Written Answers Nos. 72-91
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.
73. Deputy Thomas P. Broughan asked the Tánaiste and Minister for Jobs, Enterprise and Innovation the reason only fixed-term contracts are available to many workers in the film industry; if this is an area her Department is examining with a view to improving working conditions and security for persons working in the film industry; and if she will make a statement on the matter. [31673/17]
View answer74. Deputy Thomas P. Broughan asked the Tánaiste and Minister for Jobs, Enterprise and Innovation the reason workers in the film industry are unable to secure contracts of indefinite duration; and if she will make a statement on the matter. [31675/17]
View answerI propose to take Questions Nos. 73 and 74 together.
There may be a number of reasons why certain types of employment contracts are used in the film sector, responsibility for which comes within the remit of my colleague the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs. However, from an employment rights point of view, Ireland has a comprehensive body of employment protection legislation designed to protect employees engaged under different types of employment arrangements.
The Protection of Employees (Fixed-Term Work) Act 2003 provides that fixed-term employees may not be treated less favourably than comparable permanent employees, unless the employer can objectively justify the different treatment. Less favourable treatment of a worker may be objectively justified if it is for the purpose of achieving a legitimate objective of the employer and such treatment is appropriate and necessary for that purpose. However, any justification offered cannot be connected with the fact that the employee is on a fixed-term contract.
The 2003 Act also establishes a framework to prevent abuses arising from the use of successive fixed-term employment contracts. The Act provides that where an employee has been on two or more continuous fixed-term contracts, the total duration of those contracts may not exceed four years. After this, if the employer wishes to renew the employee’s contract, it is deemed to be a contract of indefinite duration unless there are objective grounds justifying the renewal of the contract for a fixed term only.
The Unfair Dismissal Act 1977 as amended contains a provision aimed at ensuring that successive temporary contracts are not used in order to avoid that legislation. It provides that where a fixed-term or specified-purpose contract expires and the individual is re-employed within 3 months, the individual is deemed to have continuous service for the purposes of that Act.
All employers, including those in the film industry, carry the same obligations in relation to compliance with employment law. Where an individual believes they are being deprived of employment rights applicable to employees they may refer a complaint to the Workplace Relations Commission (WRC) where the matter can be dealt with by way of mediation or adjudication leading to a decision that is enforceable through the District Court. WRC inspectors can also be asked to investigate certain breaches. Complaints can be made on a single complaint form available at the WRC’s website www.workplacerelations.ie.
The Competition (Amendment) Act 2017, which was recently enacted, establishes rights for certain categories of self-employed individuals to be represented by a trade union for the purposes of collective bargaining. I believe that this Act, which met with all Party support in both Houses of the Oireachtas, provides a fine balance in meeting the stated objectives underpinning it whilst, at the same time, remaining consistent with competition law. It will be of benefit to voiceover actors, session musicians and freelance journalists and it also provides for an application process whereby Trade Unions can apply for an exemption from the application of section 4 of the Competition Act 2002 to collective bargaining and agreements in respect of other specific classes of self-employed workers.
75. Deputy James Browne asked the Tánaiste and Minister for Jobs, Enterprise and Innovation the way in which her Department has collaborated with the IDA and Enterprise Ireland to promote economic growth in County Wexford; and if she will make a statement on the matter. [31814/17]
View answerIDA Ireland's strategy for 2015-2019 includes a commitment to increase foreign direct investment (FDI) in every region outside of Dublin by 30% to 40%. The Agency has already made good progress towards achieving this goal with Wexford performing particularly well. This is reflected in net job gains with FDI jobs in the county increasing from 2,486 in 2015 to 2,630 in 2016, an uplift of almost 6%.
IDA Ireland also continues to explore new avenues for attracting FDI to the entire South East region. These include the development of advance facilities, new marketing initiatives and a campaign to encourage Dublin-based multinational companies to establish satellite offices in the region.
Currently there are three IDA Ireland sites and one private finance facility available to market in Wexford. The number of IDA Ireland supported site visits to Wexford has increased from 1 in 2014 to 7 in 2016. The IDA continues to work hard to convert interest shown to date by potential investors into investments on the ground in the county.
In 2016, Enterprise Ireland (EI) supported companies in Wexford employed 4,816 people, a net gain on 109 on 2015. EI has paid €4.2 million to companies in Wexford across the period 2014 – 2016 and has co-funded four Community Enterprise Centres in the county.
Under the APJ Funding Scheme for the Local Enterprise Offices four projects were approved for funding which had Wexford LEO as a collaborative partner.
76. Deputy Willie Penrose asked the Tánaiste and Minister for Jobs, Enterprise and Innovation if she will take steps to ensure that the IDA considers County Westmeath as an appropriate site for a data centre (details supplied) in the midlands in view of the fact that there are a number of viable locations in mid and north County Westmeath which could accommodate same; and if she will make a statement on the matter. [31825/17]
View answerI am informed by IDA Ireland that it has appointed Jacobs Engineering to undertake a study to identify potential strategic land banks in Ireland that would be particularly suitable to accommodate the sustainable development of large scale Data Centre projects.
The study is being undertaken to ensure that all regions in Ireland, including Westmeath which is part of the Midlands Region, are best placed to win and sustain this type of investment.
The study will be conducted in a number of stages and will be focused on evaluating all potentially viable land options that are compatible with the complex and ever evolving needs of data centre investments.
77. Deputy Micheál Martin asked the Minister for Finance the role his officials have in relation to co-ordinating the bid to attract EU agencies to locate here. [25628/17]
View answerArising from the decision of the United Kingdom to leave the European Union, the Department of Finance has been working on promoting Ireland as the new location for the European Banking Authority (EBA).
The objective of promoting Ireland as a location for the EBA is outlined in the current IFS 2020 strategy. Since the Government's public declaration of interest in hosting the EBA, the Minister of State in my Department along with my officials have been actively promoting Ireland as a location of choice for the European Banking Authority.
My officials have engaged with relevant stakeholders, including meetings with the EBA and the European Commission, to highlight the benefits of relocating the Authority to Ireland. The meetings with the EBA last year and early this year were to determine the needs of the Authority and its staff when they are moved from London. Former Minister of State Murphy and Department officials also met with Vice President Dombrovskis where the benefits of Dublin as a location for the EBA were outlined.
The Department of Finance has also produced a brochure that promotes Dublin as a location for the EBA, with input from other relevant State agencies and Departments. The document is based on the criteria put forward by the President of the European Commission and President of the European Council to aid the process for decision on the new location of the EBA and EMA. This brochure was approved for publication by Government on 13 June and has been circulated to our Missions across the Union and is also being sent to other key stakeholders.
My officials are also collaborating with their colleagues in the Department of Health in coordinating Ireland’s offers to host the EBA and the European Medicines Agency.
The next stage of the process is to submit a formal bid for the EBA prior to the deadline of 31 July. My officials are preparing that bid document and it will be submitted to Government for approval in due course.
The final decision on the location of both the EBA and EMA is expected to be made by vote in November at the EU General Affairs Council (art. 50).
78. Deputy Micheál Martin asked the Minister for Finance if he or his officials have discussed the possibility of requesting flexibility on the way in which the EU fiscal treaty rules are applied to capital infrastructure projects; and if he has discussed or contemplated requesting from the EU flexibility on the fiscal rules to allow the State to prepare for Brexit, in particular. [27833/17]
View answerThe fiscal rules to which Ireland is subject have direct application through a number of EU regulations. Changes to these regulations would have to follow the normal EU approach starting with a proposal from the Commission before consideration by Member States and the European Parliament.
The issue of facilitating greater flexibility in 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.
The harmonised methodology for calculating the economic cycle used in the implementation of the SGP remains an area with limitations within the fiscal rules. My Department has secured useful changes to this methodology over the years by consistently raising concerns and objections at European level. These changes have partially compensated for the reality that the harmonised methodology is not suitable for small open economies. My Department continues to advocate for improvements in the harmonised methodology and will continue to engage constructively on this and other relevant technical issues.
The Government has repeatedly acknowledged the need for increased public investment. The current Capital Plan sets a baseline from which this Government intends to increase investment in critical infrastructure, and in areas such as housing and health, as the Deputy has identified into the future. As outlined in the 2017 Estimates, gross voted capital expenditure will increase to €4.5 billion in 2017. This represents an increase of €325 million in comparison to the 2016 outturn. By 2021 it is envisaged that Gross Voted Capital Expenditure will reach €7.29 billion, an increase of over 100 per cent in comparison to its level in 2014. These increases in investment over the coming years will be allocated to identified priorities on the basis of the outcome of the review of the Capital Plan currently under way.
It should be further noted that the SGP has a feature designed to promote capital investment in the expenditure benchmark. 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.
To date, Ireland has not been eligible to apply for the use of the investment or structural reform clauses. While this remains the case in relation to the investment clause, Ireland is moving into a position where it could apply for use of the structural reform clause.
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. The rainy day fund is one measure announced by the government which would provide a prudent countercyclical buffer to the economy. This is currently under review and further information will be provided in the Summer Economic Statement (SES) to be published in July.
79. Deputy Thomas P. Broughan asked the Minister for Finance the annual cost of section 481 tax relief since it was introduced; if he will provide a cost benefit analysis of this tax expenditure in 2015 and 2016; and if he will make a statement on the matter. [31676/17]
View answerI am advised by Revenue that prior to 2015, the Film Relief scheme, provided for by Section 481 Taxes Consolidation Act (TCA) 1997, operated by giving relief to individuals and companies investing in the film industry. The information in respect of the tax cost and number of investors who claimed relief under section 481 for the years 2004 to 2014 is available on the Revenue Commissioners webpage at http://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx.
With effect from 2015, the scheme provides direct support to film producer companies in the form of a tax credit. However, where an application was received up to and including 14 December 2014, it was processed under the previous scheme. Investors availing of the old scheme can choose the year in which to claim their relief. The provisional number of claimants of the tax credit in 2015 is 1,102 with a cost to the Exchequer of €69.7 million. Data for 2016 are not presently available.
As a requirement under the Department of Finance tax expenditure guidelines (http://budget.gov.ie/Budgets/2015/Documents/Tax_Expenditures_Oct14.pdf) reliefs such as section 481 are required to be reviewed periodically. A full analysis and review of the relief will be undertaken in line with the tax expenditure guidelines.
80. Deputy Thomas P. Broughan asked the Minister for Finance if the €3 billion received from the sale of shares in a bank (details supplied) has been used to pay down a portion of the national debt; the mechanism by which this was achieved; when he expects to receive an additional €400 million; the updated size of the national debt following these allocations; and if he will make a statement on the matter. [31677/17]
View answerThe State last week sold 25% of AIB's ordinary share capital at a price of €4.40 per share for consideration of almost €3 billion. The State also granted an additional over-allotment option over a further 3.75% of AIB's ordinary share capital as part of this transaction. Hence, unless some of these shares are bought back in the market by our stabilisation agent in the period post floatation, the State will recoup around €3.4 billion from the Initial Public Offering (IPO). This additional €400 million will be received by the State in the coming weeks as the stabilisation period ends.
The debt forecasts in the April 2017 Stability Programme Update (SPU) did not factor in any proceeds from potential banking related asset disposals.
The €3 billion AIB proceeds reduce the amount that the National Treasury Management Agency (NTMA) must borrow in the market and therefore, all other things being equal, will reduce the overall level of debt compared to that forecast in the SPU. The proceeds have the immediate impact of improving the net debt position (i.e. gross debt less cash and other certain assets).
Given the current market back-drop and historically low interest rates, the NTMA plans to maintain its presence in the market over the coming months and to that end, has scheduled bond auctions for later this month and September.
The NTMA will review its future funding plans, including for Quarter 4 2017, in the coming weeks or months. It will consider a range of factors in its deliberations, including these proceeds, financial market conditions generally and the Government’s fiscal projections.
81. Deputy Thomas P. Broughan asked the Minister for Finance when the Government agreed that funds realised from the sale of State assets must be used to pay down the national debt rather than be invested in critical infrastructure; and if he will make a statement on the matter. [31678/17]
View answerAs the Deputy is aware budgetary policy is a matter for each Member State subject to compliance with its obligations under the Stability and Growth Pact. As such, there is no discussion, negotiation, or agreement required in relation to individual budgetary items or policy.
The proceeds from the sale of ordinary share capital held by the government in AIB does not result in a beneficial impact to the General Government Balance (GGB) under the European System of Accounts 2010 (ESA 2010) framework. This is due to the fact that it is classified as a 'financial transaction' whereby it is essentially the exchange of one form of asset (shares, equities, loans) for another kind (cash).
As the sale of the shareholding in AIB does not count as general government revenue, accordingly, if the proceeds are then used for general government expenditure at any time, the general government balance will worsen.
These proceeds are lodged to the Exchequer and the NTMA will take them into account in their funding plans and will result in a reduced Exchequer borrowing requirement reducing and, consequently, Ireland’s gross debt and debt to GDP ratio will be reduced also in due course.
A lower level of debt is not only beneficial in terms of the fiscal sustainability of the State but will also result in reduced interest payments in future years. The strategy of reducing the national debt is consistent with the Government policy of repaying the borrowing previously undertaken to finance the recapitalisation of the banking sector during the financial crisis. It is my view, therefore, that because public indebtedness rose partly due to the recapitalisation of the Banks, it is appropriate to use one-off revenue from divesting the State of its banking assets to reduce debt. Although on a downward trajectory Ireland’s debt level is still comparably high and caution must be exercised due to the potential of rollover risk. We are a small and very open economy in a world that has more risks than usual and as such it is prudent to utilise these funds to better ensure the sustainability of public finances.
82. Deputy Thomas P. Broughan asked the Minister for Finance the estimated level of dividends and levies from the pillar banks and other financial institutions in 2016 and 2017; the likely yields to the State from this source in 2018 and 2019; and if he will make a statement on the matter. [31679/17]
View answerThe Deputy will recall that the Finance Bill 2016 included provisions to extend the Bank Levy to 2021. I would therefore expect it to raise approximately €150 million from the sector per year over this period.
In relation to the receipt of dividends from banks in which the State is a shareholder, it is important to note that the payment of any dividend is exclusively a matter for the board and management of each institution based on the bank’s financial performance and future prospects, and may be subject to regulatory approval. Given that these are factors outside my control it is not possible to provide a formal forecast of expected income from these banking investments.
The Deputy will be aware that AIB announced a dividend payment of €250m to ordinary shareholders in April of this year, as part of their annual results for 2016, 99% of which accrued to the State as the Bank’s majority shareholder. This payment was particularly significant given that it has been nine years since the bank last paid a dividend to shareholders.
While there are still challenges facing the Irish banking sector, I would consider it normal for a profitable bank in a stable business environment to pay a prudent, regular dividend to Ordinary Shareholders where there is no impediment to do so, in keeping with a commercial strategy and financial performance objectives espoused by the bank’s management.
83. Deputy Michael Healy-Rae asked the Minister for Finance his plans to prioritise investment in public services over tax cuts as requested by a group (details supplied) in budget 2018; and if he will make a statement on the matter. [31736/17]
View answerAs the Deputy is aware this Government must ensure that budgetary policy is in compliance with the fiscal rules - formally known as the Stability and Growth Pact (SGP) – which have direct application through a number of EU regulations as well as domestically via the Fiscal Responsibility Act 2012. These 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 rollover 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. The answer, therefore, is not simply about spending more; it is about getting more from each euro of taxpayers' money that is spent.
Having said this the Government is increasing expenditure in line with the levels permitted by the fiscal rules where possible, particularly in the area of increasing public funding for capital investment in order to meet key infrastructural requirements in areas such as housing, transport, broadband, education, health and flood defences. The recent European Commission 2017 Country Report for Ireland noted that the share of public investment in Government expenditure is expected to grow to close to 8.6% by 2021, up from 5.8% in 2015, well above the euro area average.
The Programme for a Partnership Government committed to additional capital investment over the period of the Capital Plan to 2021, to be allocated on the basis of the outcome of the ongoing review of the Capital Plan. It is expected that the capital review process will be completed in Quarter 3 of 2017, to enable the Government to make final decisions in the context of the Budget on how the additional capital funding should be allocated.
I would also note also that in the run-up to the Budget it is typical to receive a number of submissions from a wide variety of groups, representative organisations and individuals. All such submissions received are recorded and distributed as appropriate, in both the Department of Finance and of Public Expenditure and Reform, so that their content may be considered in the context of Budget and Finance Bill preparation.
84. Deputy Bernard J. Durkan asked the Minister for Finance if he has satisfied himself that there are no inflationary tendencies which might jeopardise economic progress; and if he will make a statement on the matter. [31754/17]
View answer87. Deputy Bernard J. Durkan asked the Minister for Finance the sectors of society most likely to be at risk in the event of the emergence of a lack of competitiveness through inflation in the economy; and if he will make a statement on the matter. [31759/17]
View answerI propose to take Questions Nos. 84 and 87 together.
Over the past few years consumer price inflation has been near zero in Ireland and in the euro area more generally. In 2016 annual inflation in Ireland – as measured by the Harmonised Index of Consumer Prices (HICP) was slightly negative at -0.2 per cent.
Despite the boost earlier in the year – when inflation was supported by temporary factors like higher energy prices – inflationary pressures have remained muted into 2017. This is largely due to the recent fall back in oil prices and the continued impact from previous euro-sterling exchange rate developments. Looking forward, futures markets for oil are suggesting oil prices will continue to stay around their current low levels over the course of 2017. Against this, the continued growth in domestic demand and the ongoing recovery in the labour market are expected to lead to further services price inflation. Taking all these factors into account, price pressures are expected to rise only very modestly in 2017. In the Stability Programme Update 2017, my Department forecast HICP annual inflation of 0.6 per cent for this year, rising gradually to 1.2 per cent in 2018. These forecasts will be reviewed and updated in preparation for the Budget, which will be published in October this year.
While consumer price inflation is not expected to rise dramatically over the near term, my Department continues to monitor inflation developments very closely. Any emergence of sustained price inflation would put pressure on the competitiveness of those sectors that are heavily dependent on exports. This is particularly true for the indigenous manufacturing sector, the agrifood sector and price sensitive service sectors such as tourism. In this regard, it is important that, at firm level, overall costs do not get out of line with our competitors and that pay moves in line with productivity developments.
This government will therefore continue to implement competitiveness oriented policies which is the best way domestically to counteract any inflationary tendencies and potential loss of competitiveness.
85. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economic fundamentals remain positive in terms of the future of the economy; and if he will make a statement on the matter. [31755/17]
View answer90. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to be in a position to utilise the principles of reform as experienced previously to remain of major benefit to economic prospects in the future; and if he will make a statement on the matter. [31762/17]
View answer95. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which his Department can forecast economic prospects over the next five years in view of the variety of potential challenges globally; and if he will make a statement on the matter. [31768/17]
View answerI propose to take Questions Nos. 85, 90 and 95 together.
My Department's most recent economic forecasts were published in the 2017 Stability Programme Update. Real GDP growth of 4.3 per cent was projected for this year while growth is forecast to average 3 per cent over the period 2018 – 2021. These forecasts have been endorsed by the Irish Fiscal Advisory Council.
However, the projections are, as always, contingent forecasts; they are based upon assumptions for key inputs such as trading partner growth and the evolution of commodity prices. Assumptions on external demand are particularly uncertain at present given the shifting geo-political landscape. The task of forecasting in an Irish context is further complicated by the globalised nature of the Irish economy and our highly concentrated industrial base. To provide an indication of the uncertainty surrounding my Department’s forecasts, a fan chart is produced in the Stability Programme Update highlighting the confidence bands for real GDP growth.
Notwithstanding the many challenges that the Irish economy faces, both externally and domestically, the economic fundamentals are strong;
- Irish competitiveness has been restored. The latest figures from the Central Bank of Ireland show that Ireland's real harmonised competitiveness indicator, a widely used measure of competitiveness in Europe, has improved by approximately 20 per cent between its peak in 2008 and May 2017.
- Following a number of years of rebalancing, the composition of activity is also now more sustainable, with all sectors positively contributing to growth.
- Employment has increased significantly with over 200,000 jobs created since 2012, and total employment is now above 2 million. Unemployment has fallen by some 8 ¾ percentage points from its peak in 2012 and at end May stood at 6.4 per cent.
- The public finances have been put on a sustainable path. We remain on course to meet our medium-term budgetary objective of a balanced budget in structural terms in 2018 i.e. a structural budget balance of -0.5 per cent of GDP.
The reform efforts of the past few years have been an integral part of the Irish economic recovery. However, there is no room for complacency given the considerable economic challenges we face, notably Brexit, the change in policy direction by the new US administration and high levels of uncertainty in the global economy. In light of these circumstances, the focus must be on ensuring that the economy is best placed to weather economic shocks to the greatest extent possible.
The best way to do this is through continued implementation of competitiveness oriented policies - including those that address emerging bottlenecks - along with prudent management of the public finances. That is what this Government will continue to do.
86. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economy in terms of economic performance rates alongside other EU and non-EU states, including eurozone members; and if he will make a statement on the matter. [31757/17]
View answerIreland was the fastest growing economy in the EU in 2016. Real GDP growth in Ireland was 5.2 per cent in 2016 compared with real GDP growth in the EU economy and euro area economy of 1.9 per cent and 1.8 per cent, respectively. In 2016 Ireland was the second fastest growing economy among the OECD member countries, which includes both EU and non EU countries. Total economic growth in the OECD countries was 1.8 per cent in 2016.
In Ireland, domestic demand is driving growth once again with strong contributions from both consumption and investment spending, while underlying exports continue to perform well. Service exports in particular remain strong with double-digit growth recorded in the second half of 2016 year on year.
According to the European Commission, Ireland is also expected to be among the fastest growing economies in Europe this year. The European Commission expects Ireland's economy to grow by 4.0 per cent in 2017 compared with growth of 1.9 per cent for the EU and 1.7 per cent for the euro area. Similarly, the OECD is forecasting Ireland's economy to grow by 3.7 per cent in 2017 compared with 2.1 per cent growth for the OECD as whole.
The Government’s priority is to ensure continued, sustainable economic growth in order to further increase living standards and reduce unemployment.
88. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can make provision for issues arising from Brexit in such a way as to maximise opportunities for the economy; and if he will make a statement on the matter. [31760/17]
View answerThe Department of Finance has been assessing and preparing for the impact of a UK exit from the European Union since well before the referendum on 23 June 2016. Work was carried out in the Department to assess the potential economic and financial sector implications arising, including through the ESRI-Department of Finance research programme study published in November 2015 titled 'Scoping the Possible Economic Implications of Brexit on Ireland'. This work was undertaken within the whole-of-Government framework established by the Department of the Taoiseach.
Following the result of the UK referendum and to prepare for the negotiations, work has intensified across the whole of Government, including in my own Department. A Brexit Unit within the EU and International Division was established in July 2016 to oversee and coordinate this work, and to act as a key liaison point with the Departments of the Taoiseach and Foreign Affairs, in particular. In addition, the Department of Finance staff complement in the Irish Permanent Representation to the EU in Brussels has been strengthened. The challenges which we face as a result of Brexit are mainstreamed across all divisions of my Department and this is reflected in business planning.
We know from our own published research that the potential impact on the Irish economy is significant. It is important to recognise that the full impact of the UK's exit is only expected to materialise over time. The best and most immediate policy under the Government's control to counter the likely negative economic impacts of Brexit is to continue to prudently manage the public finances. As we cannot control the international environment, we will need to continue to improve our competitiveness, including by focussing on costs we can control, by boosting our productivity, and ensuring sustainable public finances.
As outlined in the Government approach paper ‘Ireland and the negotiations on the UK’s withdrawal from the European Union’, published on 2 May, prudent management of the public finances is a key aspect of the Government’s overall strategy to mitigate the economic challenges. Brexit will be embedded in the Government’s economic decision making and its prudent but ambitious management of the economy. The Government’s paper also underlines that it will exploit fully any opportunities that arise as a result of Brexit. In this context, Ireland will continue, through the IDA, to promote the attractiveness of Ireland as a location of choice for companies and talented people who are looking to establish or expand operations in what will be the only native English-speaking country within the EU and the Eurozone.
In the Financial Services sector, Brexit will provide opportunities for Ireland to increase its share of financial services based inward investment. Minister of State at the Department of Finance, Michael D’Arcy T.D. has responsibility for Financial Services, including the implementation of the IFS2020 Strategy for driving growth in the financial services sector. The Government has also announced its intention to make a bid for the European Banking Authority when it is relocated from the UK.
89. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to rely on the support of his EU colleagues in the context of the Brexit negotiations with particular reference to the need for the discussions to remain adequately conscious of the fact that Ireland remains committed to the concept of the European project with beneficial access to the single and customs market and that as a committed member of the European Union, Ireland is in no way disadvantaged throughout the course of the negotiations; and if he will make a statement on the matter. [31761/17]
View answerThe Government’s priorities for the EU-UK negotiations have been clearly stated. They are minimising the impact on Ireland's trade and economy, protecting the Northern Ireland Peace Process, maintaining the Common Travel Area, and influencing the future of the European Union.
A critical part of the Government’s strategy and preparations for the negotiations has been to ensure that our priorities and unique concerns are heard and understood across Europe. Therefore, engagement with EU institutions and our EU partners is an important aspect of our approach. The very strong acknowledgement of our unique circumstances within the EU guidelines for the negotiations is a positive outcome and shows that the Government’s extensive political, diplomatic and official campaign of recent months has been effective in ensuring understanding and recognition of our unique circumstances and specific issues.
Since the beginning of the Brexit process, we have had over 450 engagements at political and official level with the remaining EU27 countries and the institutions. Across the board, both in terms of other Member States and the EU institutions, there is a strong willingness to work closely on addressing Irish specific issues. The Government will of course continue to engage politically at EU level in order to ensure that Ireland’s interests are kept to the forefront as much as possible during the negotiation period ahead.
Ireland remains fully committed to our membership of the EU and the Eurozone, and we will be very much part of the EU team, working to ensure that the negotiations are conducted in a constructive and positive manner. EU membership remains central to the success of our open, competitive economy and has been the foundation for much of the social progress we have made over the last four decades.
91. Deputy Bernard J. Durkan asked the Minister for Finance if he unilaterally or in discussion with his EU colleagues has identified particular threats to the European economy for countries in the eurozone and outside; if particular action is required in this regard; and if he will make a statement on the matter. [31763/17]
View answerAs Minister for Finance, I attend the Economic and Financial Affairs Council of the European Union (ECOFIN) which is responsible for EU policy in areas including economic policy. I also attend meetings of the Eurogroup, where the ministers of the euro area member states discuss matters concerning their shared responsibilities related to the euro. Its main task is to ensure close coordination of economic policies among the euro area member states. At both the ECOFIN and Eurogroup meetings, Ministers of the member states working alongside the European Commission and the European Central Bank (ECB) take stock of the latest economic situation in the EU and euro area, including on the risks to the European economy’s growth prospects.
The European economy is performing well, despite a number of challenges, as economic expansion continues in 2017 following four years of steady but moderate growth. The gradual recovery has been supported by a number of factors including sound macroeconomic policies, strong business and consumer confidence and a gradual improvement in world trade.
As highlighted in the European Commission’s Spring Economic Forecast 2017, risks to the European economy are more balanced than earlier in the year but are still tilted to the downside. Uncertainty related to the process of the UK leaving the EU continues to pose non-negligible downside risks. Bank fragilities in the euro area remain a concern even though the banking sector is now in better shape than a few years ago. In addition, policy uncertainty in the US and risks to the global outlook remain elevated.
Given the modest pace of growth, still high unemployment levels across the EU and external policy uncertainty, there are clearly no grounds for complacency.
