This week Minister for Finance Michael McGrath shoved another €4bn into the National Reserve Fund to supplement the €2bn his predecessor and now Minister for Public Expenditure Paschal Donohoe put there last year.
The move to replenish the fund, emptied during Covid-19, was originally made to ensure that some of the windfall from the enormous amounts of corporation tax the Exchequer has been collecting would be saved.
It's part of what’s been described as "de-risking" the public finances, as proposed in a report published by the Department of Finance last September.
The Department has also been busy highlighting other risks to the public finances in its Annual Report on Public Debt, often labelled the ‘National Debt'.
In the report’s Summary and Key Messages, we’re told Ireland "has one of the highest per capita debt burdens in the world".
It then lists shocks, like Covid-19 and the Russian invasion of Ukraine, that are happening with increased frequency and have dealt blows to the public finances.
And then there are the medium-term challenges from an ageing population and climate change, not to mention uncertainty over record levels of corporation tax continuing into the future.
The report does also tell us that the level of debt as a proportion of the size of the economy has gone down in recent years. But it ends with the clear recommendation that "fiscal buffers" need to be built up so we can spend our way out of trouble again, if required.
It's not the national debt itself that should mesmerise our attention, but our ability to pay for it both now and into the future.
Coincidentally, the BBC published a report last week which examined the issue of impartiality and how its journalists report stories and issues around tax, public spending, government borrowing and debt.
It’s a fascinating read for anyone interested in journalism and how we all hear, read and understand what’s going on in the economy.
There’s a lot in the report and a lot of the context is the current ebb and flow of British political debate. However, there are lots of transferable insights.
One of them is the contention that reporters can adopt ways of looking at certain issues – from both sides of the political spectrum – which the authors don’t define as "wilful bias" but nonetheless warn can breach "broad impartiality".
One of those issues is debt, with the report finding: "Some journalists seem to feel instinctively that debt is simply bad, full stop, and don’t appear to realise this can be contested and contestable."
It recommends that journalists seek out different viewpoints, when possible.
So, on the issue of our national debt, that’s what I did.
Full disclosure: I already informed the nation of what’s in the report on the day it was published, so you can judge my bias, wilful or otherwise, for yourself.
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Professor Kieran McQuinn of the ESRI said he agreed with the idea that we do need to build up "fiscal buffers" to be ready to respond to future shocks.
He pointed to the fact that back in 2007, our debt to GDP ratio was 27% but following the crash "it had increased sharply to over 110% with significant concerns about the solvency of the State".
He said the need to build back up the public finances is particularly important given the narrow base of corporation tax coming from companies in the pharmaceutical and IT industries.
However, he contested the characterisation of Ireland as one of the most indebted countries in the world based on a per capita measurement of our debt.
He pointed to research published by the ESRI in its Autumn 2021 Commentary which shows that when you measure our debt relative to our tax revenues, we’re more of a mid-ranking economy when it comes to debt.
He describes the public finances as being in a "healthy position", adding: "I do think some perspective is required in terms of concerns about the debt. Whichever metric you use, debt to GDP, debt to taxation receipts (as we have suggested in a recent Commentary) or debt to GNI*, the trend is clearly a declining one."
In 2020, adding another €36bn or so of debt to the national pile was necessary and a lot less scary than a collapsed healthcare system and banjaxed economy.
Dr Tom McDonnell of the Nevin Economic Research Institute also thinks the position of the public finances and debt levels are "ostensibly benign".
He too agrees with building up the "fiscal buffers" for future use and does not see this as "a right-wing or left-wing issue".
Where he differs slightly in the debt debate is what to do with the windfall amounts of corporation tax.
"My own view is that the corporation tax windfall should be used to assist with the ‘once-off’ investment cost of making the net zero transition," Mr McDonnell said.
"We should draw it down over time to pay for the necessary investments in renewable energy infrastructure, retrofitting, electrification of public transport, charging infrastructure etc. To my mind this would benefit the economy more than simply paying off the debt," he added.
Dr Eddie Casey of the Irish Fiscal Advisory Council also believes we need to build back up the public finances to be able to spend in times when it needs to, like during Covid-19.
However, in order to get to this position he believes our debt must be sustainable.
In other words, the public finances need to be able to handle it over time. Our debt right now, he suggests, is at a level that may not be sustainable.
In other words, it’s too high.
"A higher starting debt level means that there is more uncertainty about debt sustainability," Dr Casey said.
"This heightened uncertainty is something that can concern markets when things go wrong and it can lead to self-fulfilling crises."
In 2020, Covid-19 (with a little help from Dr ECB) taught us that adding another €36bn or so of debt to the national pile was necessary and a lot less scary than a collapsed healthcare system and banjaxed economy.
The level of public debt has fallen a bit since then. Now with borrowing rates higher, there are a whole other set of challenges to confront.
But if our recent past has taught us anything, it’s not the national debt itself that should mesmerise our attention, but our ability to pay for it both now and into the future.
