There can hardly have been a more fortunate Minister for Finance in the history of the State than Brian Cowen. In his third Budget yesterday he found himself able to reduce taxation, increase welfare payments and still keep the Government's finances in surplus. His Budget, he said was "economically appropriate and socially responsible" and with such a level of largesse to distribute it was difficult for the Opposition parties to land a punch.
However, Mr Cowen promised that it would be a prudent Budget rather than an election Budget. It shows few signs of prudence and "general election" is written between the lines of every page. It is a Budget with lots of handouts but very little vision. If Mr Cowen is possessed of a sense of direction for the public finances - and the need for further reform - it was not on display yesterday.
In the estimates, Government spending was forecast to increase by 8 per cent. Had Mr Cowen kept the increase to that level - or at least kept it below 10 per cent - then he could hardly be accused of incaution. However, Government spending is to rise by 11 per cent in an economy where the inflation rate is running at more than twice the EU average. Mr Cowen is fond of reminding us that international competitiveness is a sine qua non of economic growth; his Budget puts it at risk.
The Budget's "something-for-almost-everyone" basis will bring great cheer to Fianna Fáil. The sizeable increase in pension payments will do much to win the grey vote next year and the rise in unemployment assistance will also help the party's canvassers. But last week's The Irish Times/TNS mrbi opinion poll showed that by far the greatest priority for voters is the quality of public services like health and education. This Budget does not offer much evidence that improvement of public services is the Government's top priority.
A greener economy would not seem to be on the list of priorities at all. Despite the expectations, the Budget's green measures are no more than token. It is outrageous to dodge our commitment to reduce carbon emissions by spending hundreds of millions in purchasing carbon allowances. In addition, the damage to our environment from larger-engined cars and SUVs is disputed by nobody, but the Government spinelessly kicks higher VRT for those vehicles into the post-election long grass.
This is not a good Budget for the Progressive Democrats. The one percentage point reduction in the higher rate of income tax has been accompanied by an increase in the health levy for those on incomes of over €100,100. Add in higher VHI charges and other stealth tax increases and many of the party's supporters will see disposable income fall rather than rise. The PDs went out on a limb for a reduction in stamp duty on residential property and did not get it. But the party did bring about a better deal for first-time house buyers which will be claimed politically by both the PDs and Fianna Fáil.
Fianna Fáil have put themselves in a position to appeal to many prospective partners in next year's election.