Feargal Quinn (Independent) | Oireachtas source

The Minister is welcome to the House. I was impressed by the words he used. He talked about the need for sensible, prudent responsibility. These were exactly the words we used last year when Senator Barrett proposed exactly this theme and I was very happy to support it last year. The objective of this Bill must be accepted by everybody, I cannot believe anybody would disagree with it. The concept of a balanced budget is very solid and sound but I am sceptical about whether these targets can they met and if it will be some time before they can be met. This is seen by some as optics but it could be argued that it will limit our growth. Even the IMF, in its report issued last month, suggested that it had miscalculated the effect of the austerity on the economy. Clearly, it is not a science that is easy to define. This means that consumer spending is being hit harder than originally assumed while unemployment is even more severe. That means that the social, political and the economic effects of austerity are larger than expected. Nobody disagrees with fiscal responsibility but there will be times where we will have make sure that we do not run into the same difficulties we have had in the past.

We also have to bear in mind that this measure puts stricter rules in place which makes it harder for member states to spend their way out of trouble, which is very wise. David McWilliams has written:

Europe has 25 million unemployed and short-term interest rates in the core are negative. If that doesn't scream at you the need for a fiscal expansion in the eurozone, I don't know what does!"

Perhaps we are seeing an overall shift in policy making. People must have money in their pockets to spend. They need to get their confidence back and need to be encouraged to consume. Should there be rules, therefore, in order that when the economy improves or goes beyond forecast, we will know what to do? Instead of slashing taxes should we have rules to maintain certain taxes which might give more stability to the system and enable us to be better prepared for downturns? When Charlie McCreevy was the Minister for Finance he introduced the National Pensions Reserve Fund. Should we also be looking at another rainy-day fund, which would also mean the Government would have more flexibility for dealing with sudden shocks, as in the current crisis?

I am concerned that there is not enough diversity on the Irish Fiscal Advisory Council, as it is the Minister for Finance of the day who makes the appointments. How can we assume that the appointments are not politically biased or, indeed, divided up among the Government partners? How do we restore faith in economic forecasting? Economists are very fickle characters and it is not an exact science, so which ones do we trust? Transparency is what we need at the very least. The UK's Office for Budget Responsibility, which is the equivalent of our Irish Fiscal Advisory Council, answers parliamentary questions on forecasts and gives evidence to parliamentary committees. We need that kind of openness here. Why does our council not report to the Oireachtas? On a side note, the OBR recently admitted poor forecasting, but I wonder how accurate and independent our body will prove to be.

The Germans have their own council of economic experts. There were reports recently that they were asked by the French Government to draw up economic reform proposals for France. While these reports might not be true, it would be more open to some sort of outside body to look over finances here and make proposals. The fact is that so many decisions in terms of taxation or Government spending are politically motivated or have been in the past. Politicians need to get re-elected and while members of the Irish Fiscal Advisory Council are politically appointed, we need to get the brightest and best from outside to advise the Government.

At the time of the crisis in 2008, it was well documented how few economists there were in the Department of Finance. We should be open to outside advice and I would like to think that the appointments would reflect that. I am not really talking about the Minister's say in this, but this will last for some time. As there will be other Ministers for Finance and other Governments, I would like to ensure that we stitch in some control on their appointments to the Irish Fiscal Advisory Council.