Professor Michael McMahon:

I will address the two parts. Two elements are being conflated in that defence. As I have said in this committee and publicly many times, it is for the democratically elected Government to make the decisions and to balance those decisions as it sees fit. The argument that the budget struck a balance that was considered desirable is one that ultimately the Government has to put to the people. We do not necessarily conflate that with what we say is gimmickry. "Gimmickry" is the term used to describe the changing of definitions or adjustment of measures to make your fiscal position look more favourable than what the underlying position is.

I will separate those two and start with the first. It is true that people are being hurt by cost-of-living increases. People are being hurt to different degrees, and both last year and this year we called for the need for the aggregate stimulus not to be too great and for measures to be targeted at those most in need. Again, it is for the Government of the day to decide who they are. By our estimates, more than 70% of the cost-of-living supports were untargeted and, arguably, the tax package also does not necessarily serve those most in need. That is a decision for the Government to take. However, untargeted packages and an aggregate stimulus, as we claim this budget incurred, would not be called intervening carefully, but rather, in aggregate, leans against the European Central Bank's policy. We have fiscal policy leaning against monetary policy. The report is supportive of the potential need for targeted supports. The question is whether the nature of the targeting was targeted enough and we do not think that was the case.

On the gimmickry, if the balanced set of decisions is considered to be the right set to be put in place, I do not see any reason to try to move numbers around. For instance, windfall capital spending is capital spending. It should not be treated any differently from other forms of capital spending that are already in the budget. Those are two separate issues and they should be addressed separately. However, on both there was just cause for our report.