Tuesday, 2 July 2019

Ceisteanna (183, 184, 185)

Michael McGrath

Ceist:

183. Deputy Michael McGrath asked the Minister for Finance the pre-committed expenditure for Budget 2020; the demographics, capital commitments and other pre-committed expenditure including the nominal equivalent for each component; and if he will make a statement on the matter. [27616/19]

Amharc ar fhreagra

Michael McGrath

Ceist:

184. Deputy Michael McGrath asked the Minister for Finance the breakdown of non-voted expenditure carried over for Budget 2020; the other general Government commitments that will impact Budget 2020; the GEC increases and negative DRMs that will impact Budget 2020; and if he will make a statement on the matter. [27617/19]

Amharc ar fhreagra

Michael McGrath

Ceist:

185. Deputy Michael McGrath asked the Minister for Finance the discretionary revenue raising measures that will impact Budget 2020; and if he will make a statement on the matter. [27618/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 183 to 185, inclusive, together.

The Deputy’s questions relate to the difference between gross and net fiscal space.

As I have noted on many occasions, undue focus on the concept of fiscal space, which is calculated based on 'one size fits all' European rules, is inappropriate. Government budgetary policy is formulated based on what is right for the economy given our position in the economic cycle, not by a narrow, literal interpretation of what is permissible under the fiscal rules.

Table A1 of the Summer Economic Statement 2019 sets out an itemised 'walk' from the gross fiscal space permitted within the expenditure benchmark pillar of the European fiscal rules to net fiscal space.

This difference between gross and net fiscal space takes account of the measures that have already been provided for within the fiscal projections. The residual - net fiscal space - represents an additional amount on top of the existing budgetary increases that a literal application of the fiscal rules would allow. Using net fiscal space therefore worsens the headline general government balance.

The breakdown of pre-committed voted expenditure is shown in block j . The table details amounts that have been budgeted for in relation to demographics, the Public Service Stability Agreement and the carryover of Budget 2019 measures. As these all relate to current expenditure measures the nominal and fiscal space cost is the same.

However, as this table relates to fiscal space the amount shown for voted capital expenditure represents the smoothing over a four-year period in accordance with European fiscal rules. The corresponding nominal increase for 2020 is €0.7 billion, as noted elsewhere in the Summer Economic Statement.

Row k delineates the movement related to ‘other expenditure’. As the assessment of fiscal space under the expenditure benchmark is carried out within the statistical framework of the European System of Accounts (ESA) 2010, this block of data also includes non-voted expenditure movements within the wider general government expenditure aggregate (subject to a number of technical adjustments).

Also shown are the expenditure increases budgeted for, but not committed to any measure, as well as the assumed tax reductions within the fiscal projections. The final row in this block is a residual between the corrected expenditure aggregate movement and all of the items detailed thus far. As such, this item cannot be further disaggregated as it relates to a number of moving parts.

Details of the discretionary tax policy measures that form part of the current set of fiscal projections were set out in the Budget 2019 Tax Policy Changes document, published as part of Budget 2019.

It is not the practice of the Minister for Finance to discuss the details of future discretionary revenue measures which may be under consideration as part of the Budget and Finance Bill.

Extract from Table A1: expenditure benchmark approach to fiscal space for 2020, € billions

-

Fiscal space amount

Nominal increase

j. Pre-committed fiscal space for Voted expenditure

2.3

1.9

demographics

0.5

0.5

public service stability agreement

0.4

0.4

carryover of Budget 2019 measures

0.3

0.3

capital/NDP (smoothed)

1.1

0.7

k. Other

1.1

1.1

unallocated current expenditure (within GEC)

0.3

0.3

expenditure reserve for 2020

-0.2

-0.2

tax reductions

0.6

0.6

other (non-voted and gg)

0.3

0.3