Tánaiste says Government does not ‘ignore’ advice of State’s spending watchdog – The Irish Times

Tánaiste Simon Harris said the Government does not “ignore” the advice from the State’s fiscal watchdog, after it said that the planned Budget 2027 package was “larger than appropriate”.
The Fiscal Advisory Council believes that Ireland’s current strong economy does not need budgetary support – and that a large package could fuel further inflation.
However, the Minister for Finance also said that issues emerge during the year that the Government needs to respond to.
Harris defended the Government’s spending plan, saying that planned measures would have a “positive effect” on inflation.
In a prebudget statement, the council said the economy is performing well and that net spending should remain in line with a sustainable growth rate.
However, it said current plans would increase net spending slightly faster – and follows three years of rapid spending growth.
Speaking in Dublin on Tuesday, Harris said: “Any measures that Government brings forward have to be balanced, have to be identified priority areas where we believe support is needed.
“We believe that making work pay is a good economic argument, is good for our economy, good for hard-working people and families. Childcare is a very targeted and important area.
“There are other things that Government can do like putting money into funds, putting money into capital, like setting up savings and investments accounts that I believe has a positive effect on inflation.
[ Ifac takes aim at Government’s Alice in Wonderland budgetingOpens in new window ]
“It’s Government’s job to try and exercise the right judgment to get the balance right.”
He added that the Fiscal Council was right to state that any in-year drift in spending would have consequences for resources.
“Issues can also emerge in years that need to be responded [to] and addressed in the interest our people and our economy,” Harris said.
“I welcome the existence of the Fiscal Advisory Council.
“There’s constantly demands for more spending, often legitimate issues that people can highlight, and to have a Fiscal Advisory that can say ‘Hang on a second, here’s another perspective,’ is a welcome … perhaps remedy to some of that debate.
“We don’t ignore their advice but they are not the Government.”
The Summer Economic Statement outlined that voted spending (that is, expenditure that must be approved by the Dáil) would increase by €7 billion – a 5.9 per cent increase – in the budget, with a tax package of €1.5 billion of new measures.
The council says this amounts to a net spending increase of 6 per cent, above the sustainable growth rate of 2.5-3 per cent and an additional 2 per cent for long-run inflation.
It also believes a pattern of spending overruns since 2013 means the actual package will end up being even larger.
It said showing restraint would benefit citizens by moderating inflation and the costs faced by households and businesses.
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