Michael McGrath rejects criticism that budgetary numbers 'not realistic' 

Public Expenditure Minister Michael McGrath has rejected criticisms of his budgetary numbers as 'not realistic' by the State’s economic watchdog, saying he does not accept them. File picture: Moya Nolan

Public Expenditure Minister Michael McGrath has rejected criticisms of his budgetary numbers by the State’s economic watchdog, saying he does not accept them.

The Irish Fiscal Advisory Council (IFAC) said the Government's budgetary forecasts "lack credibility" and its spending forecasts are "not realistic".

Mr McGrath told the Irish Examiner he “fully stands over” his budgetary numbers and forecasts and “strongly defends” his approach in last October’s budget.

He strongly rejected IFAC’s description of the €5.4bn increase in permanent, non-Covid, expenditure this year as "not prudent".

“The budget we brought forward was prudent and reflective of Government policy. It was the right approach given the circumstances we faced in relation to the pandemic,” he said.

Kickstart Sláintecare

Mr McGrath said the increase in funding will kickstart the implementation of the Sláintecare policy of moving to a single-tier health system.

He also said the 30% of the €5.4bn increase in core spending applied to capital spending and that with health and housing set aside, the increase in spending was in the order of 4%, which is manageable.

In general, Mr McGrath said he welcomes the IFAC report and its "endorsement" of the overall strategy pursued by the Government.

He said he “notes” its observations but is adamant the approach taken by him will see the budget brought into balance within the lifetime of the Government.

I strongly defend the approach taken to date by the Government against the backdrop of the Covid-19 pandemic, where forecasting was incredibly difficult given there was so much uncertainty.” 

While IFAC hit out at a lack of medium- or long-term economic planning, Mr McGrath said his summer economic statement, due in July will set out his forecasts.

He rejected the criticism that departmental limits do not take sufficient account of demographics, price and wage increases, saying that his numbers have left “sufficient headroom” to take account of our ageing population.

Piecemeal approach

He also rejected a charge that his piecemeal approach has seen major decisions on tax, welfare and pensions effectively postponed.

“I don’t accept that,” he said.

The Cork South Central Fianna Fáil TD said on all of these issues, work is progressing, pointing to the establishment of the Commission on Taxation and Welfare, which is due to report next year.

Mr McGrath stressed that a key part of his approach has been to delineate between Covid-19 spending, which will have to be eliminated over time and core spending which won’t.