David Cullinane (Waterford, Sinn Fein)
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69. To ask the Minister for Finance if he agrees that the fiscal rules are too rigid, inflexible and a that one size fits all solution is clearly not working. [19808/16]

Michael Noonan (Limerick City, Fine Gael)
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The fiscal rules, which apply under the Stability and Growth Pact (SGP), are intended to promote budgetary discipline. These rules were also given domestic legal effect through the Fiscal Responsibility Act 2012 following the passage of a constitutional referendum in May 2012 in which the Irish people supported accession to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. 

The rules are designed to ensure that increases in public expenditure are suitably financed and do not rely on cyclical or windfall revenues. The deteriorating international outlook illustrates the need for caution and prudent economic and fiscal policies. These rules do not per se limit spending. They do, however, require that any additional spending is financed through sustainable revenue raising measures. Through adhering to the requirements of the SGP Ireland's economic and fiscal situation has improved as illustrated by the abrogation of the Excessive Deficit Procedure earlier this year.

However an area with limitations under the rules is the harmonised methodology for calculating the economic cycle used in the implementation of the SGP. My Department has secured useful changes to this methodology over the years by consistently raising concerns and objections at European level. These changes have partially compensated for the reality that the harmonised methodology is not suitable for small open economies. My Department continues to advocate for improvements in the harmonised methodology and will continue to engage constructively on this and other relevant technical issues. 

Finally I would point out that fiscal sustainability is a pre-requisite for economic growth.