Opinion:Fianna Fáil may come to regret not the tough choices in the Budget, but the fact that not enough were made, writes Stephen Collins
THE FURORE of the past few days over the abolition of the over-70s medical card is a classic illustration of the adage coined by Albert Reynolds in 1994 that it is the little things in politics that trip you up.
In the context of the Budget as a whole, it is a small measure that affects relatively few people, but the depth of the hostility to the move has rocked the Government back on its heels.
The controversy has also distracted attention from the fundamental question of whether Minister for Finance Brian Lenihan has done enough to get the State's finances under control or has missed a golden opportunity to confront the fundamental issues. In time, that may emerge as the real weakness of the Budget.
If the Minister is ultimately forced to bring in a supplementary budget next year because tax revenue again fails to live up to expectations or spending is not reined in sufficiently, then the current row over the abolition of the over-70s medical card scheme could pale into insignificance.
For the moment, though, Fianna Fáil TDs have been spooked by the issue, causing one, Joe Behan, a new TD for Wicklow, to resign from the party, undoubtedly putting pressure on other malcontents to follow suit.
The medical card row has generated so much heat that a range of other cuts in the Budget, affecting areas like social welfare and education, have received very little attention, as Opposition and Government TDs alike focus on the plight of the elderly who will lose their automatic entitlement to a medical card.
During the past decade and a half of unprecedented wealth, none of them would ever have guessed that the ghost of Ernest Blythe would come back to haunt the corridors of Leinster House. The man who took the shilling off the old-age pension in 1924, and was turned into the bogeyman of Irish political history by Fianna Fáil, must be smiling now, wherever he is.
Few bothered to recall that Blythe not only cut the old-age pension but all State salaries by 10 per cent in 1924. He took the action at a time when the State's finances were in a far worse condition than they are now due to the ravages of the Civil War. In any case, the pension was restored four years later.
In politics, though, myth is often more potent than fact. The defeat of John Bruton's budget because of its imposition of VAT on children's shoes is another example. Fianna Fáil subsequently implemented the measure without a murmur, but it was hung around Bruton's neck as a byword for political misjudgment for the rest of his career.
The abolition of the medical card for the over-70s may become a millstone around this Government's neck, particularly as it is certainly just the first instalment in a series of painful clawbacks of entitlements dispensed during the boom. The Government had very good reasons to abolish the current medical card system. Not only did the Department of Health have to find significant savings somewhere, the scheme was ill-thought out and far too costly from the beginning. The Irish Medical Organisation effectively mugged the exchequer after Charlie McCreevy had announced it without warning in his 2001 budget and it helped Fianna Fáil to its comprehensive election victory a year later. It was not the only ill-judged scheme that taxpayers' money was squandered on for electoral gain during that period.
The ham-fisted way in which the income thresholds were announced and revised on a number of occasions during the week only added to the Government's woes. The anxiety created among the elderly was unnecessary and cruel, when the real targets of the measure were the doctors who effectively killed the golden goose by the scale of the concessions they wrung from a profligate Government back in 2001.
The bigger issue is whether the Budget has done enough to get the State's finances back on track. Lenihan set out to find €3 billion extra from tax revenue and savings, while still allowing borrowing to rise to €12 billion.
He brought in €1.2 billion of his €3 billion target by the 1 per cent income levy and more than half a billion more through bringing forward the date of corporation tax and capital gains tax payments next year. These simple measures were the easy options and the early tax date can't be repeated next year.
By planning to borrow €12 billion next year, the Minister is providing for a position where the general government deficit will have risen from 24.8 per cent of GDP last year to 36 per cent this year and 43 per cent next year. Leo Varadkar of Fine Gael pointed out in the Dáil that the Government was on course to double the borrowing requirement in just two years.
Some commentators even think Lenihan is being too optimistic. Goodbody Stockbrokers forecast yesterday that the deficit next year will be 8 per cent of GDP rather than the 6.5 per cent projected by the Minister. Goodbody also predicts the economy will shrink by 4 per cent next year, almost doubling this year's 2.5 per cent contraction. If they are right, then the Budget is simply the first instalment in a succession of hairshirt measures. In time, Fianna Fáil TDs may come to regret not the tough choices already made, but the fact that not enough of them were taken this year. Putting off issues like taxing child benefit or, more importantly, introducing root and branch reform into the public service has only postponed the evil day.
Politically it would have made more sense to get the bulk of the bad news out of the way in one fell swoop. Going back to the well again and again will only make the voters angrier.
To be fair, the Government did give some leadership by adopting a 10 per cent cut in salaries. The President and top civil servants followed this example, which is to be welcomed. It is a pity something similar could not be applied to the private sector and to our super-rich tax exiles who trade on their Irishness but avoid their responsibilities to their fellow citizens. Unfortunately, it may be impossible to impose a super levy on them, but there is no reason why they should be allowed to retain their Irish passports. If people over 70 on tiny pensions have to pay to visit their doctors, it is time to extract something from the mega-rich tax dodgers.