Dáil Éireann Debate, Tuesday - 21 September 2021
215. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has studied the report of the National Fiscal Advisory Council; if any particular action needs to be taken in the wake of the report; and if he will make a statement on the matter. [45161/21]
View answerI broadly concur with much of the assessment of the Irish Fiscal Advisory Council in their pre-budget submission and I welcome their advice.
As the document outlines, all indicators are that the economy is recovering strongly, and that we are in a much more favourable position than we were at this time last year. The vaccination programme has been extremely successful allowing the economy to return to some level of normality. That said, there will, of course, be long-term impacts from the pandemic, particularly in terms of employment.
A number of key issues were outlined in the report.
Firstly, the Fiscal Council emphasised the need to address structural fiscal challenges.
The Summer Economic Statement set out a medium-term budgetary strategy which seeks to address this issue. Through the introduction of an expenditure rule, public expenditure will be fixed to the trend growth rate of the economy. Such an approach enhances fiscal sustainability while allowing investment in key government priorities, particularly capital investment. I note, in particular, the Fiscal Council’s view that the expenditure plans are at the limit of what is prudent. I agree with this assessment, and that is why the Government introduced expenditure ceilings that will apply irrespective of revenue performance.
Secondly, the Council raise the issue of the high level of public debt. I agree that the level of public debt needs to first stabilise, and then fall. At almost a quarter of a trillion euro, it is among the highest in the developed world. That is why the budgetary strategy set out in the Summer Economic Statement seeks to reduce the deficit to 1.5 per cent of GDP by the mid-part of this decade. By reducing the deficit, we will stabilise the debt to income ratio.
