Wednesday, 2 October 2013

Questions (129)

Stephen Donnelly

Question:

129. Deputy Stephen S. Donnelly asked the Minister for Finance the current working estimate of the quantum of new net budgetary measures that would be required in budget 2014 to meet the troika target of 5.1% of GDP for 2014, and to provide the workings of that calculation, for example, GDP of €174 billion, then 5.1% implies general Government deficit of no more than €8.9 billion, 2013 estimated GGD is €12.5 billion, so minimum correction of €3.6bn required; before any new budgetary measures, a reduction in general Government deficit of €2.8 billion is estimated €1.9 billion economic effects, €0.6 billion carryover from budget 2013, €0.4 billion due to Haddington Road, implying a minimum additional correction requirement of €0.8 billion from new budgetary changes in budget 2014; and if he will make a statement on the matter. [41491/13]

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Written answers (Question to Finance)

The budgetary and economic forecasts which will underpin the Budget are still a work in progress. I will not speculate on those figures at this stage. Budgetary forecasts will incorporate the impacts of the recently published Q2 Quarterly National Accounts and the September Exchequer returns. I would say to the Deputy that his nominal GDP forecast of €174.0bn and headline general government deficit of c. €8.9bn correspond with a deficit of 5.1% of GDP. These figures are consistent with those contained in April’s Stability Programme Update. However, I would stress that there has been quite a degree of data flow over recent months and these figures are quite dated.

In terms of carryover into 2014, I would refer the Deputy to a parliamentary question I answered on this during the summer, 36346/13, which stated that taxation provisions included in the Finance Act 2013 and the Finance (Local Property Tax) Act 2012 in relation to measures set out in Budget 2013 will result in an estimated carryover of around €300 million in 2014. There was also carryover from changes to PRSI in Budget 2013. Measures in relation to the maximum allowable pension fund at retirement to be introduced in 2014 were also announced in Budget 2013. A cross-Departmental Working Group of officials has been established to examine, among other things, the changes required to the existing arrangements governing the maximum allowable pension fund at retirement (the Standard Fund Threshold) and other potential alternative approaches for achieving the commitment. The Working Group has also sought views from various interested parties as part of the examination of options for delivering on the Budget commitment. This Working Group is also developing estimates of the likely yield from the changes. With regard to the impact of Haddington Road, this is a matter for the Minister for Public Expenditure & Reform.

As with previous Budgets, I will endeavour to strike a balance between bringing sustainability to the public finances while protecting to the greatest extent possible, both the economic recovery and the most vulnerable in society.