Our second item of business is for John Mason and Jean Urquhart to report back from their recent fact-finding visit to Dublin. Members have received copies of a short written report that sets out their key findings.
Jean Urquhart and I feel that we had an extremely useful time. I thank Alison Wilson for writing the report and for looking after us.
There are many parallels. Obviously, Ireland is an independent country, so that makes it slightly different.
Slightly?
It is slightly different, but there are many parallels and points that we could learn from, especially given that Ireland is a small country and, like us, does not want to waste resources.
The Government does the forecasting, but I think that the Irish Fiscal Advisory Council has gradually changed its position and is doing a little bit more. Rather than it being a black-and-white situation, the Irish seem to have seen it as a gradation, which we can perhaps learn from.
IFAC has to endorse the forecasts. At first, there was confusion as to whether it was endorsing the whole budget or just the forecasts. I suspect that we might need to consider that issue as well. It seemed to be difficult for it not to endorse the budget, but it can make various comments and caveats along the way.
We spent a fair bit of time talking to people about the independence of the council. That is partly about what is in the legislation and the rules, but it is also partly about the reputation that is built up. We have noticed that in Scotland. We did not pick up from anyone any questions about independence.
There are five people on the council, and they all have Irish backgrounds, but not all of them are based in Ireland. We think that that is useful, because it gives the perspective of being outside the country and looking at the issues more internationally. Because Ireland is a small country and the Irish feel that the number of people who could be appointed to the council is limited, they are allowed two terms of office, which is positive.
The act that established the council does not give it a statutory right to information. The council has been challenged about that through a peer review and it is unusual in Europe. That point is being considered.
The final point that the members of the council made concerned how much time they have to spend on governance. Because the council is a statutory body, it has to consider its human resources policy and audits, for instance. Even though the council is small, that is almost as time consuming as it is for a large organisation. The council had not expected that and we wonder whether the members of our Scottish Fiscal Commission realise that they might have to spend quite a lot of time on that as well.
Thank you very much, John.
Jean, would you like to add anything to John’s comments?
I have only a couple of things to add. First, it is interesting that the staff who are employed by the council are all seconded, some from the central bank.
Secondly, the council was at pains to talk about how it recorded everything for freedom of information purposes. There is an extraordinary amount of clarity on everything, whether it is conversations or emails. Rather than spend time being challenged on anything after the event, the council records everything so that the material can be ready for any freedom of information request.
I agree with everything that John Mason said. I, too, thank Alison Wilson, because it was sometimes not an easy job to follow our conversations.
It is an excellent report. It seems clear and detailed. I thank you both for that and I also thank Alison Wilson for the work that she has done to put together such an excellent report.
I have a couple of points to raise. In relation to forecasting, paragraph 7 of the report says:
“We heard that it soon became clear to the Council that in order to be able to assess the DoF’s forecasts thoroughly it would need to also produce its own to use as a benchmark.”
My understanding is that the council does not do the full thing from the grass roots up. I am sure that we will come on to that issue later this morning. I think that the council does some forecasting, but not the whole thing from scratch—I do not know whether that was the impression that Alison Wilson and Jean Urquhart gained. That is what I meant when I said that there are grey areas concerning who does the forecasting.
Paragraph 26 says:
“Under the 2012 Act it was established that the Council has a complete guarantee over its budget; Ministers are unable to remove or reduce its funding. Any increase in functions would lead to an increase in funding.”
Is that an automatic financial increase or does the council have to negotiate that? It obviously helps the robustness of the independence of the organisation if it does not have to worry about the funding ever being cut.
Yes. From memory, I think that the budget is €800,000, which makes ours look quite generous. That limit goes up by the rate of inflation every year. In the first two years, the council did not use it all because it was just getting going, but by the third year it was pretty close to using the full budget.
Paragraph 11 of the report says:
“the fiscal policy and tax unit has 8 staff and a budget of 2 ¾ to 2 million euros.”
That is the Government.
It is the Government’s unit. I thought that the macroeconomic unit was in the Department of Finance and that the fiscal policy and tax unit was part of the Fiscal Advisory Council. I apologise—thanks for that clarification.
It seemed that quite a bit of the council’s budget is spent on flying the four members who live abroad to Dublin, where the council meets 12 times a year. I do not know whether we would have an equivalent to that.
I do not know whether that would amount to quite a bit out of €800,000, to be honest.
I was interested in the point about appointments for two terms. What is the duration of a term?
It is either four or five years, I think.
It is four years. Quite a number of the witnesses who we will hear from later today have suggested that there should be two four-year or five-year terms.
John Mason said that over time the Irish council has taken on a greater forecasting role, to whatever degree that is. Has that required it to increase its budget, which seems fairly limited if it includes a forecasting role?
No. The budget is fixed—there was no negotiation over that.
That is interesting.
Thank you very much for that and for the report.
09:38 Meeting suspended.