ESRI CONFERENCE:THE IDEA of the International Monetary Fund (IMF) imposing its will on Ireland was "scary", a UCD economist told a conference on the budget organised by the Economic and Social Research Council.

Joe Durkan said he had seen the organisation at work in Nigeria and he was “scared” by what it might do here. The organisation tended to impose changes without having an understanding of the society on which it was imposing those measures.

Speaking later to The Irish Times, he said he did not have much faith in the European Commission either. “They don’t have the people. The best people who know what to do about Ireland are here in Ireland.”

Ireland needed to realise what needed to be done, and then do it. It had done so in the 1980s, and could do so again.

In his address to the conference, Mr Durkan said Ireland had repeatedly made the mistake of running procyclical policies and the question was why this was so.

Governments tended to regard upturns in the tax take as a permanent upturn in income. They found it difficult to agree to policies such as operating substantial budget surpluses.

He said the creation of a fiscal council to advise on the economy and of a “rainy day” fund for downturns were good ideas. The problem was that during an upturn “the politicians would take over and do what they wanted to”.

Reducing the elasticity of the income tax system would help reduce the tendency for procyclical policies. He suggested raising the standard rate of income tax relative to the marginal rate, and bringing in a property tax.

Economist Jim O’Leary said the changes that were being introduced to the EU’s Stability and Growth Pact would mean “more cops on the beat” watching national governments. The proposals would strengthen the role of the commission vis-a-vis the council and introduce what some would consider to be a further erosion of “national discretion”.