Coalition needs to watch its step as public reaches limits of capacity to absorb pain
Opinion: Cut in tax relief for health insurance has gone down badly with Fine Gael supporters
There is some satisfaction in Labour circles that the budget has not been received with the same hostility as previous ones. Photograph: Dara Mac Dónaill
The latest in the series of harsh budgets has proved politically more acceptable than its predecessors, but the Coalition needs to tread warily because there are signs that the Irish public has taken about as much as pain as it can stand.
One of the peculiarities of democratic politics is that the howls of outrage from small, well-organised lobby groups can often have a far greater political impact than the mood of the broad mass of ordinary voters.
Since the best-off pensioners in the country managed to upset the late Brian Lenihan’s early attempt to get to grips with the financial crisis, Government TDs have trembled on budget day each year in the face of furious protests from the groups claiming to be worst affected.
This time around, TDs in both Government parties have been pleasantly surprised by the relatively low-key reaction. Phone calls of protest to their constituency offices have been nothing like as numerous as in the last two years and the protests outside the gates of Leinster House have been tiny.
Labour TDs in particular were hugely relieved on Tuesday to find they were not getting it in the neck to anything like the extent that they had to endure for the previous two budgets they implemented since taking office.
The range of adjustments in welfare and pension entitlements has, so far at least, not generated the kind of serious political controversy that emerged in previous years. For that Labour TDs are particularly grateful.
Almost everybody hit
However, TDs of both Government parties would be mistaken to assume everything in the garden is rosy. The distinctive characteristic of Budget 2014 is that almost everybody in society has taken another hit. In the long run that could prove far more dangerous to the Coalition than the outrage of any particularly lobby group, particularly if Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin have to go back to the well next year for more savings.
While Labour TDs may be relatively happy, it gradually dawned on Fine Gael deputies, as the week wore on, that their natural supporters are becoming exasperated and will not tolerate being hit again.
In particular, the cut in tax relief for health insurance, the draconian tax on savings and the latest raid on already stressed private pensions have pushed many of them to the limit.
“Our middle-class supporters have already been hammered by massive tax increases since 2008, so this attack on health insurance and pensions could be the last straw,” said one Dublin Fine Gael TD. “They are not howling at the gates of Leinster House but they are close to losing faith in us.”
Michael Noonan’s reference to “gold-plated” medical insurance policies struck entirely the wrong note because so many of those with relatively modest health insurance policies will be hit by the move. The decision is designed to raise €127 million in extra revenue and so will be hard to row back on without making corresponding cuts elsewhere. Both Coalition parties are committed to moving to a universal health insurance system, so this decision is bizarre as it will inevitably force many people out of private health insurance into the public system.