Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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58. To ask the Minister for Public Expenditure and Reform if the public expenditure envelope allowed for in the existing fiscal space is adequate to meet the needs and demands for key areas of infrastructure and crucial public services; and if he will make a statement on the matter. [40482/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I should first explain the context behind the fiscal rules, to the extent that it relates to capital spending.

Substantial progress has been made in restoring Ireland’s public finances as reflected in Ireland’s movement from the corrective to the preventive arm of the Stability and Growth Pact from the beginning of 2016. 

The core element of the Preventive Arm is the Medium-Term Budgetary Objective (MTO), which is a fiscal target based on the structural rather than the actual or headline government budget balance. This structural target is measured using the difference between government income and expenditure after one-off and cyclical elements of the public finances are accounted for.   

In addition to the Structural Budget Balance (SBB) requirement, the Expenditure Benchmark comprises the second pillar of the Preventive Arm. This is designed to assist Member States to reach or maintain their MTO by putting a limit on expenditure growth year-on-year.  Ireland is now required to limit expenditure growth in line with the medium term potential growth rate of the economy.

The Government’s policy objective is to achieve Ireland’s MTO of a SBB of -0.5% in 2018 and further improvements in the headline General Government Balance (GBB) and SBB in the years ahead in order to strengthen the resilience of Ireland’s public finances against external shocks such as Brexit.

Following the onset of the economic and fiscal crisis there was a major retrenchment in public capital investment.  This is now being reversed. An additional €5.14 billion in Exchequer capital investment was originally committed in the 2016 Summer Economic Statement (SES) over the period of the Capital Plan 2016 – 2021, with a further €1.5 billion committed in the 2017 SES.

Allowing for the €2.2 billion of additional investment that the Government has already decided will be allocated for housing to support the Action Plan for Housing and Homelessness and other commitments already made in Budget 2017, the Government has substantial additional Exchequer capital funding amounting to €4.1 billion to allocate over the  four years 2018 - 2021 for increased public investment in Budget 2018, based on the assessment contained in the recently published review of the Capital Plan.  As confirmed by the Irish Fiscal Advisory Council, this will see public investment in Ireland moving from relatively low levels to among the highest in the EU.

I am satisfied that this new planned level of capital investment represents an appropriate balance between the need for additional investment, the capacity of the economy to deliver additional public infrastructure consistent with fiscal and macroeconomic sustainability and the need to adhere to the responsible spending path agreed by Government with reference to the requirements of the EU Fiscal Rules.