Cabinet plays catch-up over budget strategy

If the Government gives off a sense of being unsettled about its budget strategy, it may be because, having taken it easy over the summer, the Cabinet is coming late to the task.

Oversight mechanisms put in place by the EU to ensure euro zone governments adhere to the Fiscal Compact Treaty require member states to send their budgets for European clearance before the middle of October. As a result the Irish budget, which until last year used to be announced in December, must now be announced in early October.

Although this is the second year of that earlier timescale, the Irish budget-making process has struggled to adjust and long-promised reforms to provide a greater role for the Oireachtas in budget-making have simply been abandoned.

The key negotiations between big-spending departments and the Department of Finance (and since 2011 the Department of Public Expenditure and Reform) have traditionally begun after the August break. This was fine when there were three months to finalise the process. It seems that even now, however, the key bilaterals still don't take place until well into September. This is not mere speculation on my part. Leo Varadkar told Morning Ireland on Tuesday that detailed discussions on the health budget had not yet been held with Brendan Howlin even though it is only five weeks to budget day.

Notwithstanding the fact that no fewer than six of our current Cabinet Ministers are going through the budget process for the first time, and four others are doing it in departments to which they were appointed only in mid-July, the Cabinet has been extraordinarily tardy in getting back to the work. There were no Cabinet meetings in August and just two, it seems, since they resumed on September 3rd.

Officials and advisers

The meetings of the Economic Management Council also seem to have been few and far between in recent months. This is the committee, made up of the Taoiseach, Tánaiste, Minister for Finance and Minister for Public Expenditure and their key officials and advisers, which closely co-ordinates economic and budgetary policy in this Government.

In fact, so pervasive was its power said to be that Ministers not included among its membership openly complained. Joan Burton previously described the council as secretive and during her bid for the Labour leadership in June argued it should include Ministers from large-spending departments. It was surprising to hear Burton tell the MacGill Summer School on July 23rd that she had yet to attend a meeting, although at that stage the recess was approaching and she had replaced Eamon Gilmore as Tánaiste almost three weeks earlier.

Economic management

Less “co-ordination and control” by the EMC might be a good thing if the role of economic management had instead reverted to the full Cabinet, but if that is the case then such management oversight could only have been sketchy in July and non-existent in August.

All of which means the Government is now involved in a rushed and closed budgetary process where time pressures mean power is even more tightly centralised with Noonan and Howlin, while in the other departments officialdom has the upper hand over new or newly assigned Ministers.

Is it any wonder that Leo Varadkar felt the need to verbalise his views on health spending and on the budget generally on the radio in the manner he did on Tuesday? Up to that point there were at most five or six hours’ discussion on economic and budgetary matters at Cabinet since it was reconfigured in July.

There are other factors underlying the damaging exchanges between Varadkar and the Taoiseach this week, of course. The incumbent premier with the ostensibly easy-going style seeks to assert his authority over the straight-talking pretender. We can expect more public clashes between Varadkar and the Taoiseach and indeed between Varadkar and other Cabinet colleagues in the weeks and months ahead as tensions rumble about his straight-talking – they would say self-serving – style.

Noonan indicated last week that this year’s budget statements may include a four-year plan for tax and expenditure. If this is to be the case it makes it even more absurd that the Cabinet collectively has had so little input to the budgetary preparations and now has so little time in which to catch up.

The secretive and centralised budgetary process not only raises issues of democratic accountability but also of effectiveness in budgetary and political management. It is worth remembering the extent to which the health budget was mishandled last year.

Varadkar spoke on Tuesday of seeking a supplementary budget of half a billion for 2014. This overrun and the fiasco over medical cards have their origins in a stand-off between James Reilly and other Ministers over health spending on the weekend before last October’s budget.

The precedent does not augur well, even allowing for the additional wriggle-room the Government has this year.