Joan Burton (Dublin West, Labour)
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72. To ask the Minister for Finance the progress he has made in the reform of EU fiscal rules in respect of allowing capital investment and the ongoing review of the capital plan; and if he will make a statement on the matter. [44756/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The fiscal rules are designed to promote budgetary discipline and underpin sustainable economic growth. While Ireland's economy is growing and debt is on a downward trajectory, the debt level is still comparably high and caution must be exercised due to the potential of roll-over risk should interest rates increase. We are a small and very open economy in a world that has more risks than usual. Compliance with the fiscal rules underpins the Government’s objective of maintaining sound public finances.

With regard to changing the EU fiscal rules set out in the Stability and Growth Pact, proposals would have to be made by the European Commission in the first instance, and I not aware of such initiatives by the European Commission.

However, as I have stated previously for the Deputy in Parliamentary Question No. 78 of the 18th of May 2017 and number 128 of the 4th of July 2017, the issue of facilitating greater flexibility within the application of the fiscal rules has received significant focus at European level and framed discussions on the establishment of the structural and investment clauses, which were codified by the Commission in November 2015. Specifically these provisions allow for temporary deviations from the required structural budgetary adjustment, subject to strict conditions.

Furthermore, as the Deputy is aware, there is existing flexibility within the expenditure benchmark whereby capital formation increases are smoothed over four years with the result that only one quarter of the increase in public investment must be funded in the first year from within the fiscal space. This provision, which means increases in capital spending for housing and other purposes can be front-loaded within the EU rules, has been utilised in Ireland's budgetary plans.

The Deputy should also be aware that any decision to increase capital expenditure over and above already planned levels would need to balance the danger of potentially over-heating in the economy with the need to address infrastructure priorities and risks such as Brexit.