Pearse Doherty (Donegal, Sinn Fein)
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194. To ask the Minister for Finance if he will confirm the assertion from the Irish Fiscal Advisory Council, that the State will miss its key borrowing target, the structural balance in 2017, as a result of the €1.3 billion budget 2017 package, as opposed to the €1 billion package mooted in September 2016; and if he will make a statement on the matter. [30753/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy should be aware that the correct comparator with the nominal Budget package of €1.3 billion is the €1.19 billion which was set out in the Summer Economic Statement. This was based on fiscal space of €1 billion, but the effect of capital smoothing meant that actual capital spend of €250m only absorbed €60 million in terms of available fiscal space. Budget 2017 introduced a package of €1.3 billion which uses fiscal space of €1.2 billion.

Based on the Commission's matrix specifying the required annual fiscal adjustment towards Medium Term Budgetary Objective (MTO), the required adjustment in our structural budget balance in 2017 was fixed at 0.6 percentage points. This requirement was set reflecting both our public debt sustainability and the cyclical position of Ireland's economy. The requirement was frozen based on Commission outlook for Ireland as of Spring 2016. The projected pace of structural correction of 0.8 percentage points in 2017 as set out in Budget 2017 exceeds this requirement.

Pearse Doherty (Donegal, Sinn Fein)
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195. To ask the Minister for Finance if he will confirm the assertion from the Irish Fiscal Advisory Council that the State will breach its overspending limit, the expenditure benchmark, a result of the €1.3 billion budget 2017 package, as opposed to the €1 billion package mooted in September 2016; and if he will make a statement on the matter. [30754/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy refers to the change in fiscal package between September and the Budget. To be clear, the €1 billion in fiscal space outlined in the context of the Summer Economic Statement (SES) in June 2016 was consistent with full compliance with the expenditure benchmark in 2017. Since then, a number of changes including a revision in the composition of expenditure data from the CSO and a revision in the carryover cost of implementing the 2016 tax package, have meant the permitted fiscal space in 2017 is now some €200m higher than previously estimated. An increase of 0.3 per cent relative to a permitted expenditure ceiling of €69.5 billion should however be seen as modest.

Whilst the increase in permitted fiscal space relative to the SES is measured at €200m, the resulting 2017 fiscal package of €1.3 billion is just €100m higher than communicated in the context of SES. This difference arises due to the 2016 capital package absorbing c. €50m and a reallocation of capital into current spending in 2017 absorbing a further c. €50m.

In contrast to this increase in permitted space, the excess over the permitted spending ceiling alluded to by the Fiscal Council for 2017 and set out in Budget Table A7 relates solely to the €200m increase in EU budget contribution arising due to the July revisions to Ireland's national accounts data for 2015. Net of this higher contribution, Budget projections confirm that the use of this €1.3 billion package in 2017 (i.e. spending the announced €900m in expenditure measures and factoring in the net cost of funding the €300m taxation package), is compliant with the provisions of the expenditure benchmark in 2017.

Even leaving this aside, my Department has projected a 0.8 percentage point improvement in the structural balance in 2017, again in compliance with our obligations.