THE SECRETARY general of the Department of Finance has admitted his department failed to forecast the depth of the financial crisis in 2008.
Responding to questions on the 2008 Comptroller and Auditor General report at the Public Accounts Committee yesterday, Kevin Cardiff, who was appointed as secretary general in January, said the department had “made mistakes”, but that its projections were in line with forecasts from other agencies at the time.
During the three-hour hearing, Mr Cardiff was pressed by Seán Fleming TD to explain the discrepancy between the department’s budget deficit projection of €1.5 billion for 2008 and the actual budget deficit of €13 billion, an estimate that was “way off the mark”, Mr Fleming said.
Mr Cardiff said that, like other agencies, the department had failed to forecast the extent of the financial crisis, but that the budget estimates for 2008 had highlighted potential risks that were facing the economy.
“That same budget speech also outlined a series of risks that were possible. There were six or seven. Every one of those happened.”
Mr Cardiff expressed concerns about the level of staff resources in the Department of Finance.
Responding to a question by Jim O’Keeffe as to whether the staff at the department was sufficiently qualified to deal with the “complexity of modern finance”, Mr Cardiff said it needed to increase its level of specialist skills.
The “generalist nature” of the service could be a weakness as well as an asset.
The department had taken professional advice from bodies such as Merrill Lynch, the Central Bank, the National Treasury Management Agency and the Financial Regulator.
It had recently hired a specialist banking analyst, banking accountant and legal expert to help manage its response to the economic situation.
Committee chairman Bernard Allen said the admission by the head of the Department of Finance that his department did not have sufficient expertise or knowledge to address the complex economic and banking issues was a worry.
“Sound instruction and guidance is needed now more than ever. Even if outside knowledge is provided, it is necessary to have in-house experts to assess and interpret it,” Mr Allen said.
It was Mr Cardiff’s first appearance before the Public Accounts Committee since being appointed as secretary general of the department in January.
The post is the most senior position in the Irish Civil Service. The holder is also chief of the entire Civil Service.
