Aideen Hayden (Labour) | Oireachtas source

On that deep philosophical note, I think we will conclude. We could probably sit here and philosophise on the overall economic crisis for quite a time. There were economists of many different hues who sat on their hands for years and did not bring to anyone's attention the fact that 20% of our entire economy was based on the construction sector, for example. They did not shout half loud enough when it came to needing to broaden the tax base and so forth. I do not think economists have command of the truth any more than politicians.

The core point Professor McHale made was that the stability programme update 2015-2016 is not in line with the requirements of the domestic budgetary rule of the preventative arm of the Stability and Growth Pact on a forward-looking basis. I suppose it behoves me to point out for the record that, on a number of occasions, the Irish Fiscal Advisory Council recommended higher adjustments than the Government ultimately followed. To date, the Government's strategy has, I think, proved correct.

Comments by figures such as the Minister for Finance and the Minister for Public Expenditure and Reform have focused on the value of social cohesion and the delivery of key public services. There are aspects to the economy and economic measures whose importance cannot necessarily be fully measured. Social cohesion is one of those aspects on which one cannot put a fixed price. Organisations such as Social Justice Ireland and the Irish Congress of Trade Unions have made that point. Society is more than the sum of its parts. I do not think the Irish Fiscal Advisory Council was ignored; it was listened to and other decisions were made. Those decisions ultimately proved to be correct.

Professor McHale mentioned that the council was cautioning on tax cuts. Earlier today or yesterday, the Small Firms Association, which is concerned that we are dropping in the competitiveness rankings, made the point that if we are to maintain competitiveness, one way to avoid pressure on wage inflation is to give tax cuts. I would have different views on tax cuts. I am just putting that point forward.

The professor also made the point that it would take years for domestic demand to recover, yet I was interested to hear him say that there could be higher than anticipated growth and that the output gap was likely to be closed, which would raise the prospect of the economy overheating. I must admit, that left me somewhat breathless. The idea of the Irish economy overheating after recent years is like shades of 2006 all over again. Given that promoting domestic demand has been such an issue, how could we be looking at overheating?

Professor McHale raised a concern that, if incomes were to rise, households would prioritise eliminating private debt over consumption, which might be a downside for the recovery of the economy. Given that, in its country-specific recommendations, the Commission highlighted the high level of private debt in the economy, would the professor not think it important for households to continue to decrease their private debt rather than to engage in consumption?

I want to raise three issues on the broader horizon. One concerns the sale by the Government of its holdings in Allied Irish Banks and Bank of Ireland. What are Professor McHale's views on the import of this sale for any statements he has made about the current Government strategy? Second, what impact might the uncertainty in the eurozone over the ongoing Greek situation and the possibility of a Greek exit have on Ireland? Are we in a position to withstand it robustly or might it produce a significant downturn in our economy? Third, I understand there is a peer review of the Irish Fiscal Advisory Council being undertaken. Could the professor give us his views as to the operation of the council to date, specifically in international and European contexts? Could he comment on the broader challenges to the organisation in the medium term?