Election 2020: Which party can get things done?

Cliff Taylor: Voters will have to reach a judgment on who is best able to deliver on promises

The Department of Finance estimates that €11 billion will be available over the next five years to allow spending to rise, taxes to be cut and some money to be put aside in case trouble hits.

The Department of Finance estimates that €11 billion will be available over the next five years to allow spending to rise, taxes to be cut and some money to be put aside in case trouble hits.

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The latest budget forecasts from the Department of Finance gives the political parties a bit of a free pass in outlining their spending and tax policies. The department estimates that €11 billion will be available over the next five years to allow spending to rise, taxes to be cut – a bit – and some money to be put aside in case trouble hits. So all the parties can try to be all things to all voters, and promise to be “prudent” too.

One of the things we really need to know is what their priorities are – what they would pick to do if there was less cash around. But the €11 billion bounty may help them to avoid facing the hard choices which they might well have to make if in office.

We need the money to pay for spending plans and few parties will outline any plans to raise extra revenue, bar some plans from the left to soak the better off a bit more

The other issue that will really make a difference to the electorate is who they think will actually be able to deliver. Plans to spend money are all very well, but getting “stuff” done in a reasonable timescale is another thing entirely. My gut feeling is that focusing on one or two or the big priorities rather than filing manifestos with a bit of everything might pay dividends. Tell us three things you would do in the first 100 days in office to start – just start – improving the emergency-department crisis, for example. But I don’t expect this to happen.

Be sceptical

So how should we judge what we are about to see? Well, here are a few thoughts. Be sceptical of everything but particularly of talk of any income tax reductions. We have just gone through a period of exceptional exchequer revenue growth, but have seen the vast bulk of additional resources – planned and unplanned – go on higher spending.

True, some of this was “catch-up” spending after the cuts of the crisis years. But there is still going to be huge pressure to spend more in the years ahead and the budget watchdog, the Irish Fiscal Advisory Council, believes that – already – not enough is being set aside to deal with an ageing population. So yes, there will be tweaks and maybe some reliefs , but I wouldn’t bank on much by way of significant tax cuts, despite what is rolled out next week. We need the money to pay for spending plans and few parties will outline any plans to raise extra revenue, bar some plans from the left to soak the better off a bit more.

The second point to watch is where parties put their priorities – and how they would deliver on them. Both Fine Gael and Fianna Fáil will commit most of the resources which may – may – be available to higher spending. Where – and how – parties plan to spend will also be important and possibly instructive. What rate would they increase day-to-day spending, where would they invest and how would they plan to ensure value for money?

And, crucially, how would they deliver. Health spending has risen by 25 per cent since 2013. And there have been improvements. But the chronic problems of access to the system remain. Fine Gael’s spin is that they have only had a couple of years on this, as before that they were too busy fixing the economy. Fianna Fáil’s, so far, is that they will bring “change”. Voters are entitled to be sceptical of both. But they will still have to reach a judgment on who is more competent to deliver.

The free lunch we have got from soaring corporation tax revenues is unlikely to last

The third thing to watch is how open the parties will be about what they would do if the economy does hit a bad patch – how would they respond and what would their priorities be. The threat of a no-deal Brexit helped Minister for Finance Paschal Donohoe to avoid big giveaways in this year’s budget, an unusual – and welcome – occurrence before an election when there was money around. But the assumption on which the new forecasts are based – that there will be a trade deal between the UK and the European Union or an extension of the transition period – may be too optimistic. We just don’t know.

Both Donohoe and Fianna Fáil’s finance spokesman Michael McGrath talk about building up cash buffers in case trouble does hit. With a debt still around €200 billion, we need to do this to give ourselves some insurance. But they won’t have much time to build reserves above current levels if the UK leaves the EU without a new trade deal at the end of the year, delivering a nasty jolt to our economy. A reasonable question to all the parties is what they would do if the budget for 2021 has to be framed against the backdrop of this risk ?

Promise inflation

So far the debate here has told us little. I do wonder whether Fine Gael is getting anywhere with their relentless attacks on Fianna Fáil’s role in the bust. Beyond that we are seeing solemn promises of prudence with the usual dance of the seven press conferences before manifestos are unveiled. Already there are signs of “promise inflation” in areas such as pensions, retirement ages and tax, with little clear recognition that money spent in one are means less spent somewhere else, or higher borrowing. The free lunch we have got from soaring corporation tax revenues is unlikely to last.

But the real issue for voters will not be the promises, but who they feel can actually deliver on the key issues in health and housing, while also doing as much as any Irish government ever can to keep the economy on track. With €11 billion to spend, it is not difficult to allocate more cash. But how to make sure this gets things done is the real issue. As is what happens if the cash pile does not appear in the first place.

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