Noonan Budget 2015: the politics of prudence

There was not quite something for “everyone in the audience” in Michael Noonan’s budget statement, but it was a close run thing. Transformation of the State’s fiscal situation over a matter of months took even the Government by surprise and its response, couched in the rhetoric of prudence, strayed into concessionary territory. It was what a disillusioned electorate, whose standards of living had fallen by ten per cent, demanded. And, as a general election hove into sight, it was what they got.

Results from two Dáil by-elections compounded the injury caused to Government confidence by a blundering, shoot-yourself-in-the-foot Seanad campaign. As happened in the European and local elections, the issue of water charges dominated the campaigns and proved to be equally toxic for Fine Gael and the Labour Party. Hopes that a growing economy would revive party support withered in the face of entrenched opposition to the new tax and distrust of the three traditional parties. The drift to Independent candidates continued while Sinn Féin failed, once again, to attract a sufficient number of transfer votes.

Faced by such bleak results and growing internal party dissatisfaction, Fine Gael and Labour Party ministers on the Economic Management Council opened the purse strings. Benefits were marginal, because of the extensive nature of the comfort-giving exercise, but the message was simple: the effects of recession might remain, but austerity budgets were a thing of the past. To emphasise the altered circumstances, Taoiseach Enda Kenny pledged to reduce tax rates in next year's final budget.

That the Government is on an election footing is obvious. Although the economy is growing strongly, however, ministers are failing to exploit the potential feel-good factors. Public focus remains on water charges, as was evident from last week's street protest in Dublin. Budgetary concessions may reduce the level of that resistance, but, for so long as Irish Water continues to present as an inefficient, feather-bedded organisation, the Government will remain vulnerable. Bonus payments for executives, along with opaque organisational structures and uncertain liability for charges, carry unhappy echoes of the establishment of the Health Service Executive. As Fine Gael backbenchers complain, the man politically responsible, Phil Hogan, takes up a new challenge in Europe.

The Budget addressed key demands for job creation, housing availability and improved living standards. Capital provision for social housing was particularly impressive, but speed of delivery remains an issue. Economic growth for next year is expected to exceed three per cent, bringing additional jobs, rising revenues and welfare savings. The Government is in a good place. But fiscal prudence is required, along with a cohesive political approach, if it is to realise the potential of the situation.