Wednesday 21 August 2019

Donal O’Donovan: Watchdog keeps barking, even if ministers don't want to hear

Chairman of the Irish Fiscal Advisory Council John McHale
Chairman of the Irish Fiscal Advisory Council John McHale

Donal O’Donovan

The State's spending watchdog has bared its teeth again - in fact, this time around there is the distinct possibility it may draw blood.

The key conclusion of the Fiscal Advisory Council's latest report is that the current Government departed from a sensible and prudent spending policy at almost the first opportunity, by using the unexpectedly high tax income to increase spending this year way beyond the levels set out in the Budget.

That won't surprise anyone who has watched most ministers' seamless transformation from apostles of austerity to pre-election bringers-home-of-bacon.

But it is still an assessment that strikes right at the heart of what will be the core message of the Coalition's re-election campaign: 'Vote for us or jeopardise the recovery'.

The only conclusion to be drawn from the Fiscal Advisory Council report is that the current Government has already jeopardised the recovery, by making an unplanned spending splurge based on a pick-up in corporation tax that remains unexplained - and might not last.

Just five years since the start of the EU/IMF bailout - almost to the day, in fact - it's difficult to imagine a more damning assessment.

Even if the current robust growth rates mean we have got away with it so far, it's exactly the kind of thing that happened during the boom, and that left this country bitterly exposed when the money inevitably ran out.

The peaks and troughs of the Irish economy are notoriously hard to predict. That means we need to do more, not less, than our neighbours to ensure we can cope with any volatility.

If the Government has forgotten the bitter winter of 2010, economist John McHale and his colleagues are determined to keep the memory alive. The Fiscal Advisory Council, led by Professor McHale, is part of the budgetary defence system created during the dark days of the European crisis. There are already signs, here and abroad, that officials and politicians would be happy to let those systems atrophy.

The Fiscal Advisory Council seems determined to keep barking - even if ministers, and even voters, don't want to hear it.

Irish Independent

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