John McHale to step down as fiscal council chief

Professor John McHale, the chairman of the Irish Fiscal Advisory Council (IFAC), will step down from the role at the end of the year.

Prof McHale, a lecturer in the economics department at NUI Galway, has been the chair of the five-member IFAC since it was established in the summer of 2011. Its role is to give the Government independent assessment of its budget policies.

In a response to a query from The Irish Times, Prof McHale said on Tuesday he will step down when his term of appointment comes to an end in December 2016. He cited the necessity to have new voices and ideas.

Role

“I have decided not to put myself forward for reappointment and I informed the Department of Finance of that decision earlier this year,” he said.

He continued: “I am very proud of the organisation we have built and the work we have done and I am grateful to the Minister for the opportunity to serve.

“But after five and a half years, I think it is important to have new voices and ideas given the nature of the role.”

The council was initially established on an administrative basis in the summer of 2011. Its creation was one of the conditions laid down by the troika of international lenders as part of the State’s bailout programme.

The council was put on a statutory basis under the Fiscal Responsibility Act at the end of 2012. Prof McHale and other council members waived fees for their own involvement.

Prof McHale and Sebastian Barnes are the longest-serving members of the current council, with both their terms due to expire in December. Mr Barnes is economic counsellor to the chief economist of the Organisation for Economic Co-operation and Development. His term also expires in December this year.

Council

A native of Limerick, Prof McHale was formerly an assistant professor of economics at Harvard University, a senior research fellow at Queen’s University, Ontario. He is professor of economics at NUIG, and is also a board member of the National Economic and Social Forum.

The other members of the council are UCC economics lecturer Séamus Coffey, Dr Íde Kearney of the Dutch Central Bank, and former commissioner for energy regulation Michael Tutty.

The Department of Finance has this month sought applications for appointment to the council from interested parties. Applicants have been told they should have “significant experience with macroeconomic and/or budgetary forecasting, familiarity with domestic and/or European fiscal frameworks, and significant experience with macroeconomic and/or fiscal policy analysis”.

The IFAC’s advice has often run counter to budgetary polices pursued by governments since 2011. Most recently, Prof McHale said the Government had gone beyond what was prudent in expanding the “fiscal space” in the budget in the closing days to €1.3 billion.

Caution

Speaking when announcing IFAC’s pre-budget assessment in September, Prof McHale also cautioned against anything more than modest tax cuts.

“There are risks from Brexit and we have a high level of debt. The economy does not need a stimulus from a more expansionary budget because it is growing. There is no need to go beyond what the Government has already announced.”

In 2014, the IFAC strongly advised the then government to resist the temptation of giving tax breaks, rather than implementing its promised €2 billion of (downward) adjustments in the budget. The then government did not heed its advice and proceeded with tax cuts.