Professor John McHale:

It might be useful to say initially what we endorse. The endorsement function is limited to the macroeconomic forecast underlying the budget and we do a similar endorsement exercise for the stability programme. I thank the Deputy for the opportunity to clarify that point.

We made several substantive critiques, which the Deputy listed, in terms of the stalling in improvement in the budget balance. He mentioned the primary balance which deteriorated in 2016 after several years of improvement and that when there was an upward revision of approximately €1 billion in tax revenues there was an almost equal upward revision in spending within the year. He also said the fiscal rules were not fully complied with in 2016 based on current projections and will not be fully complied with in 2017. He is right that the Government was probably not surprised that we highlighted these factors. His main point is that it went ahead and did it anyway and whether that indicates we are not having an impact.

This Government, like any government, is under huge pressures from all sorts of directions to spend more money and to cut taxes. Facing those pressures the deficit can be used potentially as a political release valve. Most people do not obsess about that but we think about it a lot because we have been given a particular role, largely as a voice for the future. When items are funded by greater deficit spending they are not free but the cost is being pushed to the future. That does not mean there are not times when running deficits is a sensible policy in a major recession or where there are major spikes in spending, good economic policy is to run deficits because overall one wants to have a policy that is closer to a balanced budget position and to keep debt at safe levels. We do not want the kind of risks we may have run before, and the very deep crisis we experienced. I see the council as providing some balance because these costs will be borne down the line. Just because the Government pursues policies that it could have predicted we might disagree with does not mean the countervailing voice is not present.