The Spring Economic Statement delivered today (see here) represents a very belated dipping of the toe in the water towards greater budgetary transparency by the government. We were promised this in 2011. The fact that it’s finally starting to happen four years later and coincidentally on the eve of the next election – is noteworthy. But at least it’s a start!
The cost of being more up front about budgetary plans is that the opposition is given an opportunity to criticize the government over its budgetary direction. To a degree this is all to be expected. But – not for the first time – the government has left itself unnecessarily vulnerable. And, again – not for the first time – the cause of this is lack of transparency.
The problem is that the government has put the cart before the horse. There is passing and implicit referencing of this in the following extract buried on p. 46 of the Statement:
As a further potential reform to the Budgetary process, the Government will examine the possibility of establishing an Independent Budget Office. This would allow for independent costings of policy proposals from political parties and Groups in the Oireachtas…
All fine and dandy, but regrettably we’re told that: ‘[G]iven the need for consultation, this is a policy that would only be fully in place after the next election’. What consultation is needed? Why, after, four years of waiting, is this to be put off to the next government?
An Independent Budgetary Office is one of the central planks of real Dáil reform especially if – as many of us have been arguing for some time – it works to the agenda of the Dáil. This would provide an important new arm of accountability, as well as much needed transparency.
And, more to the point – government please note – it would also add greater responsibility to the role of opposition. In the current scenario it’s easy enough for the opposition to critique a government’s spring statement, offering all sorts of bright new uncosted alternatives. There’s little that can be done to challenge them on the fundamentals of their assumptions.
All that changes with the introduction of an Independent Budgetary Office. The opposition would then be on the same hook as the government in being required to prove how their alternatives are costed.
Not for the first time by being conservative on its political reform objectives this government has left itself unnecessarily vulnerable to political attack.
One thought on “The ‘Spring Economic Statement’: yet another missed opportunity for real political reform”
It might help to think about the incentives and disincentives faced by the various parties in relation to this possible Independent Budget Office (IBO). All governments – particularly those of member-states in the Eurozone (EZ) – will continue to be subject to quite strict external scrutiny and restraint under the Fiscal Compact. Ireland also has the Fiscal Advisory Council (IFAC) – which is a “comhairle chomhairleach” lest anyone think it might actually do something useful. Considerable pressure is exerted by the Dept. of Finance on the IFAC to secure its “endorsement” of the macroeconomic projections used by the DoF when generating budgetary projections. The IFAC can be as critical as it likes about the fiscal stance subsequently adopted by a government but the government will, ever so politely, reject any advice or criticism – the implicit message is that these boffins have no understanding of political reality and, in any event, governments decide. Therefore the Government has no real interest in establishing an IBO because it has the IFAC already – which it can cheerfully ignore without incurring any political cost. And, being the EU’s and IMF’s “poster-boy” for so-called “austerity”, it can extract concessions on fiscal flexibility from the European Commission and Council. (The Commission’s relaxation of the rules on Executive Deficit Procedures (EDPs) for France has opened up all sorts of possibilities. And the Commission and the Council want Ireland onside as a former “programme country” when they’re beating up on Greece.)
It is opposition parties and groupings that have most to fear from an IBO. Any half competent IBO would make mincemeat of the economic illiteracy, delusions, fantasies and ideological claptrap emerging from the opposition parties, groups and individuals. And the Government parties might be uneasy about an IBO should one or both of them be in opposition after the next general election. All parties try to lie and bluster their way to power. Any body with even a tiny vestige of credibility that would expose these lies would not be welcome.
In any event there is no reason why the ESRI couldn’t do this. The Institute of Fiscal Studies (which performs this task in the UK) is largely funded by the UK Economic and Social Research Council.
But we wouldn’t want this sort of scrutiny in Ireland. It’s just not done. Who knows? It might begin to expose how powerful and influential rent-capturing special interest groups ensure that public policies are designed and implemented to protect and advance there interests. Now we couldn’t be having that, now could we?