Dáil Éireann Debate, Tuesday - 16 June 2015
238. Deputy Pearse Doherty asked the Minister for Finance if he agrees with the Irish Fiscal Advisory Council that the budgetary projections in the stability programme update 2015 do not present a full picture of the likely costs of demographic ageing and cost pressures in delivering existing programmes, as well as not taking into account explicit Government commitments to reduce taxes; and if he will make a statement on the matter. [23091/15]
View answerThe Spring Economic Statement (SES) and the corresponding Stability Programme Update (SPU) outlined that fiscal space of the order of €1.2 to €1.5 billion is expected to be available for Budget 2016. The fiscal projections contained in those publications are based on a technical assumption of a budgetary package of €1.2 billion in 2016 which will be split evenly between expenditure increases and tax reductions.
For the post-2016 period, the published fiscal projections reflect a no-policy-change scenario from an expenditure perspective, other than provision being made for a €300 million increase in gross voted expenditure per annum to offset demographic pressures.
In addition, given the forecast improvements in the labour market with unemployment forecast to fall from 9.6% in 2015 to 6.9% in 2020 certain Live Register savings and savings from efficiencies and policy measures will make funds available to meet expenditure and other priorities.
However, the production of fiscal forecasts reflecting policy beyond 2016 requires specific decisions on the allocation of fiscal space for each year. Options include whether it should go wholly to expenditure (current / capital) or tax cuts or a combination of these and the iterative nature of forecasting over a four year period means that the range of potential fiscal projections is significant.
When Government has fully considered the appropriate use of the available fiscal space, this will be reflected in the fiscal forecasts.
