I propose to take Questions Nos. 50, 70, 99 and 125 together.
I announced the establishment of the Irish Fiscal Advisory Council on 7 July 2011. The Council is part of a wider agenda of reform of Ireland's budgetary architecture which is envisaged in the Programme for Government. When I announced the establishment of the Council, it was stated that the Council would be an independent body whose existence and independence would be underpinned by legislation to be brought forward by Government in the Fiscal Responsibility Bill by the end of March 2012.
The role of the Council is to provide an assessment of, and comment publicly on, whether the Government is meeting its own stated budgetary targets and objectives. It will also be charged with assessing the appropriateness and soundness of the Government's fiscal stance and macroeconomic projections as well as an assessment of the extent of compliance with the Government's fiscal rules. The latter are also to be brought forward in the proposed Fiscal Responsibility Bill.
The five members of the Council are:
Mr. Sebastian Barnes, OECD,
Professor Alan Barrett, TCD (on secondment from the ESRI),
Dr. Donal Donovan, University of Limerick (formerly IMF staff),
Professor John McHale, Head of Economics, NUI Galway and Chair of the Council, and
Dr. Róisín O'Sullivan, Associate Professor, Smith College, Massachusetts.
I appointed the members having regard to a number of criteria including the desirability of having a mix of appropriate backgrounds (academia, the financial sector/financial markets and public finance), macroeconomic/microeconomic expertise and a strong international dimension, as well as the need to take gender considerations into account. I am satisfied that the appointed members have the mix of skills and experience, including in relation to fiscal affairs, to ensure that the Council will be highly effective in fulfilling its mandate.
I am satisfied with the composition of the Council and I am pleased that individuals of such high calibre have agreed to serve on the Council. Indeed, it is fair to say that, when I announced the makeup of the Council, the public commentary about the membership was positive and welcoming.
The Council is supported by a secretariat of three staff, one senior economist, one junior economist/research assistant and one administration staff. A second economist position is expected to be filled shortly. The Council can also obtain specialist expertise as required through consultancy services, so I do not accept that the Council does not have the relevant expertise to do its job.
As part of its first Fiscal Assessment Report published in October, the Fiscal Advisory Council advised that in order to achieve a deficit of 8.6% of GDP next year, consolidation of €4 billion would be required. The Council also suggested that over the period to 2015, Government should implement more consolidation than currently planned so as to achieve a deficit of 1% of GDP in 2015. This would require €4 billion in additional consolidation but would result in a significantly improved debt trajectory. While not opining on the appropriate split between revenue and expenditure, the Council also questioned the view that most of the adjustment should be on the spending side.
These views and indeed those of other bodies, both domestic and international, informed my Department's analysis in producing the Medium-Term Fiscal Statement. However, in striving to restore sustainability to the public finances, we must also be mindful of protecting the emerging economic recovery and seek to strike the right balance between the two. This balancing act is difficult but we believe we have struck the right balance by targeting an adjustment of €3.8 billion so as to achieve the agreed deficit of 8.6% of GDP for 2012 and thereafter pursuing the necessary annual adjustments to achieve the agreed deficit of under 3% of GDP by 2015. This strategy is in line with our commitments under the EU/IMF Programme of External Assistance and as such the EU/IMF troika agree with our approach.
The error, related to an historical figure, on page 34 in the Fiscal Assessment Report as originally published is an operational matter for the Council. Officials in my Department had brought this to my attention. The error was amended very quickly by the Council and a revised version of the Report was published on its website. I would point out that the Fiscal Assessment Report states that " errors and omissions are the responsibility of the Council". Finally, the error in question, which as I have said related to a historical figure, did not affect the analysis and underlying rationale behind the recommendations made by the Council.