Irish Fiscal Advisory Council and Department of Finance in stand-off over pay for chair

Michael McMahon, a professor of economics at Oxford University who is currently chairing IFAC on an acting basis, said it has made “huge progress” since being set up 12 years ago. “And it would be a real shame if they undermine the body over what, I [accept], is not an insubstantial amount of money,” Mr McMahon said in an interview with RTÉ’s Morning Ireland.

“But the point is about freeing up the person doing the job [as chair] to be able to concentrate on it and give it the best.”

The Department of Finance is proposing to pay a chairman for up to 96 days a year instead of the current 30, but to reduce the daily fee from €684 to €377.

The IFAC chair claimed that the Department proposal “falls so far short of what would actually allow the person dedicate their time to this”, and he said the disagreement between the two sides had reached an impasse.

A letter sent yesterday to Finance Minister Michael McGrath by the three current IFAC members expressed concern at the lack of progress in addressing OECD recommendations on leadership of the budgetary oversight body.

Council members said they were “particularly worried” about the impact of a proposed reform to the chairman’s role that the Department had set out in an email on December 15, which they claimed amounted to a reduction in its standing due to the pay cut.

It said this effective demotion of the position was likely to reduce the pool of potential applicants for the job, and “poses risk to the council’s work and its ability to deliver on its mandate”.

An OECD review in 2021 recommended the chair should be an up-to-half-time position, as the current status of two to three days a month did not accurately reflect the time commitment involved. IFAC pointed out that no chairperson has served more than one term.

IFAC said when the role became vacant last July, they felt this was a good time to implement the OECD recommendation. Mr McMahon had agreed to becoming ‘acting chairperson’ during a sabbatical, and would step down once the changes were made.

The chairperson usually does not get the payment for the role, which instead is used to buy their time from their main employer, often a university or research institution.

The letter added: “Proceeding with a lower level of payment would weaken Ireland’s budgetary watchdog and would signal a lack of commitment to Ireland’s fiscal framework.”

IFAC asked for the daily rate of €684 to be kept, which would cost at most €65,664. This compares with the current cost of €20,520, which it says has not changed since 2010.

In response, a spokesperson for the Department said it would like to fill the current vacancies in IFAC in a timely manner, and would “continue to engage constructively with the council on these matters, will consider the contents of the letter, and respond in due course”.

Last year IFAC accused the government of using “fiscal gimmickry” in the budget, a claim that has been denied by Mr McGrath and other ministers. The council estimated that the government’s repeated breaching of a spending rule it had set for itself had led to €6.6bn in additional spending since 2021.

Several items in last year’s budget had been described as temporary or non-core, IFAC said, when they were in fact likely to be repeated, such as support for Ukrainian refugees.