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EC301 Irish Economy

EC301 Irish Economy. Topic 5: Fiscal policy and institutions. Public Finance Institutions. Historical background Under the Act of Union Gladstonian public finance Northcote-Trevelyan reforms Post WWI At independence 1922. Post independence. The primacy of Finance

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EC301 Irish Economy

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  1. EC301 Irish Economy Topic 5: Fiscal policy and institutions

  2. Public Finance Institutions • Historical background • Under the Act of Union • Gladstonian public finance • Northcote-Trevelyan reforms • Post WWI • At independence 1922

  3. Post independence • The primacy of Finance • The Whitaker-Lemass era • 1970s/80s • Department of Public Service • Department of Economic Planning and Development

  4. More recently • Re-assertion of control • Within Maastricht framework • Regionalisation debate • Also:Strategic Management Initiative • Accruals vs. Cash Accounting

  5. Structure of the Public Sector

  6. Structure of the Public Sector Rest of the World (mainly EU)

  7. Structure of the Public Sector Exchequer Rest of the World (mainly EU)

  8. Structure of the Public Sector Exchequer Extra-budgetary funds Rest of the World (mainly EU)

  9. Structure of the Public Sector Exchequer Extra-budgetary funds Rest of the World (mainly EU) Central Government and Extra-Budgetary Funds

  10. Structure of the Public Sector Exchequer Extra-budgetary funds Local Authorities Rest of the World (mainly EU) Central Government and Extra-Budgetary Funds

  11. Structure of the Public Sector Exchequer Extra-budgetary funds Local Authorities Rest of the World (mainly EU) Central Government and Extra-Budgetary Funds Public Authorities

  12. Structure of the Public Sector Exchequer Extra-budgetary funds Local Authorities Semi-state companies Rest of the World (mainly EU) Central Government and Extra-Budgetary Funds Public Authorities

  13. Structure of the Public Sector Exchequer Extra-budgetary funds Local Authorities Semi-state companies Rest of the World (mainly EU) Central Government and Extra-Budgetary Funds Public Authorities Public Sector

  14. The budgetary cycle

  15. The budgetary cycle Medium Term Macro Plan/Requirements of EMU

  16. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE

  17. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998)

  18. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) Financial Statement (December 1998)

  19. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) Financial Statement (December 1998) Outcome (end 1999)

  20. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Outcome (end 1999)

  21. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) Estimates Procedure (for 2000) Programme forGovernment Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Outcome (end 1999)

  22. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) “goodies” tax proposals Estimates Procedure (for 2000) Programme forGovernment Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Outcome (end 1999)

  23. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) “goodies” tax proposals Estimates Procedure (for 2000) Programme forGovernment Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Estimates/Votes Supplementary Estimates Outcome (end 1999)

  24. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) “goodies” tax proposals Estimates Procedure (for 2000) Programme forGovernment Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Estimates/Votes Budget night changes Supplementary Estimates Finance Bill/Act Outcome (end 1999)

  25. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) “goodies” tax proposals Estimates Procedure (for 2000) Programme forGovernment Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Estimates/Votes Budget night changes Supplementary Estimates Finance Bill/Act Social Welfare Bill/Act Outcome (end 1999)

  26. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) “goodies” tax proposals Estimates Procedure (for 2000) Programme forGovernment Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Estimates/Votes Budget night changes Supplementary Estimates Finance Bill/Act Social Welfare Bill/Act Outcome (end 1999)

  27. The budgetary cycle Medium Term Macro Plan/Requirements of EMU EXPENDITURE REVENUE Opening Position (November 1998) “goodies” tax proposals Estimates Procedure (for 2000) Programme forGovernment Departments Social Partners Audit (of 1998) Comptroller & AuditorGeneral Accounting Officers Public Accounts Cttee Financial Statement (December 1998) Estimates/Votes Budget night changes Supplementary Estimates Finance Bill/Act Social Welfare Bill/Act Outcome (end 1999)

  28. Format of the budget Current Budget RevenueExpenditure Tax Revenue Central Fund Services Non-tax Revenue Non-capital Supply Services Total Current Revenue (1) Total Current Expenditure (2)

  29. Format of the budget Current Budget RevenueExpenditure Tax Revenue Central Fund Services Non-tax Revenue Non-capitalSupply Services Total Current Revenue (1) Total Current Expenditure (2)

  30. Format of the budget Current Budget RevenueExpenditure Tax Revenue Central Fund Services Non-tax Revenue Non-capital Supply Services Total Current Revenue (1) Total Current Expenditure (2)

  31. Format of the budget Current Budget RevenueExpenditure Tax Revenue Central Fund Services Non-tax Revenue Non-capital Supply Services Total Current Revenue (1) Total Current Expenditure (2) (1)—(2) = Current Budget Surplus/Deficit (3)

  32. Format of the budget Capital Budget ReceiptsExpenditure Exchequer Resources Public Capital Programme Non-Exchequer Resources Non-programme outlays Total Capital Receipts (4) Total Capital Expenditure (5) (4)—(5) = Exchequer Borrowing for Capital Purposes (6) (6)+(3) = Exchequer Borrowing Requirement (EBR) Note also: PSBR, PSDR and General Government Deficit/Surplus

  33. Format of the budget Capital Budget ReceiptsExpenditure Exchequer Resources Public Capital Programme Non-Exchequer Resources Non-programme outlays Total Capital Receipts (4) Total Capital Expenditure (5) (4)—(5) = Exchequer Borrowing for Capital Purposes (6) (6)+(3) = Exchequer Borrowing Requirement (EBR) Note also: PSBR, PSDR and General Government Deficit/Surplus

  34. Format of the budget Capital Budget ReceiptsExpenditure Exchequer Resources Public Capital Programme Non-Exchequer Resources Non-programme outlays Total Capital Receipts (4) Total Capital Expenditure (5) (4)—(5) = Exchequer Borrowing for Capital Purposes (6) (6)+(3) = Exchequer Borrowing Requirement (EBR) Note also: PSBR, PSDR and General Government Deficit/Surplus

  35. Evaluation of Irish Public Financial Procedures • 19th Century model: for a small state • Primacy of Finance • Administrative propriety/legality • …rather than Value-for-Money • Cash-based accounting

  36. State, private organisations compared • Nature of membership/transactions • Signals for resource allocation? • Performance monitoring/exit mechanisms?

  37. Roles for public financial procedures • Ensure that the State exercises (legitimate) coercive authority • Substitute for unavailability of market signals/mechanisms • Ensure sustainability of budget plans • Procedures vs. outcomes

  38. Reforming public financial procedures • Within context of wide public sector reforms • An international trend: • Complexity of modern government • ‘Fiscal stress’ of the 1970s/80s • Pre 1990s public vs. private debate • Post 1990s “re-inventing government”?

  39. Reform agendas in general • Correcting public failures: • Unsustainable public sector shares • Monitoring performance • Distortionary interventions • Ensuring accountability

  40. Reform agendas, more specifically • Economic vs. administrative categorisations • Distinguishing roles of government: • Purchaser vs. provider, owner of assets, agent for transfer payments, financial intermediary? • Performance monitoring beyond propriety • Decentralisation, devolved resource management vs constitutional fictions • Multi-annual perspectives

  41. Public finance reform in Ireland • Pre-1960s: some pragmatic innovation • 1969 the Devlin report • 1980s: blunt instruments • Early 1990s: • Strategic Management Initiative • Comptroller and Auditor General Act 1993 • Delegated Administrative Budgets

  42. More recent initiatives • Governance and accountability • Ethics in Public Office Act 1995 • Public Services Management Act 1997 • Freedom of Information Act 1997 • Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 • Experiment with Accrual Accounting

  43. Public accounting • Cash based: • Simple • Reflects the ‘power to tax’ • Accruals • More complex • Reflects intertemporal budget constraints • Recognises assets

  44. The Exam

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