Oireachtas Joint and Select Committees

Wednesday, 22 September 2021

Committee on Budgetary Oversight

Pre-Budget 2022 Scrutiny: Irish Fiscal Advisory Council

Mr. Sebastian Barnes:

I thank Deputy Lahart for those thoughtful comments, including the fact that we should send him a copy of the report as soon as we have it next time. Let me respond in a slightly different order to the Deputy's questions. I will ask Dr. Adele Bergin to come in on Brexit and Professor Michael McMahon to come in on the general issues.

One point Deputy Lahart is right about is that as a medium-term strategy, the SES talks about how certain things will be dealt with, mostly the increase in public investment. It does not talk about some other subjects which are important. One of the neglected subjects is corporation tax. It assumes there will be a €2 billion loss, as the Government has been assuming for some time, from international tax developments but that is not developed. There is no institutional response to that. It is just baked into the figures. The rainy day fund solution and the prudence account that we talked about at some point could all be good ways of dealing with that, but it is not really addressed. There is also not much on the implementation of Sláintecare, which is another major initiative that does not really figure much in the discussion on the SES. Where that fits into the whole arithmetic could be better articulated. As I have said, there is a lack of detail about many aspects, including the climate aspect that the Deputy talked about and how that fits in and whether it has been allocated.

The Deputy is right in terms of some of these deeper questions about the public finances. As we have said, there is a need to prioritise between higher investment, higher current spending and taxation. The consequence of not prioritising is taking more risk and shifting the burden onto the next generation. In the past, we have re-emphasised how hard choices needed to be taken to meet the objective that the Government had, which was, essentially, to bring debt down at a steady pace to a more prudent level. In fact, what has happened is those hard choices have been avoided and we have ended up taking more fiscal risk. That was precisely the risk we warned about a year ago.

Maybe Professor McMahon will want to come in on the long-term issues. Then if Dr. Bergin wants to come in on Brexit, that would be helpful.


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