Reading between the lines of the budget speeches
Employment is still short of what it reached in 2007, but it is far more solidly based with jobs being created across all sectors of the economy rather than being dependent on one overblown sector. As the numbers at work continue to grow to well beyond two million, it is salutary to remember that as recently as 1989 less than 1.1 million people were at work in Ireland.
The Minister for Finance opened his sixth National Economic Monologue with the first of four references to his “sustainable” budget policies, a much-touted prudence that does not preclude the long-trailed cuts to the Universal Social Charge (USC). High tax rates are discouraging emigrants from returning home, he noted, although it is not hard to think of a few other reasons, like, cough, the absolute state of the health service, cough. While Noonan (73) might find it salutary to remember that as “recently” as 1989 less than 1.1 million were in employment, the historical comparison will be meaningless to young people entering the workforce today, as they weren’t even born then.
Whatever the final settlement, what we know with certainty is that Brexit has increased risk to the Irish economy, and as well as introducing specific measures to assist particular sectors of the economy, we must also put in place safety nets to protect us against future economic shocks.
Budget 2017 was supposed to be all about Brexit-proofing, but what does Brexit-proofing mean? Brexit-proofing means, er, Brexit-proofing. It means setting up a “rainy day” fund, but not yet - later, when it looks like it’s about to lash. There were some new measures for farmers (and sheep), but otherwise things like the reduced 9 per cent VAT rate were reframed as a buffer for the tourism sector against a weak sterling.
The Small Firms Association concluded there was “no real Brexit-proofing”, while Chambers Ireland controversially called for “realism”, arguing it won’t be possible to Brexit-proof the economy as the exact consistency of the Brexit pudding is not yet known.
I intend to introduce a tax on sugar-sweetened drinks. It is of utmost importance to me that such a tax is as effective as possible, as fair as possible, and minimises the administrative burden on business… I intend to introduce this tax to coincide with the introduction of its UK counterpart, in April 2018.
The budget of “sweeties” for the electorate also delivered a bitter pill for the sugary drinks sector with confirmation that Ireland will introduce a sugar tax, because, hey, it’s a sweet revenue-raiser and Operation Transformation can’t solve the obesity crisis alone.
The lobbying efforts of Big Sugar were not all in vain, however, as Noonan has agreed that it would be foolish for Ireland to go anti-sugar ahead of the UK, because the two countries share a highly integrated soft drinks production and supply chain, and because it might send us collectively barrelling across the border to raid the aisles of Asda for cheap deals on Fat Coke.
It makes sense to complete the task we set ourselves and get to a balanced budget. It makes sense to continue reducing our debt to much lower levels and to build our capacity to withstand shocks. It makes sense to avoid the mistakes of the past that could lead to overheating our economy.
Noonan invokes the classic speechwriting “rule of three” here by listing three things that make sense: No debt burden, no overheating, no backtracking until the job is done.
In a thoroughly dull speech, he also made several mentions of what he might like to do in future budgets, which rather presumes that the current minority Government will still be in situ this time next year and they’re not all going to fall out horribly in January just in time for a spring general election. In a world with “more risks than usual”, this seems like a very real one.
Many believed that the Government would not still be in place by the time Budget Day arrived, and yet, here we are… We, of course, cannot implement all the measures in the Supply and Confidence Agreement or the Programme for Government in a single year or a single Budget. But today is a substantial beginning.
We are where we are. Which is here. Here we are. Paschal Donohoe, in his first budget speech as Minister for Public Expenditure and Reform, developed a theme that had more subtly laced Noonan’s address: This Government plans on sticking around, no matter what you say.
Donohoe’s mild slap for the naysayers was greeted by the first flickers of life on the part of a sleepy Dáil forced to sit through a budget everyone had already heard. The Taoiseach smirked into the back of his hand as Paschal thoughtfully reminded everybody of those dark months of post-election impasse and promised / threatened to turn this budget into a long-running franchise.
All weekly social welfare payments... will rise by €5 per week in line with the increase in the State Pension. In addition I am pleased to announce a payment of 85% Christmas bonus for Social Welfare recipients in 2016. Many of those in receipt of these payments are our most vulnerable citizens. We cannot have a Just Society if we leave them behind.
The announcement of the 85 per cent Christmas bonus should be qualified by the fact that it was already back at 75 per cent and there were calls for full restoration. Still, as seasonal cheer goes, it’s better than Donohoe’s contribution in 2015, when it fell to him to repeat the annual lie that Santa Claus had been granted permission to enter Irish air space.
The new social protection measures have been costed at €301 million, which is about a 43rd of that tax bill the European Commission says Apple owes us. Donohoe’s “Just Society”, and this budget, can be summed up in three words: Here’s a fiver.
Nobody could be anything but impressed at the tremendous series of events that took place in 2016 to mark the centenary of the Easter Rising. That could not have happened without the talent and vibrancy of Ireland’s artistic community who in 2016 were granted €49 million to stage such an impressive programme of cultural events. A significant portion of that funding should remain within the Arts Budget for 2017.
The public service estimates did not make pretty reading for the arts sector, with an apparent 16 per cent cut in arts, culture and film funding in 2017. However, the unflattering comparison arises because 2016 was a special year, with a bumper load of 1916 centenary extravaganzas that had to be paid for somehow.
When Donohoe says a “significant proportion” of the funding will be retained, he means some €18 million will become part of Ireland’s baseline arts spending.
This translates as a new trickle of cash for bodies like the National Gallery of Ireland, the Arts Council and the Irish Film Board, although for politicians the keyword is “legacy”.
Those of us in the middle ground of politics have a duty to show that cooperation and consensus can work. To show that our tone can be moderate, but still convincing. To show that things won’t just fall apart and the centre can hold – and stay firm. It was in this spirit that the Partnership Government was formed and it is in this spirit that I commend these Estimates to the House.
We almost got there. All through Noonan’s speech, there was not a whiff of poetry, not a stanza, not a couplet. So congratulations to Donohoe for squeezing in a Yeats reference right at the wire, twisting his “things fall apart; the centre cannot hold” line from The Second Coming into a confident assertion that they won’t and it can.
According to media database Factiva, the 1919 poem’s original apocalyptic lines have been quoted in news sources more times in the first seven months of 2016 than they have been in any other year for the past three decades. It’s official, then, whatever Fine Gael says: Mere anarchy has been loosed upon the world.