Leo Varadkar’s Government has failed to capitalise on an economic “tailwind” over the past four years, it was claimed yesterday.
Irish Fiscal Advisory Council chief Seamus Coffey said Fine Gael had done well in getting out of the recession black hole but added no progress had been made since then.
He told the Oireachtas Finance Committee: “Efforts up until 2015 to turn around a large budget deficit were successful.
“Credit worthiness improved and the budget balance appears to be close to a balanced position.
“However, even with large tailwinds in recent years, it is telling that improvements in the budget balance excluding interest costs have stopped since 2015.
"Furthermore, if one were to account for excess corporation tax collected in recent years and for the recovery in the economy due to the upswing in the cycle, then the underlying structural budget balance [excluding interest costs] is likely to have deteriorated over this time.”
Mr Coffey also warned that “weak" planning and controls in the health service are putting the Exchequer at risk.
He added: “The persistent health overruns that have taken place over the last few years have been the result of weak planning and weak spending controls.
"This has led to a ‘soft budget constraint’ problem.
“That is, the budget allocations are not seen as credible by health managers and subsequent overruns are largely tolerated.
“This can perpetuate unplanned increases in spending and weaker controls on spending.”
Mr Coffey is advising the Government not to rely on unpredictable corporate tax returns, adding: “While corporation tax doubled from 2014 to 2018, the domestic economy grew by just over 20%.”
