Tuesday, 15 May 2018

Ceisteanna (142)

Pearse Doherty

Ceist:

142. Deputy Pearse Doherty asked the Minister for Finance the impact on fiscal space of the National Development Plan 2018-2027 by year in each of the next five years; and if he will make a statement on the matter. [21138/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Forecasts beyond 2021 have not been compiled or published by my Department.

There is no impact resulting from the National Development Plan (NDP) in 2018. The impact for 2019 - 2021 was set out in my response to PQ number 160 on 27 February 2018 and is reproduced here for the Deputy's convenience.

The specific impact of the NDP out to 2021 on the Exchequer Borrowing Requirement (EBR), based on certain assumptions, is set out below.

The NDP announced four new funds that will begin operating from 2019. These are the Rural, Urban, Innovation and Climate Action Funds. The funds will be partly covered by an unallocated capital reserve in the first instance, leaving an additional cost, which will both pre-commit unallocated available resources and worsen the EBR.

The net nominal EBR increase resulting from the three funds is set out in the last row of the following table:

New Funds, € millions

2019

2020

2021

Rural

55

80

80

Urban

100

120

150

Innovation

20

30

40

TOTAL

175

230

270

Less Capital Reserve

-98

-136

-94

Net Increase

77

94

176

As the Climate Action Fund, set out in the following table, will be funded from the National Oil Reserves Agency (NORA) levy, it will have no impact on Voted Expenditure or the EBR.

€ millions

2019

2020

2021

Climate Action Fund

20

30

40

In calculating the impact under the Expenditure Benchmark, it is assumed that both the Urban and Rural Funds will be recorded as gross fixed capital formation (i.e. subject to ‘capital smoothing’ over four years) and that the Innovation and Climate Action Funds will be treated as capital grants (i.e. not smoothed). A further assumption is that the funding from the capital reserve will offset the Rural and Urban Funds.

Should the operation of the funds change these assumptions then the figures that follow will need to be amended.

The cost of the four funds is therefore:

€ millions

2019

2020

2021

Available resources Used

54

36

54

I would stress once again that, notwithstanding the legal position, budgetary policy will be formulated on the basis of what is right for the economy and pro-cyclical policies of the past will not be adopted.