Dáil Éireann Debate, Tuesday - 11 July 2017
143. Deputy Eoin Ó Broin asked the Minister for Finance the impact on the expenditure benchmark and expenditure ceilings for 2018 and each subsequent year arising from an increase in local government borrowing of €100 million to €500 million, respectively, in 2018 for the purposes of the provision of affordable housing. [32490/17]
Amharc ar fhreagra144. Deputy Eoin Ó Broin asked the Minister for Finance the impact on the Government debt and the Government's agreed debt reduction targets as required under the Stability and Growth Pact and fiscal treaty rules for 2018 and each subsequent year arising from an increase in local government borrowing of €100 million to €500 million respectively in 2018 for the purposes of the provision of affordable housing. [32491/17]
Amharc ar fhreagraI propose to take Questions Nos. 143 and 144 together.
The 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 ensure budgetary discipline and underpin sustainable economic growth.
Any expenditure funded by borrowing, regardless of the source, is treated exactly the same as any other expenditure and, therefore, be undertaken in a manner consistent with the fiscal rules. Therefore, should local government request government approval to increase levels of borrowing in order to facilitate the provision of affordable housing, any spending of these borrowed funds will reduce available fiscal space.
Furthermore, 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 debt correction rule states that any general government debt in excess of 60 per cent of GDP should be reduced according to a formula that requires a 1/20th reduction of the excess over 60 per cent per year. Even leaving aside the debt rule, our outstanding debt is over €200 billion and, on a per capita basis, is amongst the highest in the developed world. It is imperative, therefore, that we do not add to public debt.
The most recent estimates for General Government debt were set out in the 2017 Stability Programme Update (SPU) published in April. The impact of an increase of both €100m and €500m in local government borrowing on General Government debt is set out in the table (note that rounding can affect totals).
|
General Government Debt (€ billions) |
||||
|
2018 |
2019 |
2020 |
2021 |
|
|
Debt as per SPU 2017 |
209.8 |
214.1 |
209.7 |
210.9 |
|
€100m increase |
209.9 |
214.2 |
209.8 |
211.0 |
|
€500m increase |
210.3 |
214.6 |
210.2 |
211.4 |
|
General Government Debt to GDP Ratio |
||||
|
Debt as per SPU 2017 |
71.2 |
69.5 |
65.2 |
62.9 |
|
€100m increase |
71.2 |
69.5 |
65.2 |
63.0 |
|
€500m increase |
71.4 |
69.6 |
65.4 |
63.0 |
