Bill is tough but necessary
AT ANY other time, the publication of the Government’s Finance Bill might be expected to generate much discussion and debate but the current political turmoil dominates the media to such an extent that the Bill published yesterday is little more than a sideshow. However, the Finance Bill, which will put into legislation the measures announced in last month’s Budget, is the only reason the Government is still in existence.
If there is one major item that Fianna Fáil and the Green Party are still in agreement on, it is that the Finance Bill must be passed by the 30th Dáil.
Most of the significant measures in the Bill are necessary to fulfil the terms of the bailout that the Government negotiated with the European Union and the International Monetary Fund. This State no longer has sovereignty over its fiscal policy and it will not reclaim it until many years have passed and many billions of euro have been repaid.
That said, Minister for Finance Brian Lenihan had it within his powers to soften some of the harsher measures announced in the Budget and transfer the pain elsewhere. He has chosen not to do so and the weakest in our society will be affected. Measures in the Bill which were not in the Budget include a provision for paying tax by credit card and a limit on the tax relief on electric cars. This is not a Bill which seeks to offer solace to those in distress, although one measure in it will bring relief to property investors.
Passage of the Budget measures into law, consisting of tax increases and spending cuts amounting to €6 billion, will be closely observed by the EU/IMF lenders. They will be concerned primarily that measures are being taken to repair the ruinous condition of the public finances, as would any lender. They will be less concerned that the measures sow the seeds for economic revival. Even with the adjustment of €6 billion, the deficit this year will be in the region of €14.7 billion.
The Economic and Social Research Institute predicted this week that the economy will grow by only 1.5 per cent this year. It predicted also that the numbers in employment will shrink again in 2011, the fourth year in a row. The numbers signing on the dole will be less than they might be only because there will be 100,000 emigrants over the next two years, moving to live in other countries in the hope of work denied them in Ireland. Government Ministers like to point to the continued success of our export sector while glossing over the fact that exports are on the increase precisely because other economies, unlike ours, are growing strongly.
The Oireachtas debates on the Finance Bill will be instructive. While the Government wishes to remain in office to see it enacted, both Fine Gael and the Labour Party also hope that it is passed by this Dáil so that the harsh measures it contains can be blamed on someone else.
The Opposition parties might be carefully selective about the measures they criticise and the language they use for fear that the electorate might expect that, in government, they would reverse them.