BACK IN the days when the late Charlie Haughey was a swashbuckling minister for finance, he controversially observed that you could lose a million pounds in a tot.
Whatever about that, the Department of Finance has scaled new heights by way of an accounting error that inflated the national debt by some € 3.6 billion last year, amounting to an additional € 900 for every citizen. Officials have attempted to downplay the mistake and to focus instead on the fact that it will have no implications for the coming budget and additional austerity measures. Such diversionary tactics will not serve. It is heartening to note in that regard that both Minister for Finance Michael Noonan and the chairman of the Public Accounts Committee John McGuinness of Fianna Fáil are determined to find out exactly what happened and to establish whether there have been systemic failures at the department. Initial comments by both men would suggest that life will become much more stressful for some civil servants.
What is of particular concern is that, at a time when the country’s level of debt was negatively influencing international markets, a mistake of this magnitude could have been quietly ignored. The National Treasury Management Agency maintains that it drew the department’s attention to the issue last October and on a number of other occasions. Nothing happened.
Mr McGuinness takes the view that poor accountancy procedures at Finance – and in every other Government Department – reflects something rotten within the system. If he is right, then that decay has been present for a very long time. From the late 1980s, budgetary estimates produced by the Department of Finance have been invariably wrong.
Because they erred on the side of caution in the initial years, nobody raised a stink. But it all went horribly wrong when government revenues collapsed. Such an inept approach can no longer be tolerated.
Overstating the national debt figure by 2.3 per cent of GDP in 2010 has damaged confidence in the quality of the State’s official figures. The only reason more finger-pointing and critical comment was avoided was because Germany had declared an accounting error of €55 billion last week. Ireland cannot hope for such fortunate circumstances in the future and, apart from rebuilding its international reputation, basic good governance requires that accountancy controls of the highest standard apply in future.