Professor Michael McMahon:

It may not surprise the committee that we welcome a more medium-term approach to budgeting. We have been critical in the past of budgets that have only run two years out. It makes it incredibly difficult to think about medium-term sustainability, which is really the part about which we worry. We would welcome it. The role of the fiscal councils, in particular the role of IFAC with the new EU rules, is going to be as important if not more important going forward. As we have outlined, the new EU rules being based on GDP are not going to be a very tight, binding constraint for Ireland, or at least not while things are going well. They could become an incredibly binding constraint if we were to suffer a big swing in GDP and a very sudden drop. Over the foreseeable future, we do not think they will be a binding constraint and that is why we have argued for the domestic rules. Currently, the one we call the net national spending rule from the Government is the one we have and that is the one which will be the yardstick against which fiscal prudence and good fiscal management will be judged.