Simon Harris is trying to break the mould on how politics is done.
His frequently-announced savings scheme might be the big initiative he gets over the line before he moves on to the next soundbite or leaves the Department of Finance. But it does beg the question of how many times a single initiative can be announced without it starting to seem farcical.
The idea seems to have been first floated at a Fine Gael parliamentary meeting on February 11th, when he was reported to have promised that savers would be offered better returns on deposits or, more likely, investment vehicles with potentially better returns.
How the spin evolved from there is educational and entertaining, offering observers an insight into the DNA of Harris as a politician. The most uber-retail politician at a senior level in a generation, he is the digital version of the prodigious leaflet-droppers and door knockers of the past. After the kite was first flown at the Fine Gael meeting, and Coalition partners scampered to catch up, the drum roll continued.
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On February 15th, Harris told RTÉ’s This Week programme he was drawing up a strategy to help the “squeezed middle” to make money on their funds currently on deposit. The next day, Coalition sources told this newspaper it would not be a rerun of Charlie McCreevy’s SSIA scheme of 25 years ago. The same day, speaking to reporters at a meeting of EU finance ministers, Harris said the scheme would be brought to Government in the first half of this year and would be aimed at people who “are not uber-wealthy by any manner or means”.
A few days later, on February 19th, there was more talk – but still no more firm detail – from Harris at The Irish Times Business Awards, except there was now the additional claim that a plan would be brought to Cabinet within weeks.
Last weekend in the Sunday newspapers, there were yet more announcements – this time to the effect that he would reduce taxes on investment and create a “bespoke” savings scheme for children.
There was also the inevitable talk of a Fianna Fáil-Fine Gael split on the issue – at which point the comedy went into full swing, with the unabashed exuberance of one unnamed Fine Gael minister, who asserted Harris had “similar instincts and beliefs to Charlie McCreevy, who reduced capital gains tax to 20 per cent and trousered a fortune for the exchequer”.
Who knew Harris was hiding an inner McCreevy?
The never-ending nature of the announcement about the investment scheme says a lot about Harris, this Government and how policy is made. Harris is heading towards the first of his two budgets as Finance Minister before he returns to the taoiseach’s office. With little to show from his tenure so far, capacity will be deeply constrained by Ireland’s obligation and opportunity to lead an EU presidency in the second half of the year. There is a dotted line between that presidency and this initiative, in whatever form it eventually takes.
The idea of a savings and investment union in the EU has been a sacred hope for years. It is a long-standing irony that Ireland is a big base for fund management across the EU but access by Irish savers to those funds is rendered virtually impossible by the fact the retail products don’t exist. The big idea is important for investment and liquidity in a European capital market dominated by banks. There is potential to harness untapped liquidity for business. As has often been mentioned in the many, many inches of coverage in recent weeks, the Swedes are well ahead of us and have a much better developed capital market. They also have a wider and more secure tax base.
[ Lessons from abroad on Ireland’s new savings scheme for the ‘middle class’Opens in new window ]
The key ingredient in this still half-baked idea was last September’s EU Commission recommendation that member states should introduce savings and investment accounts. The special sauce is Fine Gael’s eagerness to please its own voters. The Swedish model is investment-based, not a cashback scheme. What Fine Gael offered in its election manifesto was a guaranteed return on money parents put in for children, in a way that disproportionately benefited the better off at no risk to themselves. In any genuine investment scheme, there must be risk to earn returns.
What the EU wants is a simple vehicle that cuts out complication and expense. It also suggests limited tax incentives. And that brings us back to the scurry and spin of the last few weeks.
There are aspects of the politics of this that are interesting.
Harris – and he is no novice at this – has moved out ahead of his department, something his predecessor Paschal Donohoe would not have done. That is not necessarily a bad thing, but given the form of its sponsor, it raises the alarm about a possible cashback wheeze paid for with public money for people who already have money – or at least generous tax breaks mainly benefiting this group. The cost of the potential tax incentive is unknown. What has not been considered is the opportunity cost. Whatever it is, it will be an upward intergenerational transfer of wealth from younger people who are mostly renting – and, if they’re lucky, cobbling together a house deposit – to their more comfortable elders with money to spare.
In this model of policymaking, there is no bigger picture nor any whole-of-Government thinking. It may all make sense in the end, but for Harris, this is primarily a political punt. The job now for others is to reverse it on to a policy platform that does make sense, and balances competing pressures.
[ John McManus: Why the middle class will not investOpens in new window ]
Constantly sprinting, but a man who has never run a marathon, Harris knows he has an electoral and a reputational deficit to overcome. He is determined to make his mark in his two budgets, to be taoiseach again, and reverse the debacle of the last general election campaign.
In his favour is time, and the benefit of an Opposition that is not offering a coherent alternative government.
Against him is the fact that, while he is given to speaking emphatically on every issue, he struggles to command consideration as distinct from attention. A frenetic political personality is not the assurance people with nest eggs want in the Minister managing their money. Harris is a verbal maximalist, who seems unable to resist making announcements even before the details are pinned down, but there is no evidence it works politically with the audience he is trying to engage.
Could the investment scheme turn his fortune around? Unlike other kites that blew away there is a real likelihood this will be delivered on in some form. His challenge is to garner an electoral return in 2029 – and to ensure these promises don’t boomerang back like his election manifesto.
