Irish Fiscal Advisory Council

Irish Fiscal Advisory Council (Fiscal Council; Irish: Comhairle Chomhairleach Bhuiséadach na hÉireann) is a non-department statutory body providing independent assessments and analysis of the Irish Government's fiscal stance, its economic and budgetary forecasts, and its compliance with fiscal rules. The Fiscal Council was created as part of a wider agenda of budgetary reform after the financial crisis.

Irish Fiscal Advisory Council
Independent Statutory Body
GenreIndependent Fiscal Watchdog
FoundedJuly 2011 (interim)
12 December 2012 (Statutory Basis)
Headquarters
Whitaker Square (ESRI Building),Sir John Rogerson’s Quay, Dublin D02 K138
,
Ireland
Area served
Ireland
Key people
Mr Sebastian Barnes (Chairperson)
Dr Martina Lawless
Prof Michael McMahon
Ms Dawn Holland
ProductsStatutory Body that conducts independent budgetary oversight of Ireland's Government finances, the appropriateness of the overall fiscal stance, compliance with fiscal rules, assessments of Government's forecasts and an endorsement function (endorsing the Government's macroeconomic forecasts)
WebsiteFiscal Council's website

The establishment of a fiscal council had been proposed domestically in the National Recovery Plan 2011-2014 and by the Joint Committee on Finance and the Public Service in November 2010. It also became a requirement of the EU/IMF Programme of Financial Support for Ireland (December 2010). Its establishment follows moves to establish independent watchdogs internationally as a means of avoiding repeats of fiscal crises and to promote more transparency around the public finances.[1][2]

Purpose

The Fiscal Council was formed as part of a programme of reform of Ireland's "budgetary architecture" post the Irish economic crisis. It was established on an interim basis in July 2011, and legally constituted under the Fiscal Responsibility Act 2012[3] which was part of the EU-IMF Programme of Financial Support for Ireland (and whose terms required the creation of a "budgetary advisory council to provide an independent assessment of Government forecasts").[4][5]

The formation of the Fiscal Council was a response to the perceived failure of established Irish economic and Irish regulatory institutions to anticipate and warn over the consequences of the Irish credit bubble (i.e. the so-called "green jersey agenda"), and/or to engage in the concerns that were being raised by various international monitors at the time (IMF and OECD) regarding Ireland's economic situation.[6][7][8]

The Fiscal Council performs a similar role to the "Office for Budget Responsibility" in the United Kingdom (also formed after the financial crisis), and other equivalent members of the "Network of European Union Independent Fiscal Institutions" (which the Fiscal Council joined in September 2015).[9][10]

The Fiscal Council is structured as a Council of five members (one Chairperson) and a supporting analytical team of about seven[6][11]

The formal mandate of the Irish Fiscal Advisory Council (per the Fiscal Council website) is to:

  • Assess and endorse the Irish Government's official macroeconomic forecasts.
  • Assess the Irish Government's budgetary forecasts.
  • Assess the broader fiscal stance of the Irish Government.
  • Monitor compliance with legislated fiscal rules by the Irish Government.

The Fiscal Council has been well received by Irish financial commentators and its publications are widely covered in the Irish media.[12][13][14][15][16]

Publications

The key mandated publications of the Irish Fiscal Advisory Council are:

  • Bi-annual Fiscal Assessment Report (FAR) (produced after the Irish autumn Budget, and the spring Stability Update).[17]
  • Bi-annual Endorsement Letters of macroeconomic forecasts (produced in advance of the Irish autumn Budget, and the spring Stability Update).[18]
  • Annual Pre-Budget Statement (produced before the Irish autumn Budget).[19]
  • Annual Ex-Post Assessment of Compliance with the Domestic Budgetary Rule.[20]

The Irish Fiscal Advisory Council commenced an annual conference titled “Path for the Public Finances” in March 2017. The goal is to bring attention to long-term Irish State finance issues relevant for Ireland. International speakers attend. Each annual event is intended to focus on a particular theme, which has been:

  • March 2017 Path for the Public Finances: Fiscal Risks.[21]
  • March 2018 Path for the Public Finances: Too Hot, Too Cold! The Irish Cycle.[22]
  • March 2019 Path for the Public Finances: Long-Term Fiscal Sustainability[23]

The Fiscal Council also publishes Analytical Notes and Working Papers in areas of concern to Irish financial stability (including House Prices, Tax Receipts, Public Debt, and EU Rules/Guidelines).[24]

Focus

The Fiscal Council focuses on macro-fiscal issues. That is, issues that relate to the whole economy as well as to the public finances in Ireland. The Council's output typically covers the recent and future macroeconomic outlook, both from a short-term (demand-side) and medium- to long-term (supply-side) perspective. It puts more weight on the longer-term prospects of the domestic economy in terms of its assessments of how appropriate the Government's budgetary stance is. It also focuses on the cyclical position of the economy to assess whether recent developments might be of a sustainable nature or whether the economy might be expected to outperform or under perform in future. It also puts a lot of emphasis on analysing various imbalances and risks to the economy and public finances.

The Council has brought attention to issues including:

  • the risks associated with the Government's reliance on corporation tax receipts to fund public services as well as the concentration, volatility, and unpredictable nature of corporation tax receipts.
  • improving analysis of the more tax-rich Domestic economy (ignoring distortions present in GDP) and its cyclical performance
  • measuring uncertainty around macroeconomic and budgetary forecasts
  • ways to improve Ireland's budgetary framework (including through assessments of how the Rainy Day Fund could be redeveloped, how medium-term spending by Government could be better anchored, and how the Government's debt targets could be better devised).

Council

Chairperson
  • 1st (2011-2016) UCG Professor John McHale.[25]
  • 2nd (2016-2019) UCC economist Seamus Coffey.[26]
  • 3rd (2020-current) Sebastian Barnes (acting)[27]

Council members
  • Mr. Sebastian Barnes
  • Mr. Michael G. Tutty
  • Dr. Martina Lawless
  • Prof. Michael McMahon
  • (past) Dr. Ide Kearney
  • (past) Professor Alan Barrett
  • (past) Professor Donal Donovan
  • (past) Dr. Róisín O’Sullivan
  • (past) Professor John McHale
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See also

References
  1. "Independent fiscal institutions". European Commission - European Commission. Retrieved 2019-10-14.
  2. Beetsma, Roel; Debrun, Xavier (2018-01-29). "Independent Fiscal Councils: Watchdogs or lapdogs?". VoxEU.org. Retrieved 2019-10-14.
  3. "Fiscal Responsibility Act 2012" (PDF). Department of Finance. 2012.
  4. "Ireland bailout: full Irish government statement". The Guardian. 28 November 2010.
  5. "Memorandum of Understanding between the Irish Fiscal Advisory Council and the Department of Finance relating to the "Endorsement Function" of the Council under the Fiscal Responsibility Acts 2012 and 2013" (PDF). IFAC Department of Finance. January 2018.
  6. "Irish Fiscal Advisory Council" (PDF). OECD Journal on Budgeting. 2015.
  7. "Failure to heed warnings was cause of crash: Trichet". Irish Independent. 30 January 2015.
  8. "FitzGerald: My regrets over crash are with me until I die". Irish Independent. 12 February 2015.
  9. "What is the Irish Fiscal Advisory Council for?". Irish Independent. 14 June 2015.
  10. "John McHale The man whose job it is to say 'No Minister'". Irish Independent. 13 March 2014.
  11. "Irish Fiscal Advisory Council" (PDF). C&AG Report 2015. 2015.
  12. "Fiscal Advisory Council's timely warning". Irish Times. 7 September 2017.
  13. "Fiscal Council says Ireland is still vulnerable and warns against extra Budget spending". thejournal.ie. 5 September 2017.
  14. "Chairman, Fiscal Advisory Council: 'There's been a very strong recovery - we are now living within our means'". thejournal.ie. 18 January 2018.
  15. "Even if the government refuses listen, having this kind of analysis in the public domain is vital". Sunday Business Post. 30 November 2016.
  16. "Ireland needs continued austerity says watchdog". Financial Times. June 2014.
  17. "Fiscal Assessment Reports". Irish Fiscal Advisory Council. 2018.
  18. "Endorsement Letters". Irish Fiscal Advisory Council. 2018.
  19. "Pre-Budget Statements". Irish Fiscal Advisory Council. 2018.
  20. "Assessments of Compliance with the Domestic Budgetary Rule". Irish Fiscal Advisory Council. 2018.
  21. "Path for the Public Finances 2017 Fiscal Risks". Irish Fiscal Advisory Council. 2017.
  22. "Path for the Public Finances 2018 Too Hot Too Cold The Irish Cycle". Irish Fiscal Advisory Council. 2018.
  23. "Path for the Public Finances, 2019: Long-Term Fiscal Sustainability: Winter is Coming! | Irish Fiscal Advisory Council". Retrieved 2019-10-14.
  24. "IFAC Analytical Notes Series". Irish Fiscal Advisory Council. 2018.
  25. "John McHale to step down as fiscal council chief". Irish Time. 25 October 2016.
  26. "Michael Noonan appoints Seamus Coffey as Chairperson of Fiscal Advisory Council". 21 December 2016.
  27. "Webinar on Fiscal Assessment Report". Irish Fiscal Advisory Council. Retrieved 22 July 2020.
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