billion. This development, combined with the favourable treatment of GFCF, means that there is scope within the fiscal space to allow for cumulative additional Exchequer capital investment of €4 billion over the period, as noted in the programme for Government. 

Ending the housing shortage and homelessness is a priority for this Government and the delivery of the committed €3.8 billion Social Housing Strategy, funded through the existing Capital Programme, will be accelerated. As noted in the programme for Government there will be a mid-term review of the Capital Programme in mid-2017. It is in this context that the allocation of additional Exchequer capital investment to priorities will be determined.