Tuesday, 15 May 2018

Ceisteanna (139, 140, 141)

Pearse Doherty

Ceist:

139. Deputy Pearse Doherty asked the Minister for Finance if the €400 million earmarked for demographic change he specified at the Oireachtas Select Committee on Budgetary Oversight on 18 April 2018 was included in the calculations for the fiscal space already published; if it represents additional demographic pressures since budget 2018 and reduces the €3.2 billion of fiscal space forecast to be available for budget 2019; and if he will make a statement on the matter. [21132/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

140. Deputy Pearse Doherty asked the Minister for Finance if the €400 million allocated to public sector pay he specified at the Oireachtas Select Committee on Budgetary Oversight on 18 April 2018 was included in the calculations for the fiscal space already published; if it represents additional public pay agreements since budget 2018 and reduces the €3.2 billion of fiscal space forecast to be available for budget 2019; and if he will make a statement on the matter. [21133/18]

Amharc ar fhreagra

Pearse Doherty

Ceist:

141. Deputy Pearse Doherty asked the Minister for Finance if the €300 million earmarked for carryover spending he specified at the Oireachtas Select Committee on Budgetary Oversight on 18 April 2018 was included in the calculations for the fiscal space already published; if it represents additional carryover since budget 2018 and reduces the €3.2 billion of fiscal space forecast to be available for budget 2019; and if he will make a statement on the matter. [21135/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 139 to 141, inclusive, together.

Table 3 on page 22 of the Summer Economic Statement (SES) 2017 set out an indicative amount of €3.2 billion, based on the parameters available at that time, in respect of the estimate of net fiscal space for 2019.

In arriving at the net amount the fiscal space impact of certain pre-committed voted expenditure was deducted from gross fiscal space. The nominal amounts relating to these pre-commitments were set out in Table 1.3 on page 9 of the Mid-Year Expenditure Report (MYER) 2017, with €0.4 billion for demographics.

In relation to current expenditure there are pre-commitments that arose after the SES of €0.7 billion that would need to be funded from the current expenditure fiscal space amount or from savings/reprioritisations.

There is a cost of €0.4 billion arising in 2019 from the Public Services Stability Agreement. This amount was not included as pre-committed expenditure in the SES or the MYER as the agreement at that stage was subject to ratification by the membership of the Public Service Unions and Staff Associations.

In addition, as outlined in the Expenditure Report 2018, there was a cost estimated, at that time, of €0.2 billion in respect of the carryover impact of certain Budget 2018 measures that would need to be met from the available resources for 2019 or from savings/reprioritisation. The current estimate of the carryover impact into 2019 is €0.3 billion. This estimated carryover impact will be reviewed in the context of this year’s MYER to take account of expenditure developments during the first half of this year.

The Stability Programme Update (April) 2018 provides for an increase of €2.8 billion in Voted Expenditure, including pre-committed expenditure of €2.6 billion for next year. This pre-committed expenditure was composed of:

- €1.5 billion (National Development Plan - capital related)

- €0.4 billion (to provide for the public sector pay agreement)

- €0.4 billion (to provide for demographics)

- €0.3 billion (to provide for the carryover costs next year of measures introduced in the budget for this year).

After providing for the increase of €2.8 billion in Voted Expenditure there is a deficit of 0.1 per cent of GDP projected for next year.

The available parameters will become clearer in the next couple of weeks (the Commission recently published its spring forecasts and these are an important input).

I note that the IMF, in its press briefing on the conclusion of the 2018 Article IV mission, have stated that the focus on fiscal space is not helpful and a good stance on fiscal policy is needed.

To that end, as I have stated on numerous occasions, the Government will formulate budgetary policy based on what is right for the economy and not what is legally permissible. The Government will not adopt pro-cyclical policies that jeopardise the sustainability of our public finances and our future living standards.