Professor Alan Barrett:

There was a question on the evaluation of tax expenditure. An interesting point was raised. Until about a year or 18 months ago there was a complete imbalance within the Department of Finance on the extent to which spending proposals were evaluated relative to the evaluation of tax expenditure. There was a complete disconnect and a series of manuals as to how capital expenditure was to be evaluated. There was an absence of information on giving people tax breaks.

In fairness to the Department of Finance, it put together a set of guidelines on this about 18 months ago. It is much more active in that space than it previously was. One possible example where it might be having an effect is in the area of tax breaks for developers. Members of the committee will be familiar with the fact that one of the issues which has floated around for quite a while is whether it is something we should be doing in the context of the housing crisis. Under the new guidelines, the Department was much more proactive in forcing people who are making a proposal to provide evidence that it will actually have an effect.

Dr. McQuinn alluded to the fact that the ESRI fed into this through a report we produced which raised questions about the actual effectiveness of some of the proposed tax reforms in the context of the specific difficulties which were affecting the housing market.

It has upped its game in that regard. There is evidence that something is happening but, ultimately, politics tends to trump economics in these situations and if a decision is going to be made, it will be made.

The Deputy's final question was on the process. What is the Napoleonic phrase, "Is it still too early to tell"? It is still too early to tell.