Dáil Éireann Debate, Tuesday - 12 February 2019
187. Deputy Pearse Doherty asked the Minister for Finance the annual gross increases in general expenditure required between 2020 and 2024 to reach the EU15 average level of general expenditure as a percentage of GDP; if he will provide these annual expenditure increases as a percentage of GDP and a percentage of GNI; and the impact on projected general government balance, in tabular form. [7101/19]
View answer188. Deputy Pearse Doherty asked the Minister for Finance the annual gross increases in general revenue required between 2020 to 2024 to reach the EU15 average level of general revenue as a percentage of GDP; if he will provide these annual revenue increases as a percentage of GDP and a percentage of GNI; and the impact on projected general government balance in tabular form. [7102/19]
View answerI propose to take Questions Nos. 187 and 188 together.
Levels of general government revenue and expenditure for the EU-15 are available from Eurostat up to 2017 (2018 outturn will be available in April). Projections beyond this point are not available. Similarly, projections for general government revenue and expenditure for Ireland beyond 2023 have not been compiled by my Department.
As I have outlined previously, GDP figures for Ireland are distorted and of limited use. Instead, modified GNI, or GNI*, an alternative metric published by the CSO, provides a more appropriate analogue for international comparison.
General government revenue for the EU-15 as of 2017 was 45.3 per cent of GDP. To increase Ireland’s general government revenue to an equivalent 45.3 per cent of GNI* would amount to an average of an additional €10.8 billion in revenue each year, until 2023 (assuming that nominal GNI* moves in line with the Budget day projections).
In a similar manner, general government expenditure for the EU-15 as of 2017 was 46.3 per cent of GDP (hence the deficit for the EU-15 was 1 per cent of GDP). An equivalent 46.3 per cent of GNI* would imply an average expenditure increase of €16.2 billion each year to 2023.
In both cases this is in addition to the current plans as set out in the Economic and Fiscal Outlook published in Budget 2019.
As the Deputy will be aware, the Government is committed to investment that improves the sustainability of our public finances and our economic capacity. Under the National Development Plan, Ireland’s planned public capital investment will reach approximately 4 per cent of GNI* by 2023, among the highest in the EU. An average level of 4 per cent of GNI* is expected to be maintained out to 2027.
This substantial growth in public investment will meet the needs of the economy and remain consistent with the requirements of overall economic and fiscal sustainability.
However, aiming to increase general government revenue and expenditure by such significant amounts so as to equate with overall EU rates would be inappropriate. Government fiscal policy is guided by what is right for the economy at this point in the cycle, not by arbitrary benchmarks based on the overall budgetary patterns of fifteen countries with disparate fiscal and economic situations.
