Michael McGrath (Cork South Central, Fianna Fail)
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64. To ask the Minister for Finance the current estimate of the fiscal space available in budget 2018 net of the carry forward effects from budget 2017 and all known demographic pressures. [9993/17]

Michael Noonan (Limerick City, Fine Gael)
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The current estimate of the net fiscal space available for 2018 is €1.2 billion. This figure was set out in the documentation that accompanied Budget 2017 last October.  

This estimate is consistent with compliance with Ireland's obligations under the fiscal rules, namely the expenditure benchmark pillar of the preventive arm of the Stability and Growth Pact.  According to this metric, fiscal space is calculated as the potential growth rate of the economy (10-year average) less an appropriate margin which takes into account the fact that we have not yet achieved our medium term budgetary objective of a structural deficit of 0.5 per cent of GDP.

The fiscal space projections in the Budget are based on a number of moving parts (GDP deflator, reference rates for potential growth, etc.) set each year by the European Commission.  In addition, the value for general government expenditure produced by the Central Statistics Office is an integral part of the calculation.  Given all these moving parts, I want to stress that the figures, as always, are work-in-progress estimates and will evolve over time.

The next estimate of the net fiscal space for 2018 will be set out in the Stability Programme 2017 Update and / or the Summer Economic Statement 2017.

With regard to the carryover effect of tax measures outlined in Budget 2017, these will absorb some €172.5 million of the available €1.2 billion net fiscal space for 2018. As detailed in the Expenditure Report 2017, published by the Department of Public Expenditure and Reform, there is an estimated carryover into 2018 of approximately €0.5 billion arising from certain increases in Departmental expenditure included in the Budget Estimates for 2017. 

I would point out that the spending review, scheduled to be carried out in advance of Budget 2018, will among other issues, consider the policy options for meeting the additional cost arising in 2018 of the Budget 2017 expenditure measures.