Dáil Éireann Debate, Tuesday - 15 June 2021
133. Deputy Mairéad Farrell asked the Minister for Finance his views on reforms which would exempt green capital expenditure in order to address the climate emergency given the review by the European Commission of the fiscal rules are set to reopen. [31885/21]
View answerAs the Deputy is aware, the fiscal rules have been an integral part of the European economic governance framework for a number of decades, dating back to the adoption of the Stability and Growth Pact (SGP) in 1997. This framework has evolved significantly over the past two decades, particularly following the economic and fiscal crisis, which saw the rules strengthened through the adoption of the so-called Six- and Two-pack legislative packages.
Early last year, the Commission opened a formal review of the Six- and Two-pack, including the launch of a public consultation on the operation of the fiscal rules. Discussions around this review were paused because of the Covid-19 pandemic, with the public consultation suspended. I welcome the recent confirmation by the European Commission that they intend to relaunch the public debate on the fiscal framework when the post-pandemic recovery takes hold.
I am firmly of the view that investment in the productive capacity of our economy is key to our future prospects. In particular, robust public capital investment will be needed to achieve our ambitions in the context of the green and digital transitions. Formally, the EU fiscal rules do not place any limits on public investment, as additional expenditure is always possible provided it is financed by revenue-raising measures or matched by offsetting reductions in current expenditure. However, we must recognise that, prior to the pandemic, there was already evidence of an investment gap across Europe. The role of the EU fiscal rules in creating or tackling this investment gap is a complex question but one which I believe we must consider at both a national and European level, particularly in the context of the EU’s long-term strategy to move to an economy with net-zero greenhouse gas emissions by 2050.
My officials and I will actively engage in these discussions. However, it must be recognised that there are difficult trade-offs involved. This means that finding agreement will be challenging.
