Pat Leahy: Minister’s five-part budget mission

Donohoe’s tasks are Brexit, fiscal prudence, climate, public services and competence

Minister for Finance Paschal Donohoe: his budget must present a significant response to the threat of a no-deal Brexit. Photograph:  Brian Lawless/PA Wire

Minister for Finance Paschal Donohoe: his budget must present a significant response to the threat of a no-deal Brexit. Photograph: Brian Lawless/PA Wire

 

One of my esteemed colleagues never refers to Paschal Donohoe by his name. Instead, he calls him “Hello Everybody!” – the customary greeting of the Minister for Finance, whose bonhomie appears inextinguishable.

But Ministers who have been locked in budgetary combat with Donohoe in recent weeks say that for all the cordiality and gentilesse of their colleague, he has been tougher in this round of negotiations than in any since he became Minister for Finance 2½ years ago.

It has been a strangely muted process compared to the normal budget circus at this time of year. In normal, non-Brexit times, budgets dominate the political discourse for weeks in advance. Kites are flown and shot down, threats made and unmade, arms twisted and sometimes chanced. Each Minister does battle for his or her department’s spending allocation, employing all manner of high principle and low chicanery to wheedle a few extra million euro out of the finance-public expenditure citadel on Merrion Street that occupies the commanding heights of government.

Ministers grumble the combining of Minister for Finance and Minister for Public Expenditure roles has given Donohoe too much power

But these are not normal times. Brexit has sucked the oxygen out of politics as usual. And yet the task of formulating a budget, deciding the fundamental distributional questions of politics, is utterly central to the essence of what it is to govern. It is an expression of the character, political will and purpose of any administration. Don’t tell me what you value, says Joe Biden. Show me your budget and I’ll tell you what you value. Joe’s right.

And though it has been taking place behind doors which have been more tightly closed than usual, the same dynamics have been present, with Ministers scratching and scrambling for a bigger share of the cake, and the Minister for Finance holding out. Deals were still being hammered out in recent days. Donohoe told Ministers at Tuesday’s Cabinet meeting that if they hadn’t agreed a settlement by Friday, he would simply give them an allocation.

Exercise of power

A round of horsetrading ensued that would make the Ballinasloe Horse Fair look like an auction at Christies. The leeway has been minimal and cuts – though they are calling it “reprofiling of expenditure” – to capital budgets have been threatened upon many Ministers. The resulting ululations have been funereal. “I’m holding out to settle late,” one anxious Minister told me. “Should I have settled early?” Tell you next Tuesday.

Ministers grumble that the combining of the twin roles of Minister for Finance and Minister for Public Expenditure has given Donohoe too much power. The Department of Finance – for so long the imperious engine of government, until humbled by the financial crash – has regained some of the old swagger and does not see it that way. And Donohoe, very comfortable with the exercise of power, does not see it that way either. He has his job to do, he tells colleagues, and they have their jobs to do. Nobody is under any illusions as to who is in charge.

The Government’s reputation for economic competence has taken a battering

When he stands up in the Dáil on Tuesday, Donohoe will face five tests. If he passes them, he will have delivered a budget that is fiscally prudent, socially progressive and politically canny. He will have cemented his position as the second most powerful person in the Government, and the most powerful Minister for Finance the State has seen since the pomp of Charlie McCreevy.

So what are they?

First, Brexit. Donohoe needs to present a significant response to the threat of a no-deal Brexit. The Government’s no-deal preparations have been optimistic, to put it kindly. With the attention of the whole country on him, Donohoe needs to assure people that the Government can – operationally and financially – handle a no-deal.

Financial trust

Then second challenge is related: to deliver a prudent budget. The Government’s reputation for economic competence has taken a battering, especially on value-for-money issues like the children’s hospital. He needs to convince people he can be trusted with the national finances. His last few budgets have been panned by the Fiscal Advisory Council, the body set up to advise governments on how to avoid the mistakes of the past. It will be difficult to claim the mantle of prudence if the council gives him the thumbs down again.

Then he must introduce climate change measures. This will require not just shepherding through increases in carbon tax, but placing climate action at the centre of government planning. This will be a big change: an action plan is all very well, but the budget is where real choices are made. He will have to distinguish between those who can’t change their behaviour, and those to whom it is merely inconvenient.

Fourth, Donohoe needs to answer the prevailing political demand for investment in public services and provision for the people most in need of them. It’s expensive, though. The cost of running the State increases every year, but there is a special demographic squeeze right now. That’s because, as number-cruncher officials explain, lots of people didn’t emigrate in the 1960s and are now enjoying an expensive old age. And because we spent the years of the economic bust having babies (sure what else was there to do?), more teachers and classrooms are required than ever before. But public spending increases will have to be managed so that they benefit those most in need – struggling families, those with special needs, pensioners in poverty, poorer communities. This eats up money, and there won’t be much left for tax cuts for those who get up early, etc.

Finally, Donohoe faces the political challenge to present everything in a coherent and convincing narrative which demonstrates the Government has a plan to improve people’s lives and it is working. Though it’s hard to see past the fog of Brexit, this will be the last budget before an election. It is the Government’s biggest chance to present its vision before that campaign starts. So no pressure then, Mr Hello Everybody.

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