Dáil Éireann Debate, Thursday - 30 November 2017
60. Deputy Mick Wallace asked the Minister for Finance his plans to revise the State's policy of adhering to EU fiscal rules under the stability and growth pact due to the urgent need for infrastructure investment throughout the State; if his Department has examined cases throughout the EU in which member states have broken the fiscal rules; the reason for same; and if he will make a statement on the matter. [50872/17]
Amharc ar fhreagraThe fiscal rules are designed to promote budgetary discipline and underpin sustainable economic growth. While Ireland's economy is growing and debt is on a downward trajectory, the debt level is still comparably high and caution must be exercised due to rollover risk related to possible interest rate increases. We are a small and very open economy in a world that has more risks than usual. Compliance with the fiscal rules underpins the Government’s objective of maintaining sound public finances.
Furthermore, compliance with the fiscal rules is not only a matter of policy. The fiscal rules to which Ireland is subject to have direct application through a number of EU regulations as well as domestically via the Fiscal Responsibility Act 2012.
I am aware of the Commission's assessments of other EU Member States’ compliance with the rules; these are regularly discussed at the monthly Eurogroup and Ecofin meetings which I attend on behalf of the Government.
The issue of facilitating greater flexibility within the application of the fiscal rules has received significant focus at European level and framed discussions on the establishment of the structural reform and investment clauses, which were codified by the Commission in November 2015. Specifically these provisions allow for temporary deviations from the required structural budgetary adjustment, subject to strict conditions.
Furthermore there is existing flexibility within the expenditure benchmark whereby public investment increases are smoothed over four years with the result that only one quarter of the increase in public investment must be funded in the first year from within the fiscal space. This provision, which means increases in capital spending for housing and other purposes can be front-loaded within the EU rules, has been utilised in Ireland's budgetary plans.
Finally, I would point out 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. I will not adopt pro-cyclical budgetary policies that jeopardise our future living standards.
In summary, therefore, I have no plans to revise policy regarding adherence to the fiscal rules.
