A fiscal council without regard for society is not worth the money

A fiscal council without regard for society is not worth the money

Isn't the Fiscal Advisory Council a disgrace? A bunch of overpaid academics and economists, sitting in their ivory towers, twice a year telling the rest of us what to do, spreading gloom and doom. If the budget is balanced (after years of trying), they sneer. If our debt burden looks to have fallen significantly, they tell us that’s because we’re using the wrong measures. If there’s any little bit of spare capacity in the economy, they want us to cut it out right now.

We’re the people who keep making mistakes, according to the council, not least in the belief that we like to vote for popular things. We give them a little more than €500,000 to tell us that twice a year. It may not be exactly a case of biting the hand that feeds you, but it’s hard sometimes to escape the feeling that these “I know best” merchants are just a bit too self-righteous.

It was the American satirist and scholar HL Mencken who described puritanism as the haunting fear that someone, somewhere, may be happy. I think he’d have recognised the Fiscal Advisory Council from fifty yards!

But why do we devote acres and acres of space to these puritans, and their gobbledegook, twice a year?

They can’t even write. You tell me, for example, if this quote, from their most recent report, represents good news or bad news: “The economy is now close to its potential and there are risks of overheating, absent major adverse shocks.

The debt burden remains high, though its ratio to income is declining steadily; creditworthiness has improved, but is vulnerable to rapid changes; and the structural balance appears to be close to a balanced position (albeit this might be artificially supported by recent surges in corporation tax receipts, which are not likely to be permanent).”

Read it one way and you might think we’re good to go. Read it another way — or listen to the chairman of the council on radio — and you’ll rapidly come to the conclusion that, in fact, not to put too fine a point on it, we’re bunched. Actually, they seem to think that’s their job: to keep reminding us that we’re bunched.

I’m actually being entirely unfair, of course. The council was set up in 2011, after the era in which then taoiseach Bertie Ahern famously opined that the boom was getting boomier, and wondered why all these economists, cribbing and moaning about the economy, didn’t go and commit suicide (they were too busy, as he said on another occasion, throwing white elephants and red herrings at each other).

In other words, the council was established as part of the post-Bertie and post-Brian Cowen era, when the single most popular mantra was, “we must never let it happen again”. And they were given one job to do, which was to make sure that the government of the day didn’t go off the rails again without being called out.

And they’ve done that, efficiently and well, even with gusto. They provide benchmarks against which government actions can be judged, and that can only be a good thing. I think it’s arguable, and fair to point out, that they are pretty conservative in their viewpoints. And theirs is not the only viewpoint that matters.

You can search the council’s website from top to bottom, and you won’t find too many references to such ideas as democracy, equality, and sustainability. Those are the underpinning ideas behind the approach of another economist (and he has a PhD, too) called Tom Healy, the director of the Nevin Research Institute.

But the advisory council is the statutory body, the one that is publicly funded and which commands all the attention.

And what they’re telling us now is that we have €2.8bn to spend on new and different stuff next year. Sounds great, right?

The only problem is that, in the next breath, they’re saying that around €2.2bn of that is committed already. And, they say, we shouldn’t spend the rest on anything, unless the government is willing to raise new revenue through additional taxes.

Why not spend? Because there are too many risks out there, including a hard Brexit, of course. And they’re right, at least to the extent that we have to be careful in the choices we make now.

But here’s my frustration. The Fiscal Advisory Council doesn’t have the mandate to make suggestions about priorities or choices, except one. The job they were given is summed up in the phrase, ‘whatever you’re thinking of doing, don’t do it.’

And even by their calculations, there’s about €600m available to spend (that’s not counting the money the Minister for Finance always find behind the sofa at budget time). There are choices to be made about that money.

If the Fiscal Advisory Council were empowered — or required — to make their recommendations as if Ireland constituted more than just a macro-economy — if they were required to look at the societal impact of their recommendations — their reports would be so much more useful.

Suppose they issued a report that said, “this year, because of the constraints and uncertainties, we’re advocating that there is simply no room for new tax cuts. But there is the capacity to spend a little bit on home supports for people with dementia.

"There is room, too, for a range of service measures that would give additional dignity to elderly people. And we would allow a little bit of extra spending on free school books for all our children.”

I know, as the council is structured, they can’t — and probably wouldn’t want to — do that or something like it. But wouldn’t it be a really positive thing if, even while we’re told we have to tighten our belts again, we were offered a little bit of guidance about stuff that would help to bind us together, that might even make a bit more sacrifice seem worthwhile.

In other words, could we please have just a tiny bit of balance in this discussion? I’m not a believer in reckless, madcap spending. But I do think it’s important to bear in mind that it’s not always the strongest who have to carry the heaviest loads. Sometimes, it’s our job to help lighten the load.

Apart from Mencken, it was Oscar Wilde who defined a cynic as someone who knew the price of everything and the value of nothing. But here’s the thing about some of the choices I’ve mentioned.

It costs hundreds of thousands to keep someone in institutional or hospital care, when the State refuses to invest in the facilities that would enable them to be at home. Often, depriving someone of adequate home care is the expensive option, not the cost-cutting one. As well as being more expensive, it’s also the heartless option.

To put it another way: Investing in ways of enabling people to live in dignity, or encouraging children to get the most from their education, are the value-for-money options, because they pay massive dividends back to the macro-economy in the end. Even an economist in an ivory tower could get that, couldn’t they? If the council looked at societal impact of its recommendations, its reports would be more useful

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