Call for independent fiscal reform body

 

THE NATIONAL Competitiveness Council has called for an independent fiscal council to be established along the lines of Britain’s Office of Budget Responsibility.

Council chairman Dr Don Thornhill said “immediate and decisive” action on economic reform was more important now than ever.

“While the economy faces unprecedented economic challenges,” he said, “Ireland continues to show significant competitiveness strengths – not least of which is our resilient export performance.”

The second volume of the council’s annual competitiveness report, which was published yesterday, calls for the setting up of an independent fiscal council that would offer risk assessments of the Irish economy when it returns to growth.

“Both the OECD and the IMF have proposed changes to the current budget framework,” the report states. “These include protecting against outcomes where revenues are spent even when they are transitory and institutionalising commitments to stabilise the public finances.”

The competitiveness council said an independent fiscal council in Ireland should be underpinned by principles such as independence, accountability, full access to the information available to government departments and agencies, statutory power to request specified information and the capacity to stress-test taxation and spending scenarios.

It was “concerned” that there was “not a strong appetite in Ireland to tackle the high costs” in the sheltered sectors of the economy, such as the legal and medical sectors.

National negotiations on pay rises should be shifted away from increases in living costs and towards productivity gains, the council said.

On infrastructure, it repeated its recommendations on encouraging the development of higher-density urban centres, which it said would lead to both a more cost-effective planning and a more sustainable environment.

Measures needed to be put in place to ensure the future competitiveness of the economy is not threatened by the effects of climate change, it stressed.

“Several sources have indicated that the costs of taking action to address climate change will be much lower than the costs of inaction over the medium to long term,” the report said.