Fiscal Policy for the Future seminar series: A Fiscal Council to Navigate through Powerful Currents

Struan Little:

[Struan speaking in te reo Māori 00:00:05] E ngā iwi, e ngā mana, e ngā hoa mahi. Tēnā koutou katoa. E mihi ana ki a koutou, kua tae mai ki te tautoko tēnei kaupapa. Ngā mihi nui ki a Sebastian Barnes, te kaikōrero o te rā. Tēnā koe.

Hello, and welcome. I'm Struan Little, the Acting Secretary of the Treasury, and it's my absolute delight to be the moderator today for this Treasury Guest Lecture under the theme Fiscal Policy for the Future. I just want to acknowledge our special guest, Sebastian Barnes, who is joining us from a rather different time zone. And so, thank you Sebastian. Our current theme is exploring the role of stabilising sustainable and effective fiscal policy, and this will align with the content of Treasury's next Long-Term Insights Briefing on sustainability and resilient policy over the economic cycle, which we'll be publishing our middle of next year. And this material will also feed into our forthcoming Long-Term Fiscal Statement, which will also be published the end of next calendar year. And so, we are really happy to have speakers who are providing insights into how fiscal policy can be designed to support government to meet its current and future obligations and at the same time adapting to changing circumstances and delivering value to the New Zealand public.

Let me now turn to introducing Sebastian, who I'm absolutely delighted to have with us today. Sebastian is currently Head of Division in the OECD Economics Department, but what's particularly relevant I think for today's discussion is that he is a former Chairperson of the Irish Fiscal Advisory Council. And indeed, if my information's correct, he was also a founding member of that Council going back to 2011. So today Sebastian will discuss how independent fiscal councils work, drawing on his experience in the council and his wider work in the OECD. Well, I think we'd all agree that healthy public finances are critical to support the country's long-term living standards and prosperity, but one of the things that does mean is that we need to look closely at institutional settings that can help deepen fiscal analysis and enhance transparency and accountability. And so, with that in mind, I think Sebastian will look at how more informed and transparent public debate about fiscal policy choices can help navigate some of the major structural trends in the economy. Things like population, ageing climate and global security.

And I just add to that this is an issue that's not just of academic and research interest. This is very real in the New Zealand public policy context. Treasury did a lot of work on the establishment of a Parliamentary Budget Commissioner going back in 2019. There wasn't political consensus at that stage to take it forward, but the issue has not gone away at all. And indeed, there's been recommendations for the establishment of such an institution coming regularly, most notably in the 2024 Economic Survey from the OECD of the New Zealand economy.

So, we're still doing work on this and are intending to advise the minister on where this goes. So, this is highly relevant to today. So, what I'll do now is I'll invite Sebastian to deliver his presentation to us and then follow with some discussion. I'd invite you to use the Q&A function in Teams to post questions and then I'll moderate the discussion at the end. And if you have any technical queries, again, please use the standard chat function and we'll help you over there. But Sebastian, I'm absolutely delighted to have you speaking to us on this really topical matter and of high policy relevance to us. So, Sebastian, please.

Sebastian Barnes:

Thanks very much, Struan, and thanks. Hello to everyone from yesterday in Paris. I hope you can see my slides. It is a great pleasure to be here today to discuss with you the role of fiscal councils in navigating the powerful currents that Struan mentioned there. As you also said, the public finances are really the bedrock of economic stability and also any kind of public policy action, so this is an extremely important but also difficult topic. Setting fiscal policy soundly, keeping taxes spending appropriate lined is a major challenge for advanced economies and if we look at this chart, we can see that since the early 1970s, this has become much more difficult. Poor management of the public finances, ageing of the population, slowing trend growth and repeated crises have put the government debt to ratio on an upward trend across the OECD as a whole. And you can see that in these different grey lines.

Now, New Zealand's actually fared better than most, net debt today is around 20% of GDP, somewhat below the median OECD country and somewhere in between countries like Canada and the Netherlands. Significantly it's also below its peak in the late 1980s. It's unusual for an OECD country to have lower debt than it had in the eighties today. On a gross basis though debt is around 60% of GDP, somewhere between Australia and Poland. However, the net debt ratio has risen by more than 30 percentage points since 2007, which is actually a similar rise to the typical OECD country. And there's been a significant increase in recent years both through the financial crisis and the COVID-19 pandemic. Looking ahead, fiscal policy in advanced countries is going to have to navigate very powerful currents in the years ahead, arising from existing debt levels, from ageing of the population, and rising interest costs.

In addition to these essentially known challenges, there are also some unknown challenges on the horizon, from the budgetary costs of achieving climate change, which may be very significant, rising healthcare and long-term care spending and a more challenging geopolitical and security value. At the heart of this, there is a basic tension between the pressures for higher spending and a widespread aversion to raising taxes, and of course the economic limits on raising taxes. The fragmentation of politics in many of our countries will not make resolving this problem any easier. So today I would like to share my experience of the role of fiscal council can play in helping to steer through these powerful currents. As Struan said, I was a founding member of the Irish Fiscal Advisory Council, and it was IFAC in 2011 and in recent years served as its Chairman and I was on the council for more than a decade.

Broadly, this experience confirmed for me that fiscal councils can play a useful role in improving management of the public finances and enriching our political system, and it also offered many insights into what fiscal councils can do and how they work. I should say, of course, that the views in the speech of my own and neither necessary reflect the views of the Irish Fiscal Advisory Council, nor those of the OECD. So, the Irish Fiscal Advisory Council was established in 2011, which was a very difficult time for the Irish public finances following the banking crisis. It's a statutory independent body with a mandate to endorse the government's macroeconomic and budgetary forecasts, evaluate compliance of the national fiscal rules, and provide an assessment of the appropriateness of the overall fiscal stance. The council has five part-time members appointed through an open process, this mixes university professors, researchers, and people from the policy world like me.

An objective has always been to avoid small country groupthink, which in the past many people thought was very destructive for Ireland. And so members from outside Ireland have always played a very prominent role. And of course that's become easier to do with the online connections that we have today. The council produces public reports after the budget and other key fiscal events, as well as a report on long-term fiscal sustainability and research papers and a wide range of other activities. It's active in the media, social media, and regularly appears before Parliamentary committees. Its work is supported by five full-time economists and an administrator with a total budget that's currently around a million Euros a year. It's institutional design is quite carefully put together and broadly follows the OECD recommendations on principles for independent fiscal institutions. So how can fiscal council help to improve economic budget management?

The underlying theory from your economics textbook is the principal agent problem. Politicians may be driven by short-term political considerations. While it's difficult for voters to assess the choices being made, creating a bias towards higher borrowing today and more debt in the future. But perhaps more simply as voters, we just fail to recognise the long-term implications of today's choices, knowing of course that many of those will fall ultimately on our own heads. Fiscal frameworks and rules allow politicians to commit to sound policies by constraining their discretion and providing observable benchmarks and transparency. Independent oversight by fiscal councils makes these commitments and rules more credible.

Budgetary policy is complicated and uncertain, so a complete contract covering all contingencies cannot be embedded in the simple fiscal rule in my view. That's why assessments by fiscal council can help manage the use of discretion around the rules so they can check whether the rules are applied. They can also allow some flexibility where it's needed. For example, in March 2020, as Europe was locking down the Irish Fiscal Council very proactively issued a statement to make clear that available flexibility within the rules should be used given the emergency that was now facing.

So, enforcement of fiscal rules is an important motivation for setting up fiscal councils. However, I want to argue that Irish experience highlights two other roles an independent fiscal council can play to strengthen the public finances. The second role is to improve analysis around economic and fiscal policy, and hopefully this will lead to better outcomes for everyone. The second or the third role in this context is that I think fiscal councils can play a very important role in leading to a more informed public debate around fiscal policy raising transparency and helping to embed a stronger cultural fiscal prudence. And this is an area that fiscal councils have become increasingly interesting. New Zealand's fiscal framework anchored in a fiscal strategy in a highly independent Treasury is very well regarded, so the case for setting up a fiscal council may seem less compelling than in other cases, other countries.

However, I hope that the Irish and European experience will shed some light as to whether such institution would strengthen the budgetary framework here in New Zealand. Turning to the first role, the textbook role of fiscal councils is to monitor and promote compliance with the fiscal framework and budgetary rules. In the Irish context, council oversight cover both ex-post and ex-ante compliance for the domestic rules. These were initially focused on the structural balance that evolved more towards a medium-term ceiling for spending. At times the council signalled that some flexibility was warranted as we just saw with the COVID pandemic, but in other times it warned that minimal compliance with the rules can nevertheless signal important risks, particularly in the growing reliance in Ireland on corporation tax and revenues from the multinational sector, which weren't necessarily very reliable from an Irish perspective. The medium-term revenue adjusted spending ceiling was designed to keep spending on a sustainable path, growing in line with the underlying growth of revenue and avoiding procyclical fiscal policies or spending possibly transitory revenues.

And in recent years, a key issue highlighted by the council was the shifting of this medium-term ceiling. This chart shows the spending ceiling in billions of Euros from successive budgets and what's called an SPU, Stability Programme Update, and you can see there's a systematic pattern. Over time, this expenditure ceiling got revised up. This spending drift, which had occurred at the time while the budget balance was actually improving even more than expected because revenue growth was so strong, risk of repeating the errors of the past in terms of a procyclical approach to spending, as well as spending some revenues that might be transitory or cyclical, risk created overheating and leaving the public finances exposed to downturn.

And there may be some parallels here for people in New Zealand in terms of some of the revisions that you've had in recent years to the budget operating analysis. At the same time is focusing a lot on these repeated revisions of the expenditure ceiling, the council raised concerns about the use of budgetary one-offs repeated within year health overspends due to inadequate budgeting and a failure to comply and also a failure to comply with the full legal requirements of the Irish domestic fiscal framework. So, the government wasn't necessarily producing the forecast, the projections that it needed and wasn't setting departmental ceilings in the way that it was required by law. Over the years, some progress was made in improving budgetary analysis.

That's for the first drop. That's the role in terms of rules and compliance. The second role that I think is important for fiscal councils is raising the standards of economic and budgetary analysis. Now, a problem that's common in some countries is that governments produce systematically over-optimistic forecasts as a justification for spending too much. And there is research that suggests that IFAC has reduced its optimism bias. Now this hasn't traditionally been a problem in Ireland where forecasts have tended actually on the cautious side, nor has it been as far as I'm aware in New Zealand. However, at least in the Irish case, macroeconomic and budgetary projections have been very inaccurate reflecting the challenges of forecasting a small, very specialised open economy. And this has contributed to fairly significant policy errors. Now it's not immediately obvious how you solve that problem, but I think the council has been able to contribute to improving the techniques and methods that are used to understand the economy and the public finances.

One thing that the Irish council does is it assesses forecast errors in each report to try to identify systematic and persistent errors. These can be an important signal of things that are changing in the economic environment or things that the models aren't capturing properly. Now I note that the New Zealand Treasury's most recent published assessment of its errors is from 2016, goes back a lot. At the same time, the Irish Council has developed several analytical tools that now widely used in Ireland. I think we were the first institution officially to use fan charts to express risk. More substantively, the council played a leading role in unpicking the very complex role of multinationals in Ireland. And perhaps our biggest legacy in this area so far has been that council research on a multivariate Kalman filter helped to develop the first kind of useful measure of the output gap for Ireland.

You can see a measure that we developed, which tells a plausible story, I think of the overheating the economy before the banking crisis and the very deep recession that followed. This has now been adopted by the Department of Finance for its forecasts and is what's anchoring the measure of potential growth in the spending role. So, this is really being a big step forward in terms of how to proper compass by which navigate the Irish context. On budgetary forecasts, the council has put together new databases, developed improved policy adjusted methods of estimating the elasticity of tax to revenue, taken out some actually quite big biases in some cases, and we've also looked in depth at the drivers of health spending and the reasons for that. Something I like very much is a paper a few years ago by the American economist Eric Leeper and the paper was entitled Monetary Science Fiscal Alchemy.

And I think there remains a real problem that fiscal policy is essentially under-researched, if you look at least compared to monetary policy. If you look at literature for example, there are a huge range of estimates of fiscal multipliers that go from every pot that cover basically every number you could possibly think of, which is obviously very difficult when you're trying to make policy advice. It's exactly the kind of parameter you'd like to understand, there are quite a few papers on this, but there just hasn't been anything like the same research efforts we've seen in other areas. I hope that the future, the creation of fiscal councils in many countries will help. Already it's increased the number of economists working in this field, perhaps by more than a hundred in Europe alone. This should contribute to a better collective understanding of key questions just as moving to inflation targeting that independent central banks to spend a lot more and to encourage a lot more research on monetary policy and arguably there's a lot that we've learned.

This points to an important consideration on how councils are set up. My experience suggests that an independent economist-led organisation is needed for this to function successfully. In Ireland we always thought of ourselves a bit like central bank in terms of having a strong focus on economic analysis and communication to the public. Now sometimes people think about signing these roles to other bodies with different mandates and cultures such as audit offices or parliamentary budget offices. Now I think they have important roles of their own, but I think it's very difficult for them to have the capacity and culture to deliver in a way that are kind of focused fully independent fiscal council can. One that's essentially run by economists and focuses on those kinds of issues.

Another objection that's often raised to creating councils is there are lots of other organisations that do that work already, like central banks, ministries of finance or research institutes. Now I think those institutions all do important work in this area and of course finance ministries first amongst them, but I think at least compared to the other institutions undertaking fiscal and budgetary analysis properly is a really specialised and challenging task, requires very strong thought leadership by good economists, specialised staff, the range of databases and tools and a lot of thinking. I think that can only really be delivered in my view by a fiscal council and not by some of these other institutions that essentially functioning.

While not all councils do this, the Irish experience I think has been that undertaking our own macroeconomic forecasts has been vital. It's the foundation of developing a proper assessment of the economy and all the relevant tools and models that need to go behind that. And I think it's also very important for the council's credibility that people have the sense that they really do understand the economy at a very high level, and it is important as well in terms of making sure that the government is honest and keeps honesty. That was the second role. The third role I think is enriching the public debate on fiscal policy. So, in 2021, an independent review of the Irish Council by the OECD found that it had improved the awareness of fiscal issues amongst the wider public. And I think that's right. The council's mandate includes a part to assess the appropriateness of the fiscal stance in the light of the fiscal framework.

This is somewhat unusual but not unique amongst independent of this institution. To me, this provides a very important link between compliance to the rules and the underlying rationale for prudent policies. And it also gives the mandate the council and mandate to assess the full range of factors that are relevant to the public finances. So, I think one concern sometimes is if the mandate is too narrow and the council is just focusing on compliance with the rules, it's not very credible with the public. It's just like why do we just follow these arbitrary rules? Well, I think embedding it in this deeper narrative about what's going on with the public finances and the appropriateness of it, I think adds a lot to the credibility of the rules and helps the public to understand why these rules are there for a good reason and not just some arbitrary thing that a bureaucrat made up.

One example I think of the council using this mandate in a good way was that the council was amongst the first bodies in Ireland really to highlight the potential of economic fiscal costs of climate change and the fact that government really needed to accelerate planning and modelling to provide a better impact, a better picture of the potential impact. Now, there are other bodies of course who've worked on this in Ireland, but I think that was a very important thing coming from the fiscal angle to underline that this really was a serious issue. One key area here has been pension reform, which is also, I understand concern in New Zealand. The Council's long-term sustainability report that a new modelling of future fiscal pressures in Ireland. But perhaps what was more important is it drew attention to the public of the impact on the public finances and sustainability of current pension arrangements.

It set out a mechanism based on the Canadian experience that would improve the governance of pensions and properly reflect the long-term viability of the system. And if required build up public reserves. Given the challenges of pension reforms, this is an area where few politicians dare to tread and where a council can help reinforce the voice of others, including the finance ministry in calling for the need for reform. Clearly communicated analysis and the council on the cost of maintaining the retirement age, which would amount by the mid-twenty-thirties to thousand euros per year. For the average worker in today's terms was a very important contribution to the debate. It really helped people to understand what was behind a lot of modelling that existed already. Of course, with no policy instrument communication is vital for fiscal councils to be effective.

IFIs have to be visible, credible, and clear in their communication with the public. The Irish Council has developed a very strong reputation with the media and the Irish public for explaining fiscal and economic developments clearly and in an authoritative form. It uses a wide range of tools around its main reports, social media, YouTube videos, op-eds and main Irish papers. The vast majority of media items on the public finances in Ireland will today cite the council's analysis at the heart of the discussion. I think IFIs can also play a very important role in strengthening parliamentary oversight of the budgetary process. The council regularly contributes to hearings in the Irish Parliament and is well respected right across the political spectrum. In all of this for me, the useful question is where does the citizen, where someone who wants to understand what's going on, where do they turn? And I think that often is going to be the council, or at least as you see on this slide, articles that have arrived.

I think it's very difficult for finance ministers to play this role, budget documents have many other purposes, and of course governments are seeking to put forward their own interpretations of what's happening. Part of my job is looking at budgetary documents across many different countries, and to be fair, I find they're extremely difficult to understand. Often very, very complex, very obfuscatory, very hard not trying to explain I think to the public clearly what the issues really are. And so I think that's a real problem. For example, many governments ignore the impact to inflation using indexation of income, non-indexation of income tax brackets to raise the tax burden in the stealthy way or focusing on cash's increases in spending and ignoring the fact that most of that is going to go on inflation or higher wages. Now this is not something that governments want to highlight, but it can then make it very difficult for the public to understand why revenues are actually increasing or public services aren't improving when in principle taxes didn't go up or a lot more money went into public spending.

And I think in this regard, fiscal councils have a very clear duty to tell it how it is. In Ireland, we made a great effort to be clear, maximise readability and provide information to people in a way they could understand. For example, we introduced the concept of the cost of standing still as the baseline for budgeting rather than the purely technical assumption that had been used in the past. And I think an intuitive concept of fiscal space that we introduced also helped people to understand that actually there were some quite hard choices to be made, that growth would deliver a little bit of extra money, but if they wanted to do more in a prudent way and within the framework of the rules, the choices were going to have to be made. So, I think these concepts which actually have been taken up more broadly in the media and the political system have really helped to clarify the debates about fiscal policies.

Now on top of the three roles that I've highlighted in other countries, fiscal policy councils play a range of other roles. Some undertake very detailed costing of spending programmes while councils such as the one in Ireland we just started from the government estimates of spending and then we would dive into areas such as health where we had bigger concerns. I think costings may be more appropriate in political and economic institutional systems that focus on authorising specific programmes rather than on the management of departmental budgets as you get in the UK or in Ireland. This function also gets into the costs of achieving specific outcomes and requires very specialised expertise in the large stuff. So, this was not something that was really considered seriously, at least with the cost. The CPB in the Netherlands famously and some other IFIs undertake costing of political parties manifestos as well.

This helps to inform the democratic process as an objective and independent assessment. The parties manifestos. However, my sense is this function also requires both a very high level of technical expertise and a great deal of trust. I'm not sure it's easy to replicate this in other institutional setting. However, even without doing costings, the fiscal council can play a very useful role in forming the election debate. For example, the Irish 2020 general election, the debate was partly formed around an estimate of fiscal space on available under fiscal rules. It was provided by the Department of Finance. This was widely accepted as the starting point, but as the council noted, most of this fiscal space was essentially what was needed to maintain existing programmes because of inflation and wage increases or the cost of standing still as we like to put it. So, in practise there were actually very little room under the fiscal rules for increasing spending or cutting taxes without adjustments elsewhere. And that I think was a helpful contribution to the debate.

So, to conclude, the 2008 Economic Survey of Ireland, which partly helped to write recommended the creation for council for Ireland. This was one of the first times the OECD had recommended this to a country, but in subsequent years it became a standard practise in many countries and a common recommendation from OECD. My experience serving on the Irish Fiscal Council for more than a decade confirmed that councils play a valuable role in improving economic and budgetary management, much as we hoped that they would, and also gave me many insights as about how councils function and what they can do. While the Councillors raised concerns about fiscal policy that were not always heeded in, we haven't been totally credible in that sense.

Recent Irish finance ministers have all acknowledged that on occasions they've taken a more prudent approach to policy based on the council's advice than they would've done otherwise. So, in some sense, we have to some degree moved the dial. Oversight from the council has clearly helped the discipline government decisions around spending and taxation. But I think what's important, really more important than I think these specific examples is the wider benefits, which of course harder to evaluate, but I think the council has done a lot to improve the analysis of the Irish economy, the second role, and also to enrich the debate around the public finances and help to embed a stronger culture of fiscal discipline in the Irish political system and in Irish public debate, the third of my roles. When I look across Europe, a fiscal council have essentially been required to be set up since 2012 and almost every country now has one.

There are many success stories where the IFIs have been set up and have worked each adapt to its national needs and circumstances, but where they're having a real impact. Now I think New Zealand starts from a relatively good position from its public finances and has followed institutions including the Treasury. However, New Zealand isn't immune from some of these currents that we see around the world, and it will have to navigate these very powerful currents in the years ahead. I think a well-designed fiscal council could help to resist siren calls of raising spending without taxes and that would leave New Zealanders in a better position in years ahead. Thank you very much. I hope that was interesting. I look forward to your questions.

Struan Little:

Thanks, Sebastian. I thought that was fantastic. Highly, highly relevant and really, really interesting. I'll just make a couple of comments myself while I invite more questions into the chat. But a couple of things I got out of that, and you may want to comment on some of these, but the first is that the three functions you talk about, because typically when you think about a fiscal council, it's the compliance of the fiscal frameworks, but you are emphasising a really valuable role with practical examples in terms of how fiscal council can improve fiscal and economic analysis and also the role of promoting informed public debate. And I think that's really important. A couple of points I think you made, which I think are relevant to our debate. One is when you operate a regime of fiscal rules, you are going to need some flexibility around that and that is something that is easily abused.

And I think the point you are making is that the fiscal council can provide some credibility to when that flexibility is being appropriately or inappropriately used. And I think that's a really important point. And the other thing that really struck me was talking about organisational culture, about where and how to set up one of these things and you made the point that you think about it a wee bit like a central bank, but that the organisational culture is one of the things that's going to be the make or break of a successful council. So, I don't know if you want to comment any of those or I'll just go to some of the questions, but over to you, Sebastian.

Sebastian Barnes:

Thanks for that. Yeah, I think they're both actually worth commenting on. So, I think these three roles, I said it's really, I don't think we knew that when we recommended a council in 2008. I think it's something that's come from practice of different countries and now we've got more models. I think we've seen these roles are a bit different. And I think you're absolutely right to highlight the flexibility that I think you need some flexibility, but obviously that can be misused. And so, having someone outside who can assess it is very important on both sides, right? Someone who can say yes, it's okay to use the flexibility or someone who can say that it's not okay. And I think the not okay, I probably should have been included an example. I think pretty much every IFI in Europe would've been critical of how long the emergency energy supports have continued.

I think most of them were pretty open in the short run. Things were very bad and needed to be dealt with, and actually if you compare to the European Commission, which was fine with a lot, they have this exceptional circumstances' clause at the European level. The countries were pretty happy to leave that open for quite a long time. But most IFIs, I think were arguing to close it before that. So, it works on both sides and that's where the credibility comes from. It's actually good for a council to have been around long enough to have also had the different cases. So, for a long time everyone thought we were just these fiscal hawks and then they discovered in the pandemic that we actually were okay with spending money, which we always said that we were, but they always said, "Are you really?"

I think the organisational culture is really important. I think Ireland has a pretty unique model actually where you have these five council members who all have pretty good careers and experience who come together. Debating is actually really, really good. You kind of get different perspectives, thrash things out and then has this small, very powerful, very good secretariat. It's a slightly difficult model to operate and I'm not sure everyone does it quite that way, but it works really well and who knows, New Zealand might be a good case to do that as well. And there's a mixture actually of the central bank culture of being very economics driven and the startup culture of being very focused and being very agile and I think that works together really well.

Struan Little:

Just a connected question on the screen too and some of your research side. So how do you practically engage with academia? Do you commission research? Do you conduct research with others? What's your linkage in terms of that research function?

Sebastian Barnes:

I think a lot of it is through the members of the... I'd say one point that's important that partly speak bridges across the points. It's really good to have academics on a council. Personally, I feel that you need a mix though that. I think sometimes the concern with setting it up as well is you have ivory tower economists who don't really... I'm not sure that finance ministries necessarily won’t trust them completely. And I think having a mixture of people who are stronger on the academic side or people who've got policy experience and have some understanding of how that works, I think is a very good mix. In terms of engagement with research we found there wasn't that much research going on, so we ended up doing a lot of it ourselves. Often on very questions are not questions really for academic research questions that are questions for policy research.

There aren't many journal high-level journals going to publish articles about the elasticity of tax revenue to the tax base. Extremely important question to answer properly, and we actually introduced a new way of doing it based on adjusting it for policy changes and because they're correlated to the cycle. We got our estimates in some cases quite a lot different from the ones that people had used for a long time. And so, we did generate a lot of our research. A more recent thing, which I think is a good idea, is that we had some people who went to teach in part-time would teach course on the public finances and university. So, we'd have try and have good relationships with the academics and I think that's good partly because of the people on those courses.

If anyone in the country is going to understand the public finances and the general public, it's those people. But as well to encourage those people to think about a career in it. We had a very successful intern programme and just as I was leaving, we introduced a PhD programme as well, so we only had one person every two years or something like that. So, it wasn't a huge programme, but that's certainly a massive increase in the number of people doing research on this at PhD level. And it's very good to make link between the council and universities and to encourage people to do more research in this area.

Struan Little:

Yeah, fascinating. And a question just on, well, do you think there's a difference in how fiscal council would operate and when you've got a sovereign currency like New Zealand versus a fiscal council that's dealing in the Euro framework, would there be differences there you would look at?

Sebastian Barnes:

I think so. I mean, yeah, there's obviously a fundamental difference in fiscal policy whether you're operating your own currency or not in terms of the level of risk. So, a small economy like Ireland and many others is part of a much bigger system and that provides some protection in some cases because the ECB can come and help you, but also exposes you to risks of macroeconomic instability and other problems as well. From institutional perspective, there's a whole big debate really about the role of IFIs in European systems. There are two levels of oversight. There's the European Commission, but the European level is essentially politicised because the countries, the governments of the countries basically get to decide whether they enforce the rules or not. And then there are the IFIs at national level who are enforcing the national rules, which typically parallel the, and that obviously opens up the potential of conflict between those two levels.

On the whole, I think the IFIs are more rigorous because they're more independent than the Commission is, but then the Commission has a bigger stick because politically it's potentially messier more costly for countries to break the European rules than it is the national rules, but they're less. So, there's a whole question of interaction. My own view is there's a tendency, and in fact it was a great pity because in the big wave of reforms that they had recently, initially the proposal was to give much more role to the IFIs and that's the bit that the country's basically absolutely gutted off the things. And it's hard to argue whether it's been progress or whether it's actually gone backwards in terms of the role of IFIs.

And that partly reflects the countries I think not wanting to give them too much a role, feeling that they might actually become quite effective and probably, and when they deal with the Commission, it's a negotiation, but when you deal with the IFI, you have to deal with the facts of the case. And so, I think they would prefer that. The Commission's role is a bit ambivalent, I think, in this process as well, but I think it's a great shame and it's a pity because the IFIs aren't represented in the negotiations, so it's also you can't agree about anything else. You can easily agree to take out the language on the IFI. So, to my mind, there's a lost opportunity there, but that's probably our European tragedy in lockdown.

Struan Little:

Well, maybe a New Zealand one, but any thoughts about rather than having a fiscal council, whether we should have an overall macro policy council? So that would include how we get better alignment between fiscal and monetary policy?

Sebastian Barnes:

To be honest, not from what I've really thought about. I would've thought that the sequence that we two institutions with some sequence, right between monetary and fiscal policy works, I've thought so I'm not sure that I would try something as novel as that I think.

Struan Little:

We're always good at experimenting here, we could be first.

Sebastian Barnes:

In 20 years’ time when everyone does that and it's brilliant I'm going to look very bad.

Struan Little:

And the challenging question, but I think a fair one, which is we've seen a proliferation of these councils over recent decades, but of course the facts on the ground in terms of overall fiscal management in the OECD rising debt isn't that flash. So, do you think fiscal councils are really leading to something less bad than a counterfactual? How would you defend that?

Sebastian Barnes:

Yes, so I think actually there were hardly any councils before about 2007, and then there was the Dutch one and they've got a pretty good record. So, I think that works pretty well. The Swedish one was introduced a bit later, but that was pretty good. The Danes have something similar, they've all got a good outcomes, but from a causal point of view, those are also countries that have long histories of sound management of many things. And so, I think incrementally those institutions have helped, but I'm not sure that's the term made the difference between success and failure. So, I think you can't really tell. And I think also if the councils have been set up, if you look in Europe, I think most of them are doing a reasonable job. Some are doing a much better job than others, and then one or two of them have just been set up to fail. I think inadequate resources and other things that mean that it's not really a fair test.

I think obviously it's very hard to tell what the counterfactual is because the councils are really part of a much broader system of the finance ministry, the media, the public, so many other economic circumstances. So, it is very hard to tell in a rigorous way, but I do think they are having some incremental impacts and I think even if the outcomes aren't always great, they're probably better than they would've been otherwise. I mean, that's kind of the Irish experience. There are plenty of things that councils been unhappy about over the past 11 years, but I think the public finances are in a better state than they would've been otherwise. And I think that's really the message I wanted to get across in my remarks. It's not a gateway, it's not a of stairway to what's going to happen, it's just incrementally, I think it's adding and it's such a hard problem that any help that you can get I think is worth it.

Struan Little:

I think without putting words in your mouth, I think you would argue that the Irish overall performance has been quite impressive and turning around a really difficult fiscal position. Then you'd argue that the fiscal council alone was responsible for that, but you would an important supportive role, wider evolution. How do, you talked a bit about the role of fiscal council. You talked about its role for instance in raising climate change issues, health. What about things like the sustainable, sustainable development requirements, the SDGs inclusive development? Have fiscal councils got a role in raising those issues?

Sebastian Barnes:

I don't think so. I think it's quite important. Those are important things, but I think councils benefit from being quite focused and they benefit essentially from keeping away from normative type of questions. So, our doctrine as it were in Ireland was always, there are different ways you can run the country, you can have low taxes and you have the public services that go with that, or you can have high taxes and spend more money. Those are all completely political choices, and the council doesn't really have a view on that. They've always made clear, doesn't have a view on that or many other things.

Really the argument is that the prerequisite to all of that is that the economy is stable and that the public finance is on the sustainable track. And so obviously there are some cases where it gets a little bit more complicated in interaction, but I think it's very useful for the council to be able to say that and say whatever political party you are, it's obviously up to the voters what they want to choose, but in the end, the sustainability is going to underpin whatever you do.

And so, you can get there in very different ways, but I think keeping away from anything that seems too normative or too overwhelming and it's a pretty big, at least the way we were set up with the resources that there are on Ireland, there's a long list of topics that we wanted to look at over time. It's often taken us a long time to get to the, I mean it basically took us, I think in our first meeting we said we should have a long run sustainability report and it took us 10 years to produce it. It wasn't particularly the main issue for a lot of that period, but we just didn't have a bandwidth to do other things. I think it's that focus that is really helpful.

Struan Little:

Thank you. I think I've exhausted the questions on the screen, so anybody out there's got another one put it on. But I get that my chairman's right to ask you a question. We were chatting just briefly before, and you were just touching on the sustainability of the effectiveness of fiscal councils. Have you got any observations or thoughts about what's critical to sustain the momentum and sustain their effectiveness through time?

Sebastian Barnes:

Yeah. I think one thing, so I think council, it does evolve over time is the political context changes as the fiscal problems that you have to deal with in any period of couple of years. There's set of issues that is the issue and then the world will move on. So, things do evolve over time. I think the sustainability really comes down essentially to having a good institutional setup in terms of the way the council is designed, a rigorous process for getting good members, making sure they're properly qualified. Something that's very important, which comes back to these OECD principles as well, is having protection. So, something that happens very easily and it's happened in several countries, is the government gets fed up with the fiscal council and decides to cut its budget, so you need some special arrangement to protect it.

So, I think if you put those prerequisites in place, it will tend to evolve as it needs to. I think it should be sustainable. I think the people, being on the council, at least I'm bureaucrat really is a bit for a living, but being on the council is quite a different experience, being more like a board member. And one thing is you're a bit more personally responsible than you are as a part of some big government machine, I felt. And you have a big responsibility really, so your reputation is partly on the line, which I think gives it a kind of longevity. And also, the institution's reputation. For example, we would always, in each of our reports, always make sure that we responded to the four bits of the mandate, including an overall evaluation of the appropriateness of the budgetary position. And we were very careful to, sort of central bank careful in terms of the language we used around that sometimes we were fine with it.

We actually had this language that we always said if we thought it was appropriate, it was within a range of appropriate policies to say it wasn't a unique answer by and large, but this is what it was. When we became a bit more concerned about things, we were very careful with the language that we used because it would been very easy for the council to get weak of really exciting headlines by coming out and saying everything they're doing is rubbish, but that wasn't appropriate. And the council, this reputational thing is very, very important. So, you're always trying to maintain your reputation and on both sides. So, if there's a problem, you need to say there's a problem, but if there isn't a problem, you have to say there's not a problem, and not just try and draw attention to yourself because you think it makes you seem important.

And within that, graduating the level of advice so people can understand the severity of the problem without taking the wrong message. It is something we thought about very carefully, and I think it is preserving the stock of capital in the same way that central banks have a very strong interest in their credibility and think very carefully about communication. Communication is very important to them. I think that's one of the things that should give you this institutional longevity. If people on it have got kind of any sense, I think both of their personal reputation and of the institutional reputation they have to make sure they do a good job. And we were always, it's actually very good discipline. We were always paranoid, I'd say about repeating the errors of the past, or missing something because that would be both bad for the country, but also very, very bad for our reputation.

I think that was a very good thing in terms of our accountability, that we are always very careful not to make mistakes from the tiniest comma in a piece of text to bigger judgments that we might get right and to be clear about what we knew with different degrees of certainty and things like that. And I think that's a very nice feature of that setup, particularly we have such a focus as institution that just does that. And so, it sort of lives and dies by whether it does that properly. And I think that within our work programme there issues in this prioritisation, we had to make the issues we prioritised with ones, which we felt had the biggest impact in terms of us doing our job, but also not making those sorts of mistakes. And there are things that we knew that haven't got this slightly wrong, it didn't really matter, but there were some really key judgments and then we would go away and develop maybe the tools and the data that we needed to make sure that we were absolutely on top of that issue.

Struan Little:

Thanks. How would you respond to the comment: good governments don't need a fiscal council, bad governments will ignore them.

Sebastian Barnes:

I don't think it's that simple, but I guess there are both ones, I think for good governments. So, something that... I talked to a lot of finance ministries as part of my job and across the world, and I feel they're often a little bit of complacency. So, you sit across the desk and they tell you how great they are, and then you look at the public debt numbers and you think, well, this must be a different country that they're talking about. And it's not their fault because the political level is they're probably giving the right advice and the political level is ignoring it. But I think finance ministries have a bit less leverage over the politicians and they really think, and so I think any help in that process really should be welcome. Sometimes we had arguments with department of finance about this and that, but ultimately we're on the same side of the argument, I think in terms of trying to promote fiscal rigour, but just in a different way.

So, I think even good governments need it. And I think this, in terms of developing the analysis and the public debate, I think fiscal councils can do things that's hard for even good governments to do. And on the bad side, of course, if governments are just set on doing this, that's what they'll do. I think we saw in the UK where the costs of ignoring fiscal policy, the fiscal council, and I think that's probably been a lesson to a lot of people. And I think it does impose a political cost and clearly, and we knew that as the council, that we knew that I think most governments do care about their fiscal reputation at some level, and I think it's very costly for them, particularly when it's the government's official watchdog. So, it's their own body has told them they're doing the wrong thing. I think that does hurt them a lot now, not necessarily enough to stop them doing it completely, but I think it does impose a fiscal cost of bad policies, which is what it's supposed to be.

Struan Little:

And a bit of thought too. You talked a bit about the Irish case and the connections to the EU Commission, and there's a bunch of rule compliance in there, but have you got any thought about where a fiscal council would be particularly useful outside Europe and other bits of the Irish case that would point to the institutional design that help that? Because you talked in your answer quite a bit about the interaction with the EU and how you've thought about that outside the EU, what's important there?

Sebastian Barnes:

I think the basic, my view of the EU situation has always been that, always might be two grand, now is that I think that the thing that's ultimately going to anchor the public finances is having this kind of strong national institutional framework and this strong public debate and transparency and scrutiny. And I think the countries have been successful, the countries that have that and countries less successful, the countries that don't have it. Now, it's not necessarily easy to turn every country into Denmark or Netherlands tomorrow, but I think a council is something that at the margin can contribute to that process. And I think that's the Irish lesson as well. So, I think it's hard to see why, it's hard to think of cases where that argument doesn't really hold. I think what is interesting is you get different, I think the Irish example is particularly interesting, say to countries like New Zealand or Australia or UK that have a similar institutional kind of framework and similar kind of culture as well.

So, I think we come from cultures where people are relatively comfortable with discretion. And so, the argument, for example, that you made around flexibility is something that we feel like is very sensible and pragmatic. There are places in Europe which are much more rules oriented, and for them it seems like a terrible idea that you would allow people to use these kinds of decisions. And I think there's some truth on both sides. I think flexibility is a good pragmatic thing to have. I think sometimes Anglo-Saxon systems prize discretion too highly and that politicians overestimate their own ability, and they think they can run the cycle better than anyone else. And actually, maybe some rules would actually be a little bit helpful, trading a bit of that flexibility for having a more predictable system that might encourage better allocation of resources and having a system that's less prone to some of these biases.

I mean, right now I'm working on a project looking at fiscal risks, and it's really, really striking that to me, that debt really builds up basically in recessions. There's nothing particularly exciting about that. But I mean, the pattern that you saw actually in my first slide that roughly how it works I think is right. You have a recession, debt goes up, and then you rebalance it, you get the balance back to a small deficit or something, which is enough to stabilise the debt, but not enough really to put it down. And then you have the next shock. And so, the sort of staircase of the public finances builds up. And a crucial part of that is in the good times you have to discipline yourself. And that's really, really hard to do. It's partly hard to do for political reasons because everyone feels like there's loads of money around, so why can't they have some?

But analytically it's very challenging as well. Our estimates, the output gap, it tends to be quite procyclical, very hard to know where you are in the cycle and things like that. It's very easy to overestimate your capacity to do that. And so, I think tying your hands to the mast and saying, you know what? We're going to say that we know potential output is going to be this for three years, we'll go with that. And unless it's obviously massively derailed by the pandemic or something, we'll go with that and then we'll reset at the end and see where we've got to, to me isn't such a bad approach. One of the things we did at the council, but to explain to the public, so our feeling was that the recovery had gone on for quite a long time, and really the public finances hadn't been tightened quite enough.

And so, we've made this argument that based on the fact it's maybe eight years since the trough or something like that, that probably the next recession was closer than the previous one. And I think people found that quite striking way of framing it. And statistically it's true as well, I think. But it's like, oh yeah, it's actually not just some downside risk to something, right? This might actually happen now. We actually did that the year before the pandemic, so that turned out to be a very correct, and we had no idea that was coming, or it's obviously not an economic cycle thing in itself, but I think it was a good way of helping people to just... It's very easy to push out the correction, we've recovered, but are we really sure? And there'll be some more good times to come, and that's actually just not the way that risk works, I think.

And that's why that's one of the reasons we end up with a bias. Even a lot of the theory that I was using the beginning was about political dysfunction and weakness, but some of it I think is just that we are pretty optimistic. We don't actually have a very good way of thinking about risk in the context of economic cycles. And we tend to be too optimistic in the good times and maybe too pessimistic in the bad times. So, there is a bias and skew in the uncertainty that we don't really master. And so maybe councils can contribute in some way to closing that, even for good governments.

Struan Little:

Another question more around the role of a council on the quality of expenditure, but an IFI can be a guardian of the guardrails, but how does an IFI strike the balance between addressing the level and quality of public spending versus the easy option of raising taxes? And there's the comment here that the departing Secretary of the Treasury has advocated.

Sebastian Barnes:

So, I said we always tried to be stringently neutral about that. And so, the number of interviews where I rolled out this phrase about small governments, low taxes, small government, whatever, was very high. And I think in the end, I think we did talk about the quality of public finances as being a way of reducing the pressure. But in the end, I think it's actually pretty hard to achieve and I'm not sure we always have a very good handle on how to do it. I think really governments should be responsible for that. I think as time goes on, I think more and more that actually good budgeting processes are important for that as well. So, one of the reasons we argued a lot to have a more predictable medium-term spending framework at departmental level in Ireland, partly to increase the sustainability or the credibility of the whole aggregate expenditure ceiling.

But we also always argue that on efficiency grounds as well, that maybe departments should spend more time thinking about what to do with the money they have than lobbying for some small amount of budget time. It's a very wasteful thing and I think the best, I've never quite figured out how it works, but the Danes have a pretty strong system of that where they have this sort of thing where you have to start from a cut basically and say what you do and then they reallocate some of the money afterwards and not many governments do that. But as I said I've not quite understood the intricacy of how it really works in Denmark, but that kind of practise I think is pretty helpful. And I think a challenge, this comes back to challenges. I think there's a challenge for Anglo-Saxon type countries that's traditionally been more on the low tax side and now we're facing all these ageing and climate pressures and things like that.

Now in some countries, other types of countries, the taxes are so high that there's no real, the margin to increase taxes isn't really there. But in those countries, I think there's a fundamental question about what they want to do. And that's something, again, I gave a lecture on that in [inaudible] just trying to write some articles about it. There's a really fundamental choice to be made, whether you basically want a more generous system or not, and you can't really keep fudging it all the time just using the fact you've got very buoyant revenues to ignore it. Some of these quite fundamental choices and probably doesn't apply to New Zealand in the same way. But [inaudible] very difficult. They were pretty poor country 25, 30 years ago, and they got rich very quick, then they had a spectacular bust, then they came back very fast. So, I think they've never... It's unresolved question really what country they want to be.

So, they set up a separate commission to look at that question, which came up with academics and things on that, which was actually interesting because in a way the timing of it was really bad. It came out at the time, I guess during COVID or the energy crisis or something. So, no one had time to think about any of this big picture stuff, but it also suffered from the fact that it wasn't a standing body in the way the fiscal council was. So, they sort finished the report and then there was not a lot of follow-through and they also ended up not really quantifying what they'd done. So, the council actually quantified the programme that they put in the different options, which I think was quite a helpful contribution to the debate.

People still understand really what these choices meant in money terms, so completely neutral taking someone else's assumptions about different things, but saying if you did these things, these would be the kind of implications that it would have. So, I think councils, again, it's a bit like the elections councils can help to fill in some of the bits, but I think they need to steer away from things that look like normative choices that should be political.

Struan Little:

There's a couple of questions challenging that, so just respond to those. But where there's a systemic fiscal problem, New Zealand has, how can an IFI actually avoid addressing the underlying policies that drive that spending drift? And similarly, how can an IFI be different to the quality of public expenditure?

Sebastian Barnes:

So, I think the second question is easier. I think it's not total indifference. As I said, we did say boosting the quality is helpful as well for lots of reasons, but we never really went into the details of that. Partly I think we didn't know with the same level of certainty of precision as we did the other things. And I think again, it starts to make choices as well. Some one person's efficiency gain might be someone else's job and this kind of stuff. So, I think we wanted to keep well clear of that. I think in other areas, and the really big area was pensions. Whether Ireland has a relatively young population. So today it actually spends way below the EU average in terms of pensions. But it will go up a lot in the years, not immediately, but within about a decade it really starts to, start to kick in.

And again, there we really set out what the options were, and we showed simulations with the different options, with absolutely no view as to what was the right thing to do. That's not quite true. We more or less took no view. The one thing we, so we talked about what raising the retirement age might look like if you did it on that. We did what higher social security contributions made on that side. We maybe did some other things. We didn't particularly emphasise for example, reducing the replacement rate. Now, there was a very good reason that we did that, which is that there are quite few countries in Europe that legislated in the future big cuts and the replacement rate. And then everyone's happy with that because no one's really understood what's going to happen and there's obviously going to be some social crisis in 20 or 30 years time.

So, we didn't really want to encourage that. What to me is wishful thinking solutions to the problem. So, there were some cases we took those views. And in that case as well, we also emphasised that actually if you looked at it, it's hard to believe that one instrument would be the only thing that would be done because there was too much of a gap to fill. So, we sort of got into some of these things. And I think that's often partly also from giving fiscal advice elsewhere. Sometimes people think there's some massive ideological choice to be had, but when you come down to the nuts and bolts of it, there actually aren't that many different options. I mean, it's a bit like if you take this huge deficit in the US and at a rhetorical level, some people would say it's absolutely got to be raise taxes to save this hole, right?

And the other people would be slash spending. Once you look into the details and you think, well, that bit people probably don't want to touch or this bit we need or this, that and the other. Right? And it is a huge amount of money to raise. It's obvious that the package is some combination of the only really viable package is somewhere in between and there's a political choice to be made about exactly what it looks like. And probably in the Irish case, starting from a smaller government, I guess we weren't quite as worried about a solution that would involve high taxes and high spending. That seemed to be what lots of people were arguing for, but we weren't campaigning for that. It's just I think we had an awareness that seemed to be what people wanted. We were always very clear that if people, there was another argument as well. That wasn't for us to say which way to go.

Struan Little:

Maybe the last question for you, but I think interesting too, it goes on to some of your wider public media work, but have you done research on public perception of the council across different population groups, classes, regions? How are you perceived?

Sebastian Barnes:

So, I think it's difficult. So, it's hard to say we never did any formal stuff. The OECD spoke to quite a lot of stakeholders. So, who would've given their impression, both their own impression of where they were in institutional architecture and also an impression they got of society as a whole and the way that it was viewed. I think a big part of it really is amplification through the media. So, the Irish media I always felt were very good and pretty much without exception, they always took the council very seriously and understood it was a serious body with a proper message. And it wasn't there to be a political football or generate headlines. It was there to inform and that the media's most mainstream media view's job was to amplify that message. And I think the council got pretty good at communicating. But I think the media also always, because that's their job, always like one touch better in terms of really boiling it down to the public in a way they could understand.

But they always gave, first council was always front page of the Irish Times, which is the main paper reference. And there was a pretty good understanding between the two sides that when we put something on Twitter in a certain way, they understood that there was something we're unhappy about and that we would go on the radio or TV or whatever and talk about it. So, I think my sense is pretty well respected. There’s a limit, right? Most people aren't that interested in the public finances, which is fine. But I think these messages percolate through different levels. And I think something that always struck me, and I don't come from such a small country, but to me there's always a kind of public debate in debate between informed people, politics, the media, influential people in the Irish system, people who do have a very big influence on what happens in the country.

And I think that was a very important echo chamber because those people don't have time to read through the budget and figure out what it says. But I think either probably reading reports of the council or hearing council chair talk on the radio would probably colour their views. And that's probably something the government was quite wary of, that it wouldn't want to lose credibility with those roles. Maybe since it's the end, I can give you two slightly more light-hearted takes on the council's thing. One was amazingly, there was this guy who had this very popular football blog or football podcast who at the end of the season was looking around for subjects. And so, he actually gave a whole, whole podcast, but he had thousands and thousands of followers and he interviewed an economist. But it was actually interesting because the council's report was sufficiently clear that guy whose main job is basically commenting on football, was able to do a pretty good job of summarising what the main messages were and taking it out there.

And then perhaps just to end on the final note, towards the end of my time on the council, I was in a taxi. The taxi driver was asking where to go and the council office put a funny place and stuff. So, we're actually housed in this. It's actually an important lesson for us is that we were housed in the main research institute. So, we weren't part of it, but we just were in the same building, which meant that we shared a lot of the infrastructure that saved a lot of money and also meant that council staff could interact with a bigger group of researchers. And anyway, so I told him I was going to this research institute and he said, I hope they listen to you not like the government with the fiscal council.

Which the only time a Dublin taxi driver had ever mentioned fiscal council to me. But anyway, that was his perception, but I think he was on our side, and he had heard of us. So, I think we'd at least met two of the three criteria that I was like. So, I think it's very hard to tell where people pick things up, but again, it's way political decisions taken, right? There are so many stakeholders involved, so much debate in different directions and the council's just one voice within that. But I think it's a very important one, and I can really help to shape these narratives for people to understand not just whether the government's complying with the rules, but what the issues facing the country are, what the risks are, what things to be worried about, and in the sense whether the government is responding to that in a way that makes sense or not.

Struan Little:

That's fascinating. Look, Sebastian, just thank you so much from at a personal level as well as from a New Zealand level. I think you've seen just from the breadth of the questions that are coming through, just how topical this is and how interested people are here. This is a theme of what we are doing in part of our research over the next year or so, looking at sustainable resilient policy over the cycle. We have a particular interest in the fiscal side. We are facing, like many economies, some structural fiscal issues. And so, debate is very live. So, I genuinely appreciate your time here and your comments. I appreciate your openness and your thoughtfulness. If I could get to a place where I'm talking to coaches of football teams and they're feeding back to me some of the fiscal message, personally, I would have think I have succeeded.

I think one of the questions was what's your measure of success? I think that's a pretty good one. So, look, thank you very much for your time. I'm conscious of your time zones as well.

And just for our audience, there's more to come. So, we've got the next seminar in the series on the 16th of October. We've got Professor Roel Beetsma, Dean of Economics and Business Department at the University of Amsterdam and a member of the European Fiscal Board. So, again, another fiscal theme coming up. So, I'm really looking forward to that personally.

And just to close, a whakataukī.

[Struan speaking in te reo Māori 01:09:55] Mā te kōrero, ka mōhio. Mā te mōhio, ka Mārama. Mā te mārama, ka mātau. Mā te mātau, ka ora te iwi. Haumi e, hui e, tāiki e!

Which means roughly from knowledge comes understanding, from understanding comes wisdom, from wisdom comes wellbeing. And once again, thank you so much, Sebastian. I personally found that fascinating and a lot to contemplate. So, thank you again.

[Struan speaking in te reo Māori 01:10:21] Kia ora.

Sebastian Barnes:

Thanks very much. My pleasure.