Mr. Seamus Coffey:

I thank the Deputy for his comments. On his initial point regarding the reason for IFAC, to quote my predecessor, the first chairman of IFAC, one of the purposes of having a body such as this is to institutionalise the memory of the crash so we always have somebody who is independent to focus on the problems that can emerge with inappropriate fiscal policy. If a body such as this were to come before the committee over the next 12, 18 or 24 months and state the appropriate fiscal policy was to increase taxes and cut spending at the time of a severe downturn it would be a failure of policy making, of the Oireachtas, of the committee and, perhaps, even of the fiscal council itself. One of our purposes is to try to avoid this. If we do have to come in and state this it would be difficult to take on.

With regard to the upcoming budget, our view is that €2.8 billion is probably appropriate in many settings, whether the outline would be for a withdrawal agreement and soft Brexit or a form of hard Brexit. The issue is the type of measures chosen with the €600 million that remains unallocated, given the precommitments on public capital and public sector pay, social welfare carryover costs and other pressures faced by the public finances.

When it comes to the type of measures that could be introduced to compensate for a hard Brexit, there needs to be a distinction between those that will be temporary and those that will be permanent. Brexit is a permanent and structural change. When it happens, it will be ongoing for decades or possibly even longer. If measures and supports are to be introduced for particular sectors, the shape they will take, particularly if they are temporary, will be important. For example, the cost of building the infrastructure to collect customs and tariffs would be temporary in nature and so it would not be viewed as part of the ongoing overall budgetary package that would take from the €2.8 billion. However, income supports offered to a particular sector that might be in long-term structural decline in any event could prove difficult to remove. We would not tend to view such supports as temporary. They may prove to be temporary and they could be withdrawn in the future, with the resultant fiscal resources then being used elsewhere.

In terms of assessing budget 2020, the introduction of measures that have a potentially long term basis would detract from the €2.8 billion. It is not a case of having a normal budget and proceeding as if everything is going to continue in a positive fashion and at the same time introducing measures to offset the impact of a hard Brexit. Choices need to be made. Earlier, the Minister set out that the framework in the context of which those choices are to be made will be in the expectation of a hard Brexit. That is what we expect to happen and it is essentially what the Minister said.