Professor John McHale:

One can think of a spectrum of models for the parliamentary budget office. It seems to us, and this was also evident in the OECD report, that what is being proposed is at the less ambitious end of the spectrum. In particular, under the current proposal, the office would not have direct responsibility for or capacity to do its own costings, even though it would have an important role in the validation of costings coming from Government. Clearly, it would have very important roles in terms of analysis and validation. On the other hand, in the election campaign it seemed that some very ambitious models of the office were proposed. Under these, the office would have almost unlimited demands placed on it in terms of costings from various bodies.

One thing that is clear from international comparisons of different types of independent fiscal institutions is that costing work is extremely resource intensive. The Irish Fiscal Advisory Council can run on a relatively lean model because the nature of its mandate is such that the various assessments do not require many people to do them. However, providing costings and analysis of specific policies and proposals is an extremely resource-intensive activity. Much of this detailed specific analysis is done by the ESRI. Professor Barrett discussed this earlier. The ESRI is a substantially larger body than the proposed model for the PBO.

We believe there is potentially a middle ground that would show more ambition than the current model. It is important that the new body have real capacity to do costings, even if, for the most part, it outsources much of that costing responsibility to the Government, which does a significant amount of it already. To be able to validate costings, it is necessary to have the capacity to do it oneself and also to do the cost-benefit analysis and micro-simulations of policies. It is important also that the body have a degree of discretion. The Congressional Budget Office in the United States is required to cost all legislation. It also receives a large number of information requests to cost various proposals and has a degree of discretion in this regard. Depending on its resources and recognising the level of resources required to perform this function well, it does not have to accept all requests. It could be worth considering some sort of middle ground.