A careful balancing act

Wed, Oct 16, 2013, 01:00

The seventh austerity budget since 2008 – and this Government’s third – contained further pain for citizens and an erosion in public services and entitlements. But it also offered the prospect of economic growth with an unexpectedly large job creation programme taking centre stage. It reflected a careful balancing act as the Government, encumbered by the highest deficit within the EU, attempted to bolster public confidence while preparing to exit its bailout programme.

There was no silver bullet to deal with past excesses, just a slow grind of incremental change as costs were pared back and established entitlements were stripped away. Budget 2014 was no longer about funding a bank bailout but about bringing public expenditure more into line with government income. The unstated hope was that accelerating economic growth in the coming years would increase exchequer income and close the deficit gap.

A great deal has changed. Time was when excitement was generated when a minister for finance held up a briefcase. Now, the positioning of crash barriers outside the Dáil fulfils that role while public expectations have become sharply negative. The budget date has been moved to October, allowing for an examination of public expenditure programmes before the money is actually spent. This approach, as Minister for Public Expenditure Brendan Howlin put it, will be “the new normal” and part of a political reform programme. But some things never change, such as the taxation of “old reliables”. In that regard, Minister for Finance Michael Noonan announced a 10c rise in excise duties on a pint of beer and on a packet of cigarettes – 50c went on a bottle of wine.

There was plenty to complain about in the speeches made by Mr Noonan and Mr Howlin. And Fianna Fáil’s Michael McGrath didn’t disappoint. Having accepted the need to cut the deficit by €2.5 billion, he focused on what he regarded as the “disproportionate burden” that had been placed on those least able to bear it. He wasn’t happy about a whole range of issues, however, while Seán Fleming concentrated on the shabby treatment of the elderly and disabled. Sinn Féin’s Pearse Doherty quoted W B Yeats and complained Mr Noonan had “dried the marrow” from the bones of the Irish people, while taunting Labour ministers about cuts, “one hundred years after the Lockout”.

There is something of a wing and a prayer about this Budget as it attempts to rebuild public confidence and accelerate economic growth. Cuts are smaller than originally envisaged and planned expenditure greater. More than 1,000 additional teachers, gardaí and health workers will be employed. Some €500m will be invested in job creation. There are weaknesses and imbalances but the formula could work if international circumstances begin to match our growth profile.