Noel Whelan: Calm and cautious budget helps secure Government
Moderation and incremental approach to budget balanced with political generosity.
Minister for Finance Paschal Donohoe: “He is neither an ideologue nor a risk-taker. He is unapologetically moderate and incremental.” Photograph: Cyril Byrne
Yet again it was a moment on RTÉ’s Prime Time which illustrated the changed political context in which budgets are shaped in the current Dáil. In the era of confidence-and-supply agreements the traditional head-to-head between the Minister for Finance and the leading Opposition spokesperson on finance is no more.
Instead Paschal Donohoe lined up on a panel with no fewer than five other deputies, including a fellow Minister, to debate the finer points of the budget. The presenter, David McCullagh, drew matters to a close, noting that the politicians around him were needed for late-night votes on budget resolutions in the Dáil. Mentally one began pairing the panel off realising that any vote Minister for Children and Youth Affairs Katherine Zappone and the Minister for Social Protection Regina Doherty would cast for the budget would have been cancelled out by those of Sinn Féin finance spokesman Pearse Doherty and Independents4Change TD Clare Daly. Labour leader Brendan Howlin’s would have been the decisive vote because Fianna Fáil’s finance spokesman, Michael McGrath, was in effect rushing back to Leinster House merely to abstain.
At this point on Friday the Government will be happy that the budget has slipped down the news agenda. Even when budgets go well on the day there is often an unnoticed politically contentious measure which can take a few days to explode. The fact that some contracts for the transfer of farm land may be impacted by the increase in stamp duty on commercial transactions caused some flashes on Thursday but are likely to fizzle out.
It will take a year to assess the economic success of this budget but what is already clear is that politically Budget 2018 has enhanced the Government’s position and its sustainability.
It is significant that this makeshift minority Government, while weak in many other respects, has comfortably delivered a budget for the second time. In this budget Donohoe managed give something small to everyone in the electorate. He also managed to feed the Fine Gael grassroots and to keep his Independent colleagues in Cabinet happy. He did so while at the same time reinforcing rather than straining the confidence-and-supply agreement with Fianna Fáil.
Paschal Donohoe is neither an ideologue nor a risk-taker. He is unapologetically moderate and incremental
To have successfully charted these varied political pressures carefully in his first outing is no mean achievement. Donohoe had the experience as minister in a supporting role to Michael Noonan’s last year. This year, however, he had to manage the various political complications in his own right. It is worth remembering that Donohue was promoted to Cabinet only three years ago.
He succeeded in this task partly because he is neither an ideologue nor a risk-taker. He is unapologetically moderate and incremental.
Donohoe also succeeded because he was prepared to display political generosity. Zappone, for example, an Independent, was allowed to claim credit for the announcement of additional staff for Tusla. Donohoe not only found the money for an increase in teacher numbers to enable a reduction in the pupil-teacher ratio at primary school level but he was prepared to let Fianna Fáil take the credit for that and for the other budget initiatives which that party had championed.
The smooth changeover in the leadership of this Government from Enda Kenny to Leo Varadkar last summer and the calm politics around the budget this autumn all serve to lengthen the life span of this Government. There is now no substantial difference in economic or budgetary policy which should threaten the survival of the Coalition or their confidence and supply arrangements over the next year. There is every reason to believe that the parties involved in keeping this Government in power including Fianna Fáil will be able repeat this smooth budget process again next year.
For now, the two main parties have a strong incentive to keep things as they are. Last weekend’s Irish Times MRBI poll confirmed a trend in which both Fine Gael and Fianna Fáil are increasing support at the expense of Independents and smaller parties. It seems less and less likely that this Government will fall before budget day next October.
The other political context in which this budget was shaped was the looming and threatening spectre of Brexit.
Donohoe acknowledged that he held back from two big moves he could have otherwise made in this budget because of the the prospect of Brexit. He opted to retain the low VAT rate for the tourism and hospitality industry because of the fall in tourist trade from the United Kingdom. He decided against increasing duty on alcohol for fear of exacerbating cross-Border price differentials when sterling is falling because of the Brexit uncertainty. The Minister also announced a favourable loan scheme for business likely to be impacted by Brexit .
Elsewhere this week the news was very discouraging about Brexit. Gradually, the true impact of Brexit on Ireland is becoming increasingly apparent. Brexit above all else will shape our budgets for years to come.