Sunday 25 September 2016

Real Budget surprise came from watchdog

Published 15/10/2015 | 02:30

Professor John McHale
Professor John McHale

To the chagrin of some the Budget lacked an expected 'sugar tax', but given that it was so full of sweeteners, perhaps that's not such a surprise.

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The real surprise came with Professor John McHale of the Fiscal Advisory Council popping up on RTÉ in an unprecedented move, to express unease at the size of the Government's spending package.

The council had previously endorsed the terms of Budget 2016, which included an increase of €1.5bn in the size of the Budget. It had not, however, expected a similar amount of spending going into this year's Budget by way of supplementary spending. We were caught on the hop again when Professor McHale surfaced once more, this time to pull back from some of the claims he had made earlier.

Professor McHale's "clarification" is interesting. It was the Labour stalwart Barry Desmond who coined the phrase 'rectal fiscitude' but we don't expect a State advisory body to have to set the record, or should that be rectitude, straight.

One suspects that while Professor McHale may have been out on a detail, the thrust of his message about the 2016 targets being "too expansionary" will find agreement amongst many.

The fates have been kind to the Government. An economy so dependent on international factors has flourished with plunging oil prices, record low interest rates and the boon of a low euro.

Given our extreme exposure to global economic factors any change could have a deleterious impact on growth, and the buffer that a more cautious approach might have afforded will have been removed.

Finance Minister Michael Noonan has pledged that the days of boom and bust are in the past. Without the benefit of a crystal ball this is a bold statement.

The truth is, were the clock not ticking on the election, the balance of give and take would almost certainly be more measured. Not that a bludgeoned and battered massively productive workforce does not deserve a break. It is not in our nature to look gift horses in the mouth.

That is the job of governments and Fiscal Advisory Councils, and "surprises" from either sources have a disquieting effect.

Irish Independent

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