Thomas Byrne (Meath East, Fianna Fail)
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316. To ask the Minister for Public Expenditure and Reform if his Department favours putting in place a borrowing framework for institutes of technology, or technological universities, that give institutes of technology autonomous borrowing powers outside of general government; and if his Department is of the view that it would be legally possible to put such an autonomous borrowing framework in place under EUROSTAT rules. [29778/16]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy will appreciate that a very important consideration in considering the scope for independent borrowing by institutions in the higher education sector is whether that borrowing is  classified as falling within the General Government sector or not.

At national level the CSO are responsible under EU regulation for ensuring that all units within the economy are classified according to the rules set out under the European system of accounts (ESA2010).  Eurostat monitor this role through documentation, including the excessive deficit procedure (EDP) inventory for Ireland, and through biennial dialogue visits.  Eurostat are the ultimate arbiters on the classification of units in relation to EDP and other Government Finance Statistics.

Universities have traditionally had autonomous borrowing powers as they are classified as outside General Government. This outside General Government status is determined by a combination of the traditional autonomy that such institutions have historically enjoyed and their capacity to generate own income, so that they meet the 'market test', that is, that Government funding represents less than 50% of their overall income.  As such, borrowings by Universities are 'off-balance sheet' and do not impact on the level of General Government Debt.

These considerations do not apply in the case of the Institutes of Technology (IOTs).  IOTs, unlike Universities, are currently classified as inside General Government. Consequently, expenditure by the IOTs impacts on the General Government Balance (GGB) and borrowing by the IOTs contributes to the General Government Debt (GGD).  Essentially, as borrowings are spent, they would dis-improve the General Government balance in the same way as applies with direct Exchequer funding of the IOTs.

The Deputy may wish to note that the question of the borrowing capacity of IOTs is currently under examination by the Department of Education and Skills, in consultation with my Department, in light of proposals for increased provision of student accommodation as part of the Government's response to the housing crisis.