Independent Evaluation of the Irish Fiscal Advisory Council

Press Release: Independent Evaluation of the Irish Fiscal Advisory Council

The Irish Fiscal Advisory Council (the Fiscal Council) today (11.06.15) publishes the findings of an independent evaluation carried out to assess the functioning of the Council with respect to its mandate under the Fiscal Responsibility Act 2012 (FRA) and its performance as an independent fiscal institution. The independent review was carried out in line with the Fiscal Council’s Strategic Plan 2014 – 2016.

Launching the report, the Chair of the independent evaluation panel, Professor Lars Jonung, said:

“Our over-all assessment of Fiscal Council is a positive one. The Fiscal Council has fulfilled all the tasks that are expected from an independent fiscal institution: it has been independent, credible and non-partisan; it has created a good brand-name; its outputs are well-regarded; and it has been active in public debate, increasing transparency and public knowledge about fiscal matters. The Fiscal Council is well integrated in the EU framework for fiscal surveillance. These achievements augur well for the future, but there is also scope for enhancing the output and impact of the Council.”

Concluding the report Professor Jonung stated:

“It is important to have the proper domestic institutions in place to foster a prudent fiscal performance. It is here that the Fiscal Council has a constructive role to play in shaping the future of Irish economic performance, helping to keep Ireland on a sustainable fiscal path and thus ultimately on a successful growth path as well. The Fiscal Council has gradually evolved into a full-fledged fiscal policy council, producing bi-annual assessment reports and endorsing the macroeconomic forecasts of the government as the core of its activity. Now it is time to prepare the Fiscal Council for its future role. Our recommendations, if implemented, would strengthen the Fiscal Council as an institutional actor.

Independent Evaluation Report of the Irish Fiscal Advisory Council

Notes to the editors:

1. The Independent Peer Review group consisted of: Professor Lars Jonung (chair), Professor Iain Begg and Mr. Michael G Tutty (biographies can be found here ).
2. The terms of reference for the evaluation are available to download on the Fiscal Council website.  

CONTACT:

Professor Lars Jonung:     +46 702740273

Mr Michael G Tutty:          +353 86 8158787

Professor Iain Begg:          + 44 20 7955 6813

Administrator (Fiscal Council):        01 8632005

 

The main conclusions and recommendations of this evaluation are summarized below.

The Mandate

The mandate of Irish Fiscal Advisory Council (the Fiscal Council) is clear and stipulates exactly what the Fiscal Council is supposed to produce. No disputes concerning the interpretation of the mandate of the Fiscal Council have surfaced as far as we know. The Fiscal Council has emerged as a credible independent institution on the basis of its mandate.

• We see no reasons to change the mandate of the Fiscal Council at this stage.
• Although the evaluation team heard a number of arguments for a broadening of the mandate of the Fiscal Council, this should only be considered after a further period during which the Council is able to grow into its current role.
• The Fiscal Council should have a clear say, through its Chairman, in setting the criteria for the selection of new members of the Council.
• The present number of five members of the Council (as specified in the Act) should be maintained.
• The recruitment of Council members from outside Ireland, Irish nationals or non-nationals, should continue to be encouraged to ensure a diverse range of skills on the Council.
• The recruitment of members should reflect the balance of analytic needs and be open to differing specifications of skills as retiring members are replaced.

 

The Financial and Human Resources

The Fiscal Council has been sufficiently endowed with financial and human resources, although in an international budgetary comparison the Fiscal Council is one of the smallest of all independent fiscal institutions. The Council works well as a team and has good relations with the staff of the Fiscal Council.

• The staff of the Fiscal Council is young, capable and dedicated. As some of them are on secondment and thus likely to turnover fairly rapidly, as well as being at a stage in their careers where they will be looking to move to more senior jobs, this could lead to problems of retention of the ‘institutional memory’ and consistency of approach and messages.
• Steps should be taken to make work at the Fiscal Council still more attractive, for example by encouraging staff to work on academic publications (as happens in DG ECFIN of the European Commission and many central banks) and boosting participation in professional conferences. The Fiscal Council should be able to meet any ensuing costs within its current budget.
• The Fiscal Council should have stronger right, preferably statutory right to obtain information covering relevant public sector authorities as recommended for independent fiscal institutions by the OECD.

 

The Output of the Fiscal Council:

The overall output of the Fiscal Council has steadily improved. We regard it today as of high quality. Still, the challenge for the Fiscal Council is to maintain and improve its analytical capacity. The credibility and impact of the Fiscal Council’s publications and recommendations hinge upon its analysis. Here we have some recommendations to foster the Fiscal Council’s performance. The Fiscal Council should consider:

• putting more stress on long-term fiscal issues, such as long-term debt sustainability.
• complementing its recommendations on the deficit with some more discussion of likely developments in the wider economic context and any resulting uncertainties.
• deepening its interaction with the academic community, for example by setting up an academic advisory panel.
• developing and using models with a focus on government deficits and debt sustainability and purchasing econometric studies of interest from university departments or organisations with advanced modelling capacity
• commissioning background studies.
• canvassing external views on the structure and presentation of its reports and offering a simplified and shorter summary.
• including a post mortem section in the Fiscal Assessment Report.
• making all data used in tables and charts in the Fiscal Assessment Report downloadable in excel format.

 

 

 

The Impact of the Fiscal Council and its Communication Strategy

The Fiscal Council is accepted and respected across the political spectrum. Still its communication strategy can be improved in a number of ways. Specifically: the Fiscal Council should consider

• producing a 4/5 page summary of FAR reports in simple language for the general public.
• employing infographics to a greater extent as a way of presenting its reports.
• organising an annual conference on its outputs and on Irish fiscal policy.
• producing shorter explanatory notes aimed at members of the Oireachtas and similar interested parties, including journalists, covering emerging themes.
•  developing shorter, more popular versions of reports which convey the key messages but offer links to the more detailed material.
• appointing a part-time member of staff (or sub-contractor) to deal with external communications.
• broadening its website to include a section aimed at lay readers including fact-sheets on important fiscal issues, up-to-date charts on key Irish economic data and links to international websites of similar character.
• being active in social media.

 

The EU Framework and the Irish Fiscal Framework

The Irish system of fiscal surveillance is well incorporated within the EU framework. The Fiscal Council is viewed as a successful domestic institution by the EU representatives that we have talked to. In a European perspective, it is valuable to have domestic ownership of fiscal surveillance. Here the Fiscal Council has an important role to play:

• within reason, serving as a bridge between Brussels and Dublin, fostering the exchange of views and information between the European Commission, the European Council and the Government of Ireland and other Irish actors.
• developing its analytical capacity on issues pertaining to the EU framework of fiscal surveillance such as the output gap, taking account of the specific nature of the Irish economy.
• continuing to take an active part in the newly established network of European independent fiscal institutions as well as in other international networks for fiscal councils.