Professor John McHale:

One of our functions is to endorse the macro-economic forecast, not the budgetary forecast, on which the stability programme and budget are based. We do see the Department's forecasts in advance of their being published and we then undergo a very rigorous endorsement exercise. We produce our own benchmark forecasts as part of that process, which we use for comparison purposes with the official forecasts. However, the Department has made important points on the need for reasonably up-to-date data in order to produce its forecasts. It is only in March that the national accounts for the previous year are available. To try to produce forecasts in advance of having the data would lead to lower quality forecasts. Even when we receive the forecasts, the timelines are very tight because they are produced only after the data become available. In terms of forecast provision, it would be difficult to bring it forward.

The main issue is not so much the timing of the SPU but the content. If I were in the members' position, it would be a matter of trying to get as much detail as possible on the actual policy plans contained in the SPU and associated spring or summer statement, depending on the timing.

As explained in its reports, the projections made in the SPU have recently contained limited detail on the Government’s envisaged policies and do not fully incorporate the costs of maintaining existing public service levels and real benefits. Yesterday’s summer economic statement goes some distance towards incorporating envisaged Government policies in official forecasts by showing the path for revenue and expenditure in a scenario where the available net physical space is used. However, it is still not clear how this is to be reconciled with the estimated costs of simply standing still in the provision of public services and maintaining the purchasing power of social protection benefits. In the absence of informative medium-term forecasts for revenue, expenditure, the deficit and the debt, the capacity to have a meaningful Oireachtas input in advance of the budget and SPU would be severely limited as policy debate would be based on unrealistic technical projections for the public finances. The reform of the budgetary process should be accompanied by a move to provide more informative medium-term forecasts on a stand-still basis, as well as by a forecast that includes the impact of the Government’s envisaged tax and spending policies. Such plans are needed for effective management of the public finances, as well as being a requirement of the EU budgetary frameworks directive.

While the proposed parliamentary budget office, PBO, could play a valuable role in the budgetary process, its precise design and functions need to be carefully considered to ensure its effectiveness. The committee could consider a PBO, the role of which would lie somewhere between the current proposal for a PBO with limited functions and one with a more extensive remit. A PBO that is well resourced but with a degree of discretion and strong independence seems to be a better model compared to the one proposed.

Summing up, the council believes it could play a valuable supporting role for the Oireachtas in augmenting the two current appearances by its representatives before the Oireachtas with a third in September following publication of its pre-budget statement. In addition, it could contribute to the new budgetary process by providing a briefing for the national economic dialogue. To allow meaningful Oireachtas participation, the proposed changes to the budgetary process need to be underpinned by the provision of informative medium-term budgetary forecasts.

The council is grateful for the opportunity to share with the committee its views on the proposed new budgetary process and welcomes members’ questions and feedback.