Dr. Donal Donovan:

It is important to distinguish between austerity and fairness. One can conclude, as the Government and the council have clearly done, that austerity in the sense of reducing the budget deficit by a certain amount over time - one can argue about the amount and the timeframe - is desirable for all the reasons we have been talking about this afternoon. In my view, the question of the fairest and most efficient way of achieving this is a different one. This is where I think a given amount of austerity can be achieved in a fair and equitable way. I think this is what Deputy Boyd Barrett was emphasising, to a large extent. As economists, we are not particularly great at what we do. We are not politicians. We cannot make social choices that have to be made by politicians. One man's fairness is another man's unfairness. One man's level of income at a certain tax rate might be considered too high by another man. Decisions on these matters have ultimately been made by every government, including the Irish Government, over the recent period. I have a personal view, as everyone sitting here probably does. As an economist, it is not relevant. As a citizen, it is. I vote for whoever happens to belong to my persuasion.

The fiscal council has been quite careful about this. We have thought about it a lot. We do not believe our role involves entering into the composition of taxation or expenditure from a fairness or equity point of view. It is not actually in the mandate that was given to us. Obviously, that debate is carried out in a different forum. We all have personal views. As a council, we do not have a position. Efficiency issues are slightly in between. It is more of an area for an economist than for Joe Citizen. There are questions of when taxation becomes inefficient in terms of growth, etc. The council has not gone there either because when one talks about the merits of high or low income taxation, it is usually rather difficult to sort the issues relating to fairness and equity and the personal views one might have about the money people should earn net of taxes from the issues of efficiency and the question of whether an income tax rate of a certain level will have adverse effects on growth. That is a very slippery area. For that reason, the council has decided not to go there. It would involve getting into a very political debate. There might be some economics in it, but there would be an awful lot of politics and many social views in it. That is not our space. I do not know whether that helps the Deputy.