Dáil Éireann Debate, Thursday - 5 November 2015
111. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform further to Parliamentary Question No. 146 of 22 October 2015, the impact that any additional recurring expenditure in 2015 and 2016, over and above current projections, would have on the fiscal space for 2017; and if he will make a statement on the matter. [38794/15]
View answer112. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform further to Parliamentary Question No. 146 of 22 October 2015, the manner in which the expenditure rule impacts on the fiscal space for 2017; the circumstances in which overall expenditure for 2017 could be increased from current projections; and if he will make a statement on the matter. [38795/15]
View answer113. Deputy Michael McGrath asked the Minister for Public Expenditure and Reform if Supplementary Estimates are permitted under fiscal rules from 2016; how expenditure overruns within individual Departments will be dealt with from 2016; and if he will make a statement on the matter. [38796/15]
View answerI propose to take Questions Nos. 111 to 113, inclusive, together.
The framework for the conduct of budgetary policy relating to the issues set out in the Deputy's question were detailed in the Budget and Expenditure Report documentation published on the Budget 2016 website available at www.budget.gov.ie.
My statement on 13 October last on the Expenditure Estimates for 2016 and that of the Minister for Finance on the Budget, highlighted the progress achieved in securing fiscal sustainability. This is demonstrated by Ireland's exit from the corrective arm of the Stability and Growth Pact (SGP) at the end of this year and its transition to the preventive arm which will set the context for the delivery of our fiscal targets from 2016 onwards.
As the Deputy will be aware, the core of these fiscal rules is the Medium Term Objective (MTO) which is to achieve a balanced budget in structural terms (i.e. once allowances are made for once-off temporary factors and the impact of the economic cycle on the public finances estimated using the agreed EU methodology). Compliance with the MTO will require an improvement in the structural budget at a rate greater than 0.5% of GDP each year until the MTO is met.
The second pillar of the fiscal rules relates to the Expenditure Benchmark which supports the achievement of the MTO by explicitly setting the rate - aligned to the estimated potential growth rate of the economy - at which aggregate public expenditure can grow other than when the relevant expenditure is funded by discretionary revenue measures.
Ministerial Expenditure Ceilings within which Departments should deliver the services for which they are responsible were set out in the Expenditure Report. These are consistent with our obligations under the fiscal framework set by the preventive arm of the SGP and the need to maintain hard-won fiscal stability. Under the EU fiscal rules additional resources in excess of those ceilings may only be allocated in a manner that is consistent with our obligations under the preventive arm of the SGP. For example from 2016 onwards any supplementary estimates needed to meet unplanned additional spending would need to be funded through expenditure savings and efficiencies elsewhere or via discretionary revenue measures.
The Ministerial Expenditure Ceilings for the period to 2018 set out in the Expenditure Report 2016, take into account a range of expected expenditure developments including demographic pressures in Health, Education and Social Protection, the carry-over impact of certain Budget 2016 measures, expected lower numbers on the Live Register and the revised capital envelope set out in the Capital Plan.
The Deputy may wish to note that as set out by my colleague the Minister for Finance in his response to Parliamentary Question No. 146 of 22 October 2015, the amounts set out in the Budget 2016 documentation in relation to gross and net fiscal space for the period 2017 to 2021 are not final for the reasons set out in the reply.
Actual aggregate expenditure beyond 2016 will ultimately be a matter for Government decision-making, in light of the available fiscal space determined under SGP obligations at that time and its allocation between tax and expenditure measures as determined by Government.
I am satisfied that the Government decision-making which underpinned Budget 2016 demonstrated how an appropriate balance can be struck operating strictly within the fiscal rules of achieving budgetary sustainability and directing available public resources to areas of greatest need.
