Dáil Éireann Debate, Wednesday - 5 July 2017
72. Deputy Sean Fleming asked the Taoiseach if debts relating to third level education institutions such as universities, institutes of technology and other colleges and the education and training boards throughout the country are included as debts on the national balance sheet; and if so, the reason for this. [31712/17]
View answerThe legally binding accounting rules which must be used by all EU Member States for producing Government Finance Statistics (GFS) are those of the European System of Accounts 2010 (ESA 2010). The Manual on Government Deficit and Debt (MGDD) provides further guidance on the implementation of ESA 2010 when reporting GFS.
To test whether a unit is in government, the decision rules that need to be followed are as per ESA 2010 and MGDD. These rules establish that an entity should be classified in the government sector if it is (a) under public (government) control and (b) if it is a non-market entity. The first step in the classification process is therefore to determine if the unit is under public control. However, not all publicly controlled entities are in general government. This is because if a publicly controlled unit is a market producer (i.e. selling their output at economically significant prices) it is classified outside government as a public corporation.
According to the rules of the MGDD the market/non-market criterion is applied taking results over a "number of years" - in practical terms usually a three year period is taken. Only when a clear pattern is observed is a reclassification undertaken. This ensures that government figures are not made volatile through reclassifications arising from exceptional events.
Historically the universities were classified as privately controlled non-profit institutions in the National Accounts. The CSO, having reviewed the Universities Act, 1997, concluded that, on balance, the universities have sufficient degree of autonomy under this legislation to be classified as being privately and not publicly controlled. Therefore the universities are not currently included in the list of public corporations published by the CSO.
In 2012, under the previous version of the ESA standards (ESA95), the CSO reclassified the universities as market producers. Whilst they remained outside Government as a result of this review, their classification changed from the non-profit sector to the non-financial corporations sector. Therefore, the universities are currently classified outside Government on the basis that they are (a) privately controlled and (b) market producers and, as such, their debt does not contribute in any way to the national debt. The CSO is currently reviewing the classification of the universities as part of its routine monitoring of institutional sector classifications.
On the other hand, under the same classification criteria and review process according to the ESA 2010 standards, the institutes of technology and education training boards are at present classified within the Government sector. Consequently, their indebtedness to agencies outside the Government sector is included as part of the national debt.
