An independent review of the performance of the Department of Finance over the past decade has found that the Department did warn the Government about the dangers of the economic policy it was following, but that its advice was overruled by the Cabinet.
The report says the budget-making process was overwhelmed by programmes for government and social partnership.
This review by independent experts from Canada and Holland looked at the advice the Department provided to Cabinet over the past decade.
Minister for Finance Brian Lenihan welcomed publication of the report, saying: ‘It provides a very fair and thoughtful assessment of the Department's performance over the past ten years.’
The report found the Department of Finance was aware of the dangers of the Government's pro-cyclical economic policy of increasing spending and cutting taxes - and of the overheating of the property and construction sectors, and of the vulnerability of the tax system to a downturn.
The report says the Department did provide clear warnings on the risks of the Government's policy, and that its advice was more direct and comprehensive than concerns expressed by others in Ireland or abroad.
But it found that in every year except 2003 the Cabinet increased spending above the levels advised by the Department.
It says there was an extraordinary public expectation for more spending, and that the budget process was completely overwhelmed by social partnership and Government programmes committing to cut taxes and increase spending.
It says that instead of being an appropriate framework for prioritising spending claims, the Budget simply paid the bills for these dominant processes.
The report faults the Department for not increasing the volume and stridency of its warnings as time went on.
It calls for big changes to the way budget information is prepared, published and independently assessed.
