Tuesday, 27 February 2018

Ceisteanna (205)

Pearse Doherty

Ceist:

205. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the capital spend that will be required in each of the next ten years or as far as forecasts permit that will be allowed to be spent, in each case, at 4% of GNI star and GDP; and if he will make a statement on the matter. [9405/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Public)

I assume the Deputy is requesting information on the projected level of gross voted capital for each year over the period 2018-2027 if public capital investment was fixed at a 4 per cent share of the relevant measure of national income referenced by the Deputy, i.e. GNI* and GDP.  

The latest forecasts published by the Department of Finance alongside Budget 2018, as detailed in Annex 3 of the Economic and Fiscal Outlook are for the period to 2021.  The Exchequer resources allocated for investment under the National Development Plan are based on projected nominal growth in national income (GNI*) averaging 4 per cent over the period 2022-2027 (2 per cent volume growth and 2 per cent growth in the GNI* deflator). This aligns with the most recent projection for Ireland's potential growth from the European Commission for Ireland for the 2020s.

The level of Exchequer investment that would equate to a 4 per cent share of projected GNI* - using the projections adopted in the NDP - and projected GDP - assuming nominal GDP growth of 4 per cent for the period 2022 - 2027, as well as the total for the ten-year period are set out in the following table.  The level of Exchequer investment set out in the NDP is also included in the table for the Deputy's convenience.   

€   Billion

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Total

Investment   proposed under the NDP

5.8

7.3

7.9

8.6

8.9

9.4

10.0

10.5

11.0

11.6

91.0

Investment at   4% of GNI*

8.0

8.3

8.6

9.0

9.3

9.7

10.1

10.5

10.9

11.4

95.8

Investment at   4% of GDP

12.1

12.6

13.1

13.7

14.2

14.8

15.4

16.0

16.6

17.3

145.7

As the Deputy will be aware, the December 2016 report of the Economic Statistics Review Group recommended the use  of GNI* as the most accurate measure of the size of the Irish economy.  Increasing public capital investment too much or too quickly could heighten overheating risks and exacerbate capacity constraints in the economy.  Potential overheating risks were addressed as part of the review of the capital plan as published in September.  This highlights the importance of adopting a prudent and measured approach to increased public capital spending as reflected in the National Development Plan in circumstances where there is some uncertainty regarding the cyclical position of the economy and the risk that the continuation of strong economic growth could result in overheating of the economy.