No time for show-time politics in lead-up to budget

Last weekend the Sunday Independent ran a piece claiming that PJ Mara is to be brought back to run Fianna Fáil's next general election campaign. Whatever about his famed capabilities as a campaign operative, the baggage with which the veteran spinmeister comes renders his return unlikely. If there are actually some in Fianna Fáil who think PJ Mara is the answer they are asking the wrong question.

“It’s showtime,” were Mara’s opening words at the launch of the 2002 general election campaign. It was a signature moment in an era of boom-time auction politics. Fianna Fáil and the Progressive Democrats in government and Fine Gael and Labour in opposition all promised the electorate tax cuts and a raft of other publicly funded goodies. The voters lapped it up. Fianna Fáil outbid the rest and were re-elected.

One would have thought showtime politics would have ended when the floor under the Celtic Tiger collapsed with the fiscal and banking crisis in 2008. However, there remains an instinct for showtime politics in all the parties.

For the past six years there have been no goodies available to dangle in front of voters but as soon as some wriggle room appears in the national finances, politicians just can’t help reverting to type.

In the lead-up to the local and European elections several Ministers talked liberally on and off the record about the prospects of imminent tax concessions. As early as March, at Fine Gael’s pre-election ardfheis, media reported how Michael Noonan “dropped hints” of tax cuts. It didn’t work.

Uncertainties

Since those elections expectations have been fuelled further, even from within the bowels of Merrion Street itself. On June 17th, for example, the Fiscal Council warned that significant uncertainties remained in the economy because of high levels of private debt and the uneven pace of recovery and that the Government should still implement plans for €2 billion in cuts in the 2015 budget. In reply Minister for Public Expenditure and Reform Brendan Howlin generated headlines suggesting there would be “leeway for tax cuts in the budget”.

He spoke about how “we do want to give relief to people, and we will do that in as planned a way as we can”.

On July 11th,Taoiseach Enda Kenny in his debut press conference with Joan Burton as Tánaiste spoke of how the Government would “reduce the 52 per cent tax rate for low- and middle-income workers, starting with this budget in October”.

Tax relief

While Cabinet took a break in August, Ministers of State took up the task of signalling tax relief. On August 25th Simon Harris, in some of his first interviews as Minister of State for Finance, generated headlines in media outlets along the lines “Fine Gael Junior Minister calls for tax cuts”.

Not to be outdone, in the same week Labour’s new Minister of State Ged Nash got into the fray, dangling the prospect of tax relief in front of an austerity-fatigued electorate while also calling for pay increases.

When the exchequer figures were published last Tuesday showing tax receipts €1 billion ahead of target the Government began to fear its efforts at public optimism had over-heated. On Wednesday it deployed a combination of 12 minutes of Burton on Morning Ireland followed by another 18 minutes of Noonan on Today with Sean O'Rourke in an effort to contain the over-optimism about tax cuts.

They both talked much about the need for prudence, about how they had learned the lessons of the past, but also about where and how tax reductions might be targeted on budget day.

All of these Ministers can point to how during the summer they warned of a need for caution and spoke of how relief for taxpayers must be targeted. All the headlines generated, however, were about tax cuts and that was not accidental.

This Government must know that as well as carefully managing the economy it has to carefully manage expectations. Its over-hyping of the exit from the bailout late last year should have reawakened it to that risk.

From Machiavelli to Glasnost, history teaches us that regimes are at most risk when expectations shift. All the pomp and celebration choreographed around the exit from the bailout backfired for the Government. As Maurice Hayes put it in Glenties in July: "Hats were thrown in the air in celebration too soon."

Having endured austerity in the well-placed hope that recovery would ultimately come, voters are hungry for appreciable signs of such a recovery in their own pockets.

They are unlikely, however, to forgive politicians who play with their expectations.

The economic recovery is still fragile and so too is the political mood. Both Government and Opposition parties would be wise to stay away from the politics of showtime.