Oireachtas Joint and Select Committees
Wednesday, 4 December 2019
Committee on Budgetary Oversight
Fiscal Assessment Report: Irish Fiscal Advisory Council
Mr. Seamus Coffey:
On what the money is used for, the Deputy mentioned the Minister for Finance's speech yesterday indicating that moneys would be transferred. I think he mentioned the National Treasury Management Agency, NTMA. It would be impossible to transfer money to the National Pensions Reserve Fund as it no longer exists, but he was referencing providing the funds to the NTMA. In general, that is what happens. The NTMA managed the cash and the liquidity of the State. It has ongoing financing needs to roll over debt. This year, it was looking at borrowing around €18 billion. The indication is that any surplus that was available would simply be incorporated into that cash management strategy. It is not the case that the money would not be used, it would simply go into the general cash management of the State and the NTMA would take account of that when it was looking at its borrowing requirements for the year, particularly when it comes to insuring that we have a liquidity reserve. Since the crisis, we have maintained large amounts of cash in the fear that we might lose market access. That might seem remote now but, equally, it might have seemed remote in 2008.
If the Government was to follow our advice on the three things we set out at the end of our submission, what would the impact be? The Deputy referred to the impact on corporation tax and from where the hole would be filled. Our advice when it comes to setting spending plans is that things such as corporation tax should be completely ignored and that spending plans should be based on what the Government thinks is the sustainable and hopefully reliable revenue sources. Looking at temporary or windfall receipts should not impact it. It should not be a case of seeing additional money coming in and then having additional spending on the basis of that. As Dr. Lawless said, one must look at the long and medium term at what can be relied on for a number of years. Taking those proposals into account, one would look at potential growth of the Irish economy. We have done reasonably well in average growth. In actuality it is very high or very low but the average is pretty okay. Perhaps fiscal policy is contributing to that by spending too much in the good times and maybe undermining the economy in the poor times. The impact would be to ignore those temporary revenues and put things on a sustainable fashion. That would mean that services, supports and Government spending would be available every year, not just when money comes in.