Michael McGrath backs down in row with Irish Fiscal Advisory Council over pay

Minister for Finance Michael McGrath has backed down in a row over money with the State’s budgetary watchdog.

He has scrapped pay proposals that led to claims he was “demoting” the top post in a body that accused the Government of “fiscal gimmickry.”

Mr McGrath’s move came three weeks after the Irish Fiscal Advisory Council (Ifac) said his pay plan for the body’s chair would weaken the council and signal a lack of commitment to its work.

“The issue has been resolved and a letter has issued from the Minister to the chair of Ifac,” said the Department of Finance in response to questions.

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Ifac is understood to have a received a sanction letter – sent from the Department of Public Expenditure to the Department of Finance – giving the go-ahead to pay the chair a daily rate of €684 for a maximum of 96 days each year.

That new rate is exactly in line with Ifac demands. The body had rejected proposals which effectively cut the chair’s daily pay rate to €377, with the number of days worked by them rising from about 30 per year up to potentially 96.

“I am very pleased that, as recommended by the OECD (Organisation for Economic Co-operation and Development), there is greater recognition of time involved in being the chairperson of the council,” said Michael McMahon, the University of Oxford professor of economics who has been acting Ifac chairman since the summer.

The new arrangement will apply to the next permanent chair, a role that is soon to be advertised. Prof McMahon has signalled he will not be applying for the permanent post.

Ifac is an independent statutory body set up after the economic crash to monitor economic policy and compliance with binding fiscal rules. It assesses the Government’s fiscal stance and budget forecasts, issuing regular reports.

In early December, the body said Budget 2024 “lacked transparency” and would add to price pressures in the economy: “The Government employed fiscal gimmickry to flatter its numbers.”

Mr McGrath was quick to reject such criticism, insisting his budget “struck the right balance”.

The row over the Ifac chair’s pay stemmed from an OECD review of the body three years ago, which noted the chair’s workload and recommended advertising the role as an up-to-halftime post.

The Departments of Finance and Public Expenditure issued proposals in mid-December to reform the chair’s role, prompting the Ifac to say it was “particularly worried” about pay.

In an open letter to Mr McGrath in January, Ifac said increased hours had the effect of cutting the chair’s daily fee from the level of an assistant secretary in a Government department (€684) to the lower ranking principal officer level (€377).

“Specifically, the proposal reduces the standing of the council and its chairperson via a cut in the rate of pay per day, effectively demoting the position,” the January letter said.

“This is likely to reduce the pool of potential applicants and poses risks to the council’s work and its ability to deliver on its mandate.”

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