• -
  • irishtimes.com - Posted: November 17, 2009 @ 12:09 pm

    Still no pain, but at least some gain for Sinn Féin

    Harry McGee

    As long as I have been writing about politics, there was one comedy show we all looked forward to every year.

    It was the Sinn Fein pre-Budget Outlook.

    The party would present its figures and we would hold our bellies as its TDs conveyed such fiction and fantasy with such straight, serious and po-faces.

    The absolute pinnacle for this school of comedy came in the weeks before the 2007 General Election when Gerry Adams appeared on PrimeTime for a star turn. It was a magnificent performance. His innumeracy was a massive factor in determining Sinn Fein’s subsequent election results.

    The truth was that whatever the mastery of Adams and his party on the national question, they knew damn all about finance. Sinn Fein produced more policy papers than the NAMA legislation had amendments (and boy there was a lot of them). But the problem was that it didn’t cost any of them. Universal health care for everybody. Huge increases in social welfare.  Big hikes in taxes. It was all done on the general Robin Hood principle – rob the rich to pay the poor. But when you totted it all up, it didn’t balance, the sums didn’t work, it made no financial sense.

    But cometh the recession, cometh the cold chills of reality. Sinn Fein was the first party to present its pre-Budget submission yesterday. Still very much based on the Robin Hood principle, it was nevertheless the first wholy coherent financial document that the party has published, in my opinion. I think that some of its projections are askew and are based on over hopeful assumptions. There is also a trick-of-the-loop or two, including a €2 billion raid on the National Pension Reserve Fund. And the party’s aim to increase €4.5 billion in extra taxes is not a realistic option in the current climate.

    Still, it has some things going for it. Firstly, it places the party very firmly indeed on the left. No cuts whatsoever in social welfare. For child benefit. For anything. I just wonder why the party accepted the enormous State commitment to social welfare, which covers way way more than the dole and pensions, with questioning any elements of it whatsover.

    Also the party wants the Christmas bonus revived (cost €223 million) and a new ‘cost of living’ package to help people pay bills (ie a measure to help meet the costs of inflation). But in forwarding this position, the party rejects the CPI index which shows that the cost of living has actually decreased in the past year. Fair enough. The party is taking a populist line with its consituency. Objectively, you could argue there is absolutley no need for this.

    In summary, the package proposes some €4.5 billion in tax increases; €1 billion in cuts; and a €2 billion raid on the pension fund. Its stimulus package will cost €4 billion, most of it geared towards jobs, the rest at restoring the Christmas bonus and helping people meet cost-of-living expenses. The net savings will be about €3.5 billion, the party says.

    What is interesting is that the party goes hammer and tongs at the more wealthy in society, both in its tax measures and in its cost-saving plan. I didn’t get a chance to ask at the press conference yesterday but I suspect that if the very serious cuts the party is proposing for TDs, Ministers, hospital consultants and more senior public servants were implemented, it would make a huge dent into its own predictions for tax-take from the wealthier classes.

    The most eye-catching measure from my perspective was the proposed wealth tax of 1 per cent for assets valued over €1 million, an idea that might be explored further. The party based its calculations on a Bank of Ireland assessment of wealth that was done in 2007, and discounting the overall figure by 50 per cent. It reckoned a €1.6 billion take, which seems high to me, given the calamitous fall in GDP, wealth etc in Ireland over the past 18 months.

    The other two big tax ideas are the standardisation of all discretionary tax reliefs and exemptions. This will affect pension reliefs. More relevant is that it will also  affect private medical insurance – something that people with very humble salaries avail of. I believe there was an internal debate about this. But the party wants universal health provision and to make an exception for medical insurance would have give it some kind of official approval. The one exception the party did not go after was mortgae interest relief.

    It also wants to introduce a third tax rate of 48 per cent for those earning over €100,000. It would raise over €355 million, it says. But it would also increase the marginal tax rate for that group at 60 per cent. Positioned where it is, Sinn Fein, of course, would see no real problem with that. Labour I suspect will propose something similar, but may go for a 45 or 46 per cent rate, rather than a 48 per cent rate.

    Its proposals for cuts are radical. A billion euro saved from high earning public servants. Salaries are to be capped, under its proposals. A maximum of €150,000 for consultants. A maximum of €75,000 for TDs. A maximum of €100,000 for civil servants. No change for frontline services which means that the party wants to leave nurses, guards and other emergency workers alone. Again, you kind of wonder is it wise not to look at any of the blizzard of allowances or extras or perks that they get.

    There are a couple of silly suggestions. One is for excise duty on alcohol to be relaxed in the four-weeks of the Christmas period to discourage people from shopping across the border. Apart from the workability of this, you also have to question the message this sends out about alcohol and lushness  in Irish society. As a non-drinker, I find it shocking to think that people go on pilgrimmages just to stock up on booze for personal consumption.

    Sinn Fein has been working hard on building up its credibility on financial matters. It’s an unfinished symphony.  Its hoped-for tax take doesn’t add up. But it is a serious effort.

    • robespierre says:

      It will be a difficult road for them. They will not win new votes with those proposals. It will be the next generation of SF that determines their path. They really need to sweep clean the Augean stables to rid themselves of the lingering waft of cordite.

      Even the fact the Gerry Kelly was allegedly getting in touch with Muslim rebels in the Philippines however well intentioned only serves to preserve the image of a party middle Ireland will not vote for.

    • shellshock says:

      so basically they are the same as FF/FG/Labour. IE they know feck all about economics. do you find them as hilarious? I wonder if the people losing their homes and those on the dole are laughing with you?

    • dealga says:

      These blogs really do attract an army of commenters adept at completely missing the point.

      Wonder how much the Justice and Defence Depts would save if the shinners withdrew their support for those anti-science NIMBY whackjobs in Mayo?

    • Dave says:

      “So basically they are the same as FF/FG/Labour, i.e., they know feck-all about economics. Do you find them as hilarious? I wonder if the people losing their homes and those on the dole are laughing with you?”

      This is a bit of a red herring, in fairness.

    • Simon McGuinness says:

      Harry, you characterise the SF proposal to invest 1 billion, rather than 3 billion in the stock market as a “raid on the pension fund”. Surely this is unfair?

      The “fund” remains untouched – it is just the absurd process whereby Ireland inc. borrows 3billion from the ECB to invest in the stock market which has returned a negative result for the past 2 years that stops (partly).

      Yes you read it right – we borrow at 1% and invest it in a pension so we can lose 50%. Ask anyone with a private pension fund if they’d do it and you will get one answer – never! And the government doesn’t even get tax relief.

      We’d get more use out of it if we spent it on fireworks or booze.

      But we could invest it in the 43 new schools that we desperately need to cope with the current massive baby boom, if we could bypass Scrooge O’Keeffe. (Mind you – buying laptops 3 years in advance, when they are obsolete in 3 years, rates only marginally less daft).

      Any improvement in the financial literacy of SF has to be welcomed, not least because it gives them a spotlight to shine on the absolute financial incontinence (sic) of FF.

    • dealga says:

      We lose 50 percent, maybe, if it was invested in summer 2007 and it was all sold up in March of this year. If we’re going to pick arbitrary periods of time then I’m guessing the NPRF is absolutely flying since March.

      We clearly don’t ‘lose 50%’ and probably will be comfortably in the black within a couple of years – your point is daft. Trying to do something about our future pension requirements is one of the only things the FF/PD government did right.

    • Dave says:

      I despair of people who think investing in the stock market is “gambling.”

    • Dan Sullivan says:

      Simon, 1 re: the raid on NPRF. The NPRF has about €20 billion in assets which at present includes the €7 billion that Lenihan announced back in Feb would be use to recapitalise the banks. The amount we put in each could be reduced but selling up down would be selling into a buyers market.

      It has long been the case that when investing over the long term that it is prudent to continue investing a set portion even in a downward market as the lowers prices will eventually be compensated for in the next upturn. To only invest when the market is going up is foolhardy.

    • Ray D says:

      Nice sneers indeed. Nothing SF will do will benefit them electorally here. They do not fit in with the endemically corrupt public system in the south. For example, no TDs of other parties could live on the average wage, dispense with the perks, or fight for the common man. SF set a bad example in these areas.

    • dealga says:

      Yeah Ray that’s it.

      No other reason we might be slow to vote for Beardy Adams’ cronies – that chancer McDonald, the fishmonger, the gunrunner’s daughter et al.

      None at all…

    • No-moss-gathered says:

      It is only August this year since Ferris collected the killers of Jerry McCabe from a period of incarceration that involved nights out in pubs. No matter what economic mix SF propose there is no role in the economic decision-making process for a party that is dodgy on normal political action and decision-making. Whatever criticism can be garnered at the ‘establishment’ parties, none of them consider consorting with armed robbers who kill garda to be part of any mix of policies being put forward.

Search Politics