The Irish Fiscal Advisory Council (Ifac) has developed a strong and influential voice in commenting on and analysing budgetary matters. Its latest report provides some praise for Government reforms in Budget 2022, but also some criticisms and warnings about longer-term issues. In particular, it argues that our national financial plans do not include sufficient detail on how vital climate change commitments will be met, or any updated costing for the Sláintecare healthcare programme.
The two ministers responsible for the national finances, Paschal Donohoe and Michael McGrath, are given credit for setting a broadly appropriate path for Budget 2022, continuing to support the economy while reducing borrowing. Uncertainties remain here due to the pandemic, but – barring a worst case scenario – there should be leeway to deal with them. New controls put on annual spending growth are also welcomed by the budget watchdog, though it does want them to be tied down more firmly.
But the warning shots bear consideration too. The obvious point on climate action is that the costs of not dealing with it would be a lot greater than the bill for doing so. The risk is that action will not happen unless it is properly and realistically budgeted for. The latest Climate Action Plan does not do this and it is unclear what additional spending will be required beyond the allocations in the National Development Plan. Ifac says it looks very likely that extra cash will be needed, especially given new commitments on electric vehicles and retrofitting,
Necessary climate measures cannot be allowed to fall into the same uncertain status as the Sláintecare plan. No new figures have been produced for this since 2017 and again, the council says, it’s likely costs will be well above expectations.
There is much that is positive in the report though it was written before the arrival of the Omicron variant. But the warnings about proper costings of major commitments must be heeded, particularly because we cannot continue to rely on corporate tax to pay for annual overruns.