Clear that Labour is comparative winner in budget

Analysis: Party put ‘political facts on the ground’ and more or less made good on its promises

Harry McGee analyses the budget announcements.

 

Before one syllable of today’s budget was uttered by Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin, it was clear that Labour was the comparative winner.

Not in comparison with Fine Gael but really in comparison with Labour last year. The 2013 Budget announced last December was a forgettable experience for the smaller party in Government.

It lost out ignominiously when it failed in its effort to increase the rate of USC by 3 per cent for those earning over €100,000. Its agreement to a cut in child benefit resulted in a terrible PR fiasco.

With that last act, all of the promises it made in its infamous ‘Tesco’ advert before the election had been broken. And to compound its misery, the party chairman Colm Keaveney went overboard over social welfare cuts.

And the year before was not great either - Minister for Education Ruairi Quinn was forced to reverse cuts he had imposed on disadvantage schools and also on special resource teachers.

So, it was vitally important for the party to be seen to asserting itself and its identity in this budget, especially in the light of its poor performances in opinion polls.

This time when the party put ‘political facts on the ground’ such as free GP care for under fives, protecting class sizes, and protecting social welfare rates, it more or less made good on its promises.

This time around it is perhaps Noonan and Fine Gael who will face the greater flak than Howlin and Labour.

And that is in the context of Howlin always getting the short straw in terms of having to announce cuts.

Why might that be? Maybe Noonan over-announced when saying that people would be astounded by all the good things in the Budget. With him taking a whopping carry-over of €600 million into the Budget, he had much less ground to make up.

But while the €500 million jobs package sounds very impressive, the lustre is dulled a little when it is realised that the bulk of it (€290 million) comes from something that everybody expected, the extension of the lower 9 per cent VAT rate for the hospitality sector.

The other 24 items collectively contain some good measures but you wonder do they have sufficient ballast to provide the massive fillip and stimulus that some sectors - especially construction - really need.

And in the new tax measures he has announced there are some that will be thorny and painful. No more so than the 10c being put on the old reliables (cigarettes and a pint of beer) for the first time for several years; as well as another 50c rise on a bottle of wine.

Noonan said the lower 9 per cent VAT rate will cushion that but that argument will fall deaf on many ears.

And there is evidence of one broken promise.

The pension levy was supposed to come to an end in 2014 but it looks like its demise has been delayed for a year, and the budget booklet suggests that it is being increased from 0.6 per cent to 0.75 per cent for next year.

The new charges for medical cards as well as the capping of tax relief for medical insurance to €1,000 will also draw criticism. Noonan said that it will affect only “gold-plated” policies but most policies these days cost well over €1,000 per annum.

The reduction to a €230 standard for maternity leave (technically on Howlin’s patch) is combined to taxation measures introduced for last year.

Mothers with infants have been hit in a Budget for two years running and that is going to hurt.

Cumulatively both Ministers will be assailed for a range of measures that affect older people - namely the removal of the telephone allowance for pensioners; new income restrictions on medical cards for over 70s; and the scrapping of the €850 bereavement grant.

There is further bad news with a huge sum (€113 million) being earmarked for savings in medical card ‘probity’. In reality, that means that some families will have medical cards taken away from them.

On the other side of the equation, the extension of free GP care toi under fives will be welcomed.

Howlin has shown innovation in his use of the windfall from the sale of the National Lottery. As well as the €200 million earmarked for the National Children’s Hospital, he has also found €200 for a capital programme that will be used for roads, sports, tourism, and 2016 commemoration events among other things.

But then when you look at the estimates for individual departments you see cuts in sports (€3 million); tourism (€13 million); and roads (€46 million).

So as one hand giveth, the other taketh away. That said, many of the big cuts in the public expenditure side were pre-announced in the past few days and none in itself if a political land mine.

It’s not the most austere budget we have seen but it by no means a giveaway. Noonan more than Howlin suggested there would be a giveaway element but the evidence points elsewhere.

Politically, the jobs stimulus on the revenue side is a little underwhelming and Noonan also delivered a few stings in the tail.

There’s no major controversy lurking and perhaps Labour will sense they have had the slightly better day today, if they make adjudications in that light.

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