Meeting of the Parliament 10 March 2016
Presiding Officer, I did not realise until now that this would be my last speech. You obviously know something that I do not. The whip in this Parliament must move in very mysterious ways. I hope that I do not get dragged into anything next week or the week after.
This has been a short debate. It is always a difficult job to sum up only a handful of speeches since I last spoke. However, the starting point must be that we all want the bill to pass. As I said in my opening speech, the bill is considerably better than it was at the start. For that reason alone, it deserves the support of the entire Parliament.
If we examine the genesis of fiscal commissions throughout the world—why they came about and come about—we find that, in almost all cases, the reason that a fiscal commission came about was that there was a big recession, a downturn that was not predicted or a downturn that turned out to be demonstrably worse than anyone predicted and that it was all driven by optimism bias from Government. Therefore, Government after Government has set up a fiscal commission to ensure that the pence and the pounds are managed, to ensure that optimism bias is minimised or, indeed, eradicated and to get independent expertise along with a set of checks and balances. That is one of the reasons why we are doing it now, coupled with the fact that we already have some financial powers and we are getting considerably more.
If we have financial powers only over, for example, LBTT, if we get it slightly wrong, we could find a way to accommodate that change to ensure that it does not impact on the services that we can provide. However, once we move into income tax, non-domestic rates and a portion of VAT, with the greater number of powers that we have, the greater is the risk that we get it wrong. If we got it wrong at the forecast stage, particularly in predicting that we will get more than we actually do, we would have serious problems in the Scottish budget and difficulties in correcting those errors going forward. For that reason, the Fiscal Commission becomes even more important. That is why we should all back it today.
I want to pick up on the one key point of the debate. John Mason—a man I respect hugely, who has done a very good job as deputy convener of the Finance Committee—is simply wrong to say that the issue was tokenism. Jackie Baillie’s amendment reflected the second most important thing that the committee reviewed and considered. Issue number 1, far above the rest, was forecasting, but issue number 2 was having a responsibility for the long-term sustainability of the finances and ensuring that the fiscal rules were adhered to.
It is incorrect to suggest that that responsibility is tokenism. OECD principle 3.3 outlines the functions that fiscal commissions ought to have:
“economic and fiscal projections ... baseline projections ... analysis of the executive’s budget proposals”
and
“monitoring compliance with fiscal rules or official targets”.
Monitoring compliance is one of the key things that have to be done by any fiscal commission, anywhere on the planet.
The committee thought all the way through that the commission had to do that. In rejecting that today, I hope that Mr Swinney can at least keep the door open. As our powers increase and we become a stronger fiscal Parliament, it is critical that we get that right. We need somebody other than Government to keep control. That will not just be better for the country, but will help Mr Swinney or his successor to do their job even better. For that reason, I hope that we ultimately get that responsibility for the Scottish Fiscal Commission.
17:52