I have noted the assessment of the Stability Programme Update 2019 in the Irish Fiscal Advisory Council’s Fiscal Assessment Report. In keeping with established practice, I will issue a formal response to the Report in due course.
The Council’s assessment of the primary budget balance highlights concerns over the risks of reliance on elevated corporation tax receipts and unplanned increases in Government expenditure.
As I have stated on numerous occasions, the Government is acutely aware of the importance of not committing to unsustainable permanent expenditure increases financed by transient revenue increases. To that end, we have committed to putting aside some of the excess corporation tax receipts for the Rainy Day Fund, to build up our fiscal buffers for the uncertain economic times ahead.
Furthermore, my Department has prepared a Fiscal Vulnerabilities Scoping Paper, to be published shortly, which outlines a number of possible policy approaches to countering the risks of reliance on volatile tax revenues. These proposals, among others, will be considered by Government as we begin preparations for Budget 2020.
In terms of unplanned increases in expenditure, additional expenditure reporting requirements by Departments can be introduced when expenditure has exceeded departmental budgets in the previous year. After the significant budget overrun by the Department of Health last year, a new oversight board has been established to continuously monitor and report on departmental expenditure, in order to address potential issues as they arise.
My Department will publish the Summer Economic Statement 2019 next week. This will set out the parameters for economic growth, the risks facing the economy over the medium-term, and the Government's strategy for addressing these challenges. The Statement will guide Government in formulating budgetary policy based on the principles of steady and sustainable improvements in the public finances and living standards.