Martin Heydon (Kildare South, Fine Gael)
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I thank the officials for coming in and for their detailed presentation. I will kick off with the area of corporation tax. The council outlines a scenario in which corporation tax receipts return to 2014 levels. Receipts have overperformed since then, but is there any evidence that all of this increase is excess? Could some of it be a structural increase, meaning that 2014 is not an appropriate base year to work from?

The assessment report is critical of the intention not to transfer the €400 million in contributions to the rainy day fund this year and next year. At the same time the council suggests that the €1.5 billion transfer from the Ireland Strategic Investment Fund should be used for a different purpose to support economic activity and employment in Ireland.

The strategic investment fund discretionary portfolio is worth around €8.5 billion, of which €1.5 billion will be transferred. A further €1.5 billion is to be targeted towards infrastructure and investments, leaving around €5.5 billion to support economic activity. Is that not sufficient, and if not, what is?

The report reads, "There is a case for suspending Rainy Day Fund payments in the event of a disorderly scenario, but the case for suspending payments without the risk materialising is less convincing." Given the Government is projected to run a fiscal deficit, would it not be unwise to borrow to fund the rainy day fund as well as being financially imprudent given the cost of servicing such borrowing?

On the technical expenditure, specifically the forecast for a future pay deal, the council is critical of the omission of any provision of a further pay deal in the expenditure forecasts. Were this included, would it not create a floor for future expenditure rather than working as a ceiling? What impact would it have on the Government's negotiating position with unions if they could see a specific sum had been set aside prior to going into negotiations? That is a practicality that must be borne in mind.

On fiscal rule compliance, the assessment report is 160 pages, including references to three different frameworks for assessing compliance, including the council's own principle-based approach, its old approach, and that of the European Commission. The report claims that the new approach makes assessment simpler. Does including additional approaches have the opposite impact and only act to make the assessment of fiscal rules more confusing for people? Can this lead to a dilution of the messages? Mr. Barnes referred to the two scenarios around Brexit, and they have been helpful. Given that budget 2020 was prepared on a no-deal basis, if that does not come to pass, and I take the point Dr. Lawless made earlier, does IFAC believe that the economic growth forecast set out in the summer economic statement is the more appropriate scenario to rely on for future planning rather than the forecasts in budget 2020?

I note the comments on windfall taxes. The biggest percentage increase year on year in tax take is not corporation tax at 5.9% but income tax at 8.6%. Given that income tax is our biggest tax head and one of the most reliant on the real economy, does that not point to the public finances being in a robust position? There was comment here on not repeating the mistakes of the past, particularly those made by the Government during the Celtic tiger. Will IFAC comment on the income tax take being 38% of the overall tax take compared with 28% in 2006? Does that not point to the economy being in a much stronger position?