Michael McGrath Interview - Minister for Public Expenditure & Reform

 

Michael McGrath Interview - Minister for Public Expenditure & Reform

Michael McGrath is the current Minister for Public Expenditure and Reform, a role he has

served in since June 2020. He has been a TD for the Cork South-Central constituency since

2007 serving as Opposition spokesperson for Finance from 2011 until his entry into Government

in 2020. I began by asking him about his upbringing and early life growing up in Cork.

Early Life

“I grew up as one of five kids in Passage West. My late father would have been somebody who

did manual work all his life in different forms, and my mum worked at home. I had a really good

upbringing. My parents weren’t overtly political; they certainly weren’t involved in politics or

members of any party. They did encourage taking an interest in community and in the world

around us, and they would have known some Fianna Fáil politicians and would have supported

the party but were not involved [directly] in any way. During my time in secondary school, I took

a liking to history and loved the period of Irish history around the foundation of the Irish State. I

had an outstanding history teacher which made such a difference. I would have been very shy

in school, among the quietest in the class. I wouldn’t really have had the confidence I think to

speak publicly or participate in discussions and so on - but that came over time,” the Minister

says.

Time in University College Cork

From there McGrath went to UCC to study commerce, undertaking a four-year degree and

graduating by the age of 20. “I was the first in my family to go to college and I did very well there

academically which opened a lot of opportunities. I joined the Commerce & Economics society

and that was actually my first election, running for Vice-Auditor. And that’s when I probably

really started to come out of myself and begin to believe that I could be the front person. I took

college seriously and that didn’t allow much time for other involvements. I didn’t really get

involved in Fianna Fáil much in college. It always clashed with my lectures and I prioritised my

lectures like a good student,” he says.

He continues: “I finished college in May 1997 and there was a general election on and I

remember going to a rally down in the Silver Springs Hotel. I recall approaching John Dennehy,

one of the TDs at the time and I said to him ‘I’m finished college I’m happy to give you a hand’

and so I did a bit of canvassing for him and by that stage I’d decided that I wanted to have a go

at politics.

I was fortunate to live in a town that had a town council - Passage West. And in 1999 I

contested my first election at the age of 22 and got in. It was a great opportunity for a young

person to stand for a town council because it wasn’t overly daunting - you needed to get a few

hundred votes, you didn’t need thousands of votes,” he adds.

Transition from UCC to the workplace

By that stage McGrath was in the midst of a four-year training contract with accountancy firm

KPMG in Cork, whereupon he obtained his chartered accountants qualification. From there,

McGrath took the position as financial controller of Red FM before beginning a two-year stint in

UCC as head of Management Information and Systems (MIS). McGrath acknowledges that this

was quite a different role from his previous one and was challenging to juggle alongside his

commitments as a councillor. “I got elected to the county council in 2004 and I discovered fairly

quickly that it wasn’t going to be possible to juggle both,” he says.

Unlike with the town council (one or two meetings per month), county council meetings were

conducted during the day. “I realised that if I wanted to kick on and aim for the Dáíl that I was

going to have to make a very big decision - and I did make a big decision,” he affirms. McGrath

left the role in UCC and acknowledges it was a big risk in hindsight given that he had one young

son at the time. “I just felt like I wasn’t doing either job properly and I knew where my heart was

and I wanted to have a crack at politics,” he says. McGrath was subsequently elected to the Dáíl

in 2007 at the first time of asking.

Career advice

“I would encourage somebody to get whatever qualifications they are hoping to get. I think it’s

important just to have that foundation which will be of benefit throughout your life, whatever you

decide to do. There are different routes into politics and you can go into it at different stages in

your life. I went into it quite young, although I was 30 by the time I got elected to the Dáíl. I think

we need more mobility in and out of politics. We need people to go in at different stages of life,

including later in life with people who have a track record under their belt and have success.

Politics is insecure - you could be elected for a term or two and lose your seat, and perhaps end

up in no man’s land career-wise which is a risk for people. It’s an outstanding privilege to be

elected to national parliament and to represent your community but there is a risk and I was

blind to that really when I was young,” says McGrath.

Working in Government

“Even though I was an Opposition spokesperson on Finance for 9 years it was still a huge step,”

the Minister says. “Nothing really prepares you for the white heat of coming into Government

especially at the time of a global pandemic. We came into office in June 2020 and immediately

we were preparing a €5bn economic stimulus because the outgoing [caretaker] Government

had been essentially ‘holding fort’ since the election in February and there were certain things

they couldn’t do and legislation couldn’t be passed in the House. There was a build-up of activity

that had to be dealt with, so we were straight into that,” he says.

He adds: “It takes a while to get used to sitting around a table with people you have opposed in

Parliament for a long number of years. But you find your feet, and you develop relationships and

you learn to be yourself and to work hard - you have to have a good work ethic as a Minister.

There’s a lot coming at you all the time and then you have to try to find a balance, and it is

incredibly difficult, between your national responsibilities as a Minister and your role as a

constituency TD and that’s something that I think all Ministers struggle with on an ongoing

basis,” says McGrath.

Managing the public finances amid COVID-19

Despite unprecedented levels of Government spending necessitated by the pandemic, McGrath

is confident that the current situation is “a manageable challenge for the country.” “The public

finances are in a better place than anyone thought they would be during the dark days of Covid.

We had a deficit last year of €8bn. It was forecast to be far greater than that. This year it will be

much smaller and you will have seen the Central Bank forecast a surplus for next year. We’ve

just published very strong Exchequer returns for Quarter 1,” he says.

“We’re facing challenges. There will be major costs to be met, but compared to other countries

Ireland is entering this period of uncertainty from a position of strength. We’re seeing a very

strong pipeline of inward investment, almost daily announcements from IDA clients, the Irish

economy is one of the fastest growing in Europe, employment has exceeded pre-pandemic

levels and we have very strong tax receipts as I’ve mentioned,” the Minister adds.

For all of those reasons, McGrath says he is “quite optimistic” that Ireland will come through this

period of uncertainty in good shape, but adds that it will be testing and that the Government will

have large expenditures that will have to be met. He adds: “We just have to be sensible about

the decisions we make on all other issues, because it has been hard work to get the public

finances back to this place and it’s important for the country and for our long-term sustainability

and for our young people: the more we borrow and the more debt we heap on, the shoulders of

young people it is they who will be ultimately carrying that burden, so I’m very conscious of our

obligation to those who will come behind us. Sometimes politicians don’t always think about the

future as much as the present day challenges but I have a real sense of the obligations we have

to young people and maybe that is partly due to the fact I have seven children; so the future and

their wellbeing and the economic opportunities that will be there and the sustainability of our

country is something that I think about deeply,” says McGrath.

Inflation

With inflation running at a 22-year high in March of 6.7%, there has been increased calls for

hikes in public sector pay. Economists warn, however, of the potential for this to contribute to a

wage-price spiral which could drive inflation even higher and exacerbate the situation. McGrath

acknowledges that this a dilemma which policymakers face. “It is tricky because you don’t want

to make the situation worse. These are extraordinary times. This inflation is, in large part,

because of the global disruption that has taken place because of the war. There was inflation

coming out of Covid because of the strength of the rebound in the global economy and the

amount of money that was pumped into the system by central banks globally. But the war has

added a whole new dimension to our inflation - it’s very much energy related,” he says.

“The interventions we have made to date have been once-off in nature. What I have to be

careful about is long-term commitments that we make. It is one thing to provide temporary

supports. It is a different decision, with different consequences to build that into the permanent

expenditure base of the country which is recurring every single year. We are going to seek to

agree a broad national strategy with the Social Partners in relation to how we deal with this

acute problem of inflation and cost of living. It can’t all be done through pay increases or tax

reductions or Government interventions: it will be through a combination of those measures and

we have to navigate our way through this without doing any long-term damage to the economy

and to our productive capacity as a country,” he adds

Despite the multiple Government interventions to date (including the recent cuts to excise and

the €505 million February cost of living package), McGrath acknowledges that there are still

“real pressures out there”. He continues: “A lot of people and businesses are under real strain

facing these costs and there is no easy answer. Every government in the developed world is

grappling with this. Our inflation is high, but it is much higher in countries like the Netherlands

(12%) and Spain (10%) and some European countries have inflation as high as 15%, so I think

we do need more concerted action at an EU level - this is beyond the capacity of any single

government,” he says.

McGrath also believes that there is a need to be honest with people that the Government cannot

fully alleviate the situation given the global nature of the problem. “There is a price for all of us

from this war and we just have to be honest with the Irish people - and I think they do

understand that - but we are open to further initiatives to try and ease the burden that we know

people are carrying at this time,” he concludes.