The Irish Fiscal Advisory Council (IFAC) has accused the Irish government of “fiscal gimmickry,” which it calls “deeply concerning” in a report responding to October’s Budget.
According to the Fiscal Assessment Report December 2023, “The government employed fiscal gimmickry to flatter its numbers” within Budget 2024.
“Measures introduced in Budget 2024 lacked transparency,” the report reads.
“The government used many techniques to present lower spending than is likely. Many of the measures labelled as “non-core” or presented as one-off in nature look likely to persist beyond 2024. This includes the Ukrainian supports and Covid spending in health.
“Some of the cost-of-living measures introduced, such as mortgage interest relief, also look likely to stick around. A widely anticipated health overrun for 2023 was ignored in the budget figures. And a new category of capital spending labelled “windfall capital investment” is clearly just additional capital spending but was treated as outside of both “core” and “non-core” spending.”
The organisation added: “These deliberate attempts to game fiscal assessments are deeply concerning.”
“Gimmicks like this tend to crop up when governments want to make budgetary figures look more favourable than they really are,” the report reads.
“The National Spending Rule’s focus on core spending is also likely to have prompted this. The government should not continue this gimmickry.”
The report further claims that the government is risking repeating past mistakes mistakes by employing an “everything now” approach, which will boost inflation.
“While there are clear pressures to improve Ireland’s public services and infrastructure, the lessons from the 2000s are clear, it reads.
“Doing everything now will add to price pressures in the economy, will mean worse value for money for public projects than if they were done at another time, and risks exacerbating capacity constraints.”
On the outlook for the economy, IFAC claims that the spending forecasts in October’s Budget are “unrealistic” and “lack credibility.”
The organisation also claimed that the economy remains strong, and that it is not concerned about volatility in corporation tax.