Call for change to drafting of budgets

REFORMS:MAJOR CHANGES in the way budgets are drafted and implemented are proposed in the Wright report.

The report recommends a greater reliance on written records and greater public release of economic analyses by the Department of Finance, but says policy advice used in the preparation of budgets should be exempted from Freedom of Information legislation.

Successive programmes for government and the social partnership process were major drivers of spending and overwhelmed the budget process, according to the panel which drew up the report.

“Instead of providing an appropriate fiscal framework for prioritisation of competing demands on the Government’s overall agenda, the budget essentially paid the bills for these dominant processes.

“Relatively clear advice to Cabinet in June on the risks of excessive spending and tax reductions was lost by the time of December budgets.”

The report says the pre-budget period for public dialogue on the challenges facing the economy is far too short.

It suggests creating a “meaningful” consultation period, the release of more analysis for debate and the appointment of a fiscal council to validate the government’s plans.

After the Cabinet reviewed its budget strategy in June, the government should release its economic and fiscal forecasts, an assessment of the risks to this outlook and its proposals for new spending and tax measures.

Departments would not seek to have their spending increased after the spring consultations leading to the budget review at Cabinet.

Where the November tax results proved more positive than expected, this revenue would be used to reduce debt rather than increase spending or tax relief.

Calling for a more robust engagement with outside economists to strengthen the budgetary process, the report says budget forecasts should include well-articulated scenarios of alternative outcomes.

It suggests the department organises an annual public workshop, with involvement by private sector and academics, to debate economic and fiscal challenges before the department finalises its forecasts.

Had departmental and ministerial advice to Cabinet been accepted at the start of the budgetary cycle, Ireland would have been better positioned to deal with economic challenges, the report states, before asking why this advice was ignored and why the department did not issue stronger advice.

The report says it is best practice to maintain a formal written record, but adds that the lack of a coherent record of budgetary advice was a major shortcoming in the department. It suggests this was due to the possibility that information could be subject to release under Freedom of Information legislation and recommends that budget policy advice be exempted from these provisions for at least five years.

The panel says human resource management was a low priority for the department and some staff “conspicuously underperform”.

It calls for the appointment of a senior HR specialist, initially on a short-term contract, and reinforced performance review processes.