Ireland’s budget watchdog has said that if the Government is not going to listen to its advice in the first instance, it should at least follow the budgetary parameters it sets down for itself, including the “now-disregarded” 5 per cent spending rule introduced in 2021. Seamus Coffey, chairman of the Irish Fiscal Advisory Council (Ifac), warned an Oireachtas committee on Tuesday that the State’s finances are being put on an unsustainable footing by poor forecasting and planning, leading to departmental spending overruns.The Irish economy is in a “strong position” and is expected to grow again this year, with a “record number of people at work”, the economist said. From a “balance sheet perspective”, the State is also in rude health. Yet the Government’s medium-term spending plans are increasingly being funded through “risky corporation tax receipts”, Coffey said.Ifac has repeatedly told successive Fianna Fáil and Fine Gael governments that relying on windfall corporation tax receipts – largely paid by a handful of large multinational corporations – is unsustainable.When that tax revenue is stripped out, the watchdog said last week, the Republic will run an underlying budget deficit of €11 billion for 2026, widening to almost €21 billion in 2030. At the Oireachtas Committee on Budgetary Oversight on Tuesday, Cian O’Callaghan, the Social Democrats’ spokesman on finance, asked Coffey for his view on whether he believes Ifac’s advice is being heard in political circles.[ Cliff Taylor: I won’t waste my time writing about this again ... definitelyOpens in new window ]“One step would be, not for the Government to necessarily listen to what the fiscal council is saying, but to listen to what they’re saying themselves in terms of things that have been set out over the last number of years,” the economist said. Coffey cited the example of the 5 per cent annual spending increase limit introduced by then minister for finance Paschal Donohoe in the 2021 Summer Economic Statement. The rule has been ignored in each subsequent budget since its introduction.He also gave the example of the annual budget figures that the Government provides, which are “exceeded” every year “with overruns across various departments”, particularly in health and education. Finally, he cited the “stated intention” of setting up rainy-day savings funds to house excess corporation tax revenues. “Now, because of the smaller surpluses that are planned”, contributions to the funds “can’t be covered” by corporation tax receipts but “must now be borrowed”, the economist said. Coffey added: “So a step would be, not necessarily for the Government to listen to the Fiscal Council, but just to agree to, or just to stick to what it is they’re saying themselves. Then maybe after that we can get our budgeting and our sort of approach to fiscal policy on a more solid and sustainable footing.”Separately, Coffey said there are “echoes of 2006″ within the current Irish economic climate. In the boom years leading up to the 2008 financial crisis, he said the economy and the exchequer were “hugely dependent” on the construction sector, which was “hugely depending on credit”. He said: “So the issue in 2006 was that that credit tap turned very, very quickly, and [when that happened], it was 200,000 jobs lost in construction with over 100,000 further jobs lost across the entire economy. “We can see, in retrospect, looking back at 2006, the reliance on one sector. In 2026, there are clear echoes with the reliance on [corporation tax] revenue.”