Budgetary Oversight Committee publishes pre-Budget scrutiny report

The Oireachtas Select Committee on Budgetary Oversight today, 5 October, published its pre-Budget scrutiny report.

In relation to protecting the Irish economy from risks such as Brexit and Common Consolidated Corporate Tax Base (CCCTB), the Committee recommends that:

•    Sufficient investment is made in upgrading public transport, housing and broadband to improve connectivity.
•    The Department continues to protect the 12.5% corporation tax rate.
•    That the Government engages with the Committee before end of Q2 2018 on the steps it is taking to Brexit proof its 2019 Budget.  
•    That the Government engages with the Committee in advance of budget 2019 on the evaluations it has carried out regarding the potential impact of CCCTB  

During its pre-budget hearings, the Committee identified Childcare Costs and housing as significant barriers to labour market participation, and constraints on economic growth. It recommends

•    that any available fiscal space be used to help prioritise investment to alleviate childcare costs, particularly for second earners.
•    re-examining the current childcare cost relief measures and other barriers to labour market participation with a view to increasing participation rates.
•    a significant increase in investment in social housing through a multi-annual response.
•    if there are limitations on the total amount of capital expenditure available, priority could be given to expenditure on housing.

The Committee noted that possible climate change fines could have a significant budgetary impact in the medium term. Compliance costs do not include the additional ongoing cost of dealing with climate change events, or mitigation costs. The Committee noted the limited evidence of consideration given to climate change issues in budget planning to date. It recommended:

•    Government takes steps to climate-proof future budgets by examining the possibility of introducing tax measures to encourage a reduction in emissions, using a similar approach to the sugar tax.
•    Government engages with the Committee before Budget 2019 on the steps it is taking to climate proof its budget proposals, including on decisions in relation to, for example, the equalisation of diesel and petrol.
•    The Committee recommends a review of current tax policies that give rise to fossil fuel subsidies (e.g. the electricity tax exemption for domestic users, reduced rates of VAT applied to energy, diesel rebate scheme, marked gas oil).

It also recommends:

•    The Minister and the Department of Finance engage with the European Union in order to change the Common Agreed Methodology in order to produce a more meaningful measure of the output gap for Ireland.  

•    That extensive engagement around the determinants of fiscal space for the coming year(s) far in advance of the annual budget in future.

Other recommendations include:

•    That, as part of Budget 2018, the Government publishes a proposal on how the Rainy Day Fund will operate
•    that Department of Finance review the available evidence that the VAT on tourism reduction measure has led to job creation.

Committee Chair Josepha Madigan said: “The Committee has conducted its pre-Budget scrutiny of the budget through a desktop review of budget-related material and meetings with national stakeholders, including two meetings with the Minister for Finance and Public Expenditure and Reform.
 
The Committee also received briefings from the Parliamentary Budget office. This report offers a summary of common themes emerging from the Committee’s meetings with stakeholders, and recommendations on areas where there was consensus among Members.

While time constraints have made this report somewhat limited in scope it contains detailed analysis of a small number of key budget themes, upon which the Committee has based its recommendations.  

This pre-budget report, together with the Committee’s previous reports, represents a further step towards the Committee’s long term goal to promote meaningful and transparent scrutiny of budgetary decisions.

It has been a great privilege to chair this relatively new Committee. The Committee serves an important function in enhancing Oireachtas engagement with the budgetary process and increasing transparency.  I hope that our work, as outlined in this report, contributes positively to the upcoming budget and serves as a starting point for the Committee’s continued ongoing engagement in the budgetary process.”

Read the full report here.

Ends

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Committee Membership:

Chair: Josepha Madigan (Fine Gael)

Deputies:

Seán Barrett (Fine Gael)
Richard Boyd-Barrett (AAA / PBP)
Thomas P. Broughan (Independents4Change)
Colm Brophy (Fine Gael)
Joan Burton (Labour)
Dara Calleary (Fianna Fáil)
Lisa Chambers (Fianna Fáil)
David Cullinane (Sinn Féin)
Pearse Doherty (Sinn Féin)
Stephen Donnelly (Fianna Fáil)
Marin Heydon (Fine Gael)
John Lahart (Fianna Fáil)
Michael McGrath (Fianna Fáil)
Eamon Ryan (Social Democrats / Green Party Group)