“I am the guardian of the public purse and acutely aware of this responsibility”

Minister for Finance Michael McGrath TD talks to Accountancy Ireland about his political career, profession as an accountant and priorities for the months ahead

Minister for Finance Michael McGrath can still recall the first time he walked through the doors of Leinster House in 2007 as a publicly elected member of the Dáil.

It was, he says, “a humbling experience”. “It still is today—to be elected by your community. I will always be humbled walking into Leinster House as an elected representative of the people. It is an enormous honour,” he says.

McGrath’s appointment last December as Minister for Finance was the latest milestone in a political career stretching back to the late nineties. 

It was also an apt appointment for McGrath, a Fellow of Chartered Accountants Ireland, who is, he says, determined to “hand over the national finances in good health” when his term draws to a close.

The seeds of McGrath’s political interests were sown at a young age, growing up in Passage West on the west bank of Cork Harbour.

“During my school days, I enjoyed history as a subject and an interest in current affairs was encouraged at home,” he says.

 “The news would always be on in the background and there were always newspapers around we were encouraged to read. 

“I remember, because we lived in a rural area where it wasn’t possible to walk or take a bus to school, we would be driven there in the morning and the radio would be on in the car. I can still hear David Hanly interviewing people on Morning Ireland. 

“It’s amazing how things stick with you. Listening to those interviews sparked an interest in me about the world around me and about political life, the reach it has and how much it influences pretty much everything that we do.”

Start in politics

While growing up, McGrath was also heavily involved in community sports and the local development association in Passage West.

“I was very fortunate to be brought up in an area where there was a Town Council. They are all unfortunately abolished now, but it was a great starting point for someone like me with an interest in politics,” he says. 

“You didn’t need a huge number of votes to get elected. If you had a good network of family and friends in the community, you could succeed.”

As his interest in politics was taking root, McGrath was also learning that he had a head for numbers and an interest in business.

“I did business studies at second level and decided to study commerce at UCC from 1993 to 1997,” he says.

“That actually coincided with the introduction of specialised degrees at the university, such as finance and accounting and Business Information Systems. But I chose the BComm because I hadn’t studied accountancy at second level.”

In his third year at university, McGrath began to seriously consider his career options. “I knew I wanted to stay in Cork and that I wanted to secure a professional qualification,” he says.

“The obvious next step was to sign up to a training contract and continue with my studies. There wasn’t much accounting in the BComm, so I was only exempt from the old Prof 1 and some of the Prof 2 subjects, but I was very eager.

“I finished the Prof 2 exams before I even started my training contract with KPMG the September after leaving college and went straight into Prof 3 in my first year of training, and the FAE the following year.”

Value of the profession

McGrath chose to qualify as a Chartered Accountant because, he says, he “saw the value of the qualification and the analytical skills it gives you”.

“There was a lot of respect for the qualification, then as now. It is a professional passport—a globally recognised qualification that can take you anywhere in the world. I felt that it was the natural next step for me.”

Shortly after joining KPMG and aged just 22, McGrath ran for his first Town Council election in Passage West and Monkstown. 

“It was the year of my FAEs. While on study leave, I split my time between studying and canvassing for the election. I really enjoyed my four years with KPMG, learned a huge amount and met my future wife Sarah working there. As I always say, we fell in love across an audit file! After qualifying, an opportunity came up that I simply couldn’t refuse. I joined Red FM in Cork as financial controller,” he says.

“It was a really exciting start-up radio station in Cork with some dynamic investors and I was there for a few months before it went on air, so I was involved in setting up the commercial relationships and recruiting staff.”

McGrath’s work with Red FM involved reporting daily to the station’s chief executive and monthly to the board of directors.

“As a young newly qualified accountant, it was a fantastic experience and gave me a great sense of the practical application of the qualification,” he says. 

“I was doing monthly accounts, reporting to the board, managing relationships with suppliers, driving commercial revenues through advertising sales, and helping out with managing staff.”

From there, McGrath returned to UCC, joining the finance office as head of management information systems.

“My qualification as a Chartered Accountant allowed me to stay in Cork at a time when my interest in politics was really developing and I could pursue that in parallel,” he says. 
“I managed to do both for a while, but eventually had to make a decision as to where my future lay. I stayed at UCC for a couple of years, but in truth, politics was taking hold at that stage.

“I was on the Town Council and ran for Cork County Council in 2004, which was a much bigger deal. It required a much more vigorous campaign covering a larger area and I needed several thousand votes to get elected. 

“After I was elected, I realised very quickly that I simply couldn’t do it all. I couldn’t be a County Councillor attending meetings during the day and, at the same time, hold down a senior role at UCC. I took the decision with my now wife, Sarah, to go for politics.

“At that stage I knew where I wanted to go, but I wasn’t sure I could get there, and in many ways I was blind to the personal risks of giving up a secure pensionable job at UCC. It was a great place to work, but my passion lay with politics.”

Proudest achievements

McGrath was elected to Dáil Éireann for the first time in 2007 as Fianna Fáil TD for Cork South Central and went on to serve as Minister for Public Expenditure and Reform from June 2020 to December 2022, when he became Minister for Finance.

“Looking back on my time as Minister for Public Expenditure and Reform, what I think I am most proud of is my role in maintaining social cohesion during the COVID-19 pandemic, which was a very dark period for the country,” he says.

“We had to make decisions, sometimes with limited information, and make them very quickly. I really take heart now in the way the Irish economy has since rebounded. 
“It vindicates the approach we took in introducing the Pandemic Unemployment Payment Scheme and the Wage Subsidy Scheme.

“Reaching political agreement on the review of the National Development Plan with a commitment of €165 billion in capital investment through to 2030 is another achievement I am very proud of—and the fact that we managed to negotiate two public sector pay deals at a time of high inflation.”

“As a percentage of national income, our annual capital investment is now among the highest in the European Union and this year, over €12 billion will fund vital infrastructure in areas such as housing, transport, education, enterprise, sport and climate action.”

Now, as Minister for Finance, McGrath’s highest priority is, he says, to manage the public finances safely at a time of global turbulence. 

“I am acutely aware of this responsibility, not just to the people we serve now, but to the next generation and those yet to come,” he says.

“As Minister for Finance, I am ultimately the guardian of the public purse and ensuring that it is properly managed is my number one priority.

“I am determined to play my part in handing over the national finance in good health whenever the term of this government ends or my term in this office finishes.”

Current priorities

Top of the agenda for McGrath currently is navigating the ongoing economic uncertainty prompted by the war in Ukraine and resulting inflationary pressures worldwide.

“We are facing huge international challenges at the moment with the ongoing war, the spiral of inflation it has triggered, and the cost-of-living pressures households and businesses are having to endure,” he says.

“Despite all of this, the Irish economy is in relatively good health compared to many other developed countries and we anticipate growth across the economy this year. 

“The public finances are in good shape. We recorded an estimated general government surplus last year of over €5 billion, equivalent to two per cent of our national income, and we will be forecasting a larger surplus this year.

“We have more people working in Ireland than at any time in our history—close to 2.6 million. 

“Safeguarding these successes against the background of international economic uncertainty is a key priority for me—managing public expenditure in a sustainable way and handling the fall-out of signing up to the international OECD BEPS agreement.”

Agreed in 2021, the OECD’s Domestic Tax Base Erosion and Profit Shifting (BEPS) deal will bring to an end Ireland’s long standing 12.5 percent corporate tax rate, instead introducing a 15 percent global tax rate for multinationals with annual revenues exceeding €750 million.

The lower 12.5 percent rate will be retained for multinationals with annual revenues below this threshold. BEPS will also bring changes to the way in which corporate taxes are applied and collected.

“I think BEPS will, in time, come at a cost to Ireland, but that has to be balanced against the policy certainty it affords us in relation to corporate tax as a key lever and, of course, at a European level, efforts are underway to negotiate reforms to the Stability and Growth Pact,” McGrath says.

“There are changes to the fiscal rules and Ireland is very much part of this process and seeking to shape the overall outcome.”

Indigenous business supports

In the months ahead, McGrath says he will be “paying very close attention to the suite of enterprise taxes we have in our code”.

“My question is: are we doing enough for SMEs through schemes such as the Key Employee Engagement Programme, the Employment and Investment Incentive Scheme, the Capital Gains Tax environment for entrepreneurs and, of course, the R&D tax credit system?

 “I am very conscious that we have an extraordinarily successful Foreign Direct Investment community in Ireland. We must protect and continue to improve this where we can by remaining competitive and investing in our infrastructure and in our talent.

 “However, I also think that it will be increasingly important in the future that we have an appropriate balance in how we support our indigenous economy. 

“I will be looking very closely at the suite of enterprise tax measures we offer indigenous businesses to see if there is more we can do to incentivise entrepreneurship in Ireland, to reward it and create an environment in which start-ups see Ireland as a location in which they can scale.”

Wise investment in public services is another key priority for McGrath. “It is crucial for me to ensure that we have a successful economy, but also that we use the fruits of that success to invest in vital public services,” he says.

“We must continue to reform our healthcare system and build up permanent capacity within the system, while also focusing on the green and digital transition, both of which will be central to our economic development over the next 10 to 20 years. We must, of course, also address the huge challenges we face in housing.”