Fiscal council should have legal right to budgetary data, OECD says

The Irish Fiscal Advisory Council (IFAC) should have a legal right to access information on budgetary matters, the Organisation for Economic Co-operation and Development has recommended.

The OECD conducted a review of the Government’s budgetary watchdog, finding it performs well in the context of its mandate and in comparison to similar bodies in other countries.

It said the council had “strengthened fiscal management in Ireland” by developing new tools for assessing the Government’s budgetary position and measuring the economic cycle.

It also praised the council for improving awareness of fiscal issues among the wider public.

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However, it said some important data was “not systematically published or provided to the council in a timely manner”.

The council has previously criticised the Government for not publishing its non-exchequer spending estimates. Non-exchequer spending accounts for about a fifth of total Government spending and includes spending in areas such as local government, semi-State bodies, and other agencies outside the remit of the exchequer.

Pensions

The council has also had issues getting information on spending on public sector pensions and on the full extent of health spending.

“To align with international peers and continue to operate sustainably and effectively, the council should have a statutory right of access to information,” the OECD said.

In its report, the organisation said the Irish budget process typically had an annual rather than a medium-term focus “and this is likely to be exacerbated in forthcoming years in the context of the immediate pressures that Covid-19 is putting on government finances”.

“There is appetite among stakeholders for the council to help bring greater attention to important medium- to longer-term fiscal issues,” it said.

The OECD said the council should seek to further strengthen its annual budgetary analysis and work, highlighting medium- and longer-term fiscal issues, including through the continued publication of its new Long-term Sustainability Report.

IFAC was set up in 2012 after the financial crisis exposed weaknesses in previous fiscal policy choices.

Independent fiscal institutions (IFIs) have become an important feature of budgetary oversight in Europe. In recent times, the council here has criticised the Government's use of corporation tax receipts to pay for excess spending in health.

The OECD recommended that the council’s €800,000 budget be safeguarded in real terms, which may require legislative changes.

Risen faster

It noted that the budget is linked to general price changes in the economy, but wages and other costs have typically risen faster.

"This review comes at a key time for the council, 10 years after it was first established," said IFAC chairman Sebastian Barnes.

“With many challenges facing the Irish economy and a need for continued clear and independent analysis of the public finances, the council welcomes the review’s findings and looks forward to working to implement its recommendations,” he added.