asked the Minister for Finance the basis for the distinction between current and capital expenditure in the budget documents; and if there is any common practice in this matter in OECD countries.
Written Answers. - Current and Capital Expenditure.
373.
The distinction between current and capital, in so far as the supply services and the Public Capital Programme are concerned, is based generally on the principle that expenditure which provides physical assets for the continuing use or benefit of the public is treated as capital and expenditure which does not create physical assets is treated as current. Expenditure for the provision of factories, roads, houses, schools, hospitals etc., is therefore classified as capital while expenditure on salaries and pensions, welfare benefits, subsidies etc., is classified as current.
Certain expenditures which do not create physical assets are however treated as part of the Capital Budget. These are mainly refinancing by State bodies and local authorities of borrowings of previous years and certain capital contributions to international organisations.
While it may not be general practice to have a separate capital budget as in Ireland, I understand that the broad principles which I have outlined for the distinction between capital and current expenditure are generally accepted in OECD countries.