Auction politics back with a vengeance

Finance Minister Paschal Donohoe professes to be very proud of his rainy day fund and it is surely good that our Government has a sinking fund from which resources can be drawn should the national roof fall in, or fiscal dry rot develop.

Mr Donohoe’s €1.5bn contribution to the fund sounds like a lot of money, but is small change. We have been here before, after all. 

One of his predecessors, Charlie McCreevy, also set out to provide for the future and we all know what happened next.

In recent interviews, Mr Donohoe has sounded a little edgy. One wonders what he really thinks about his boss’ casual references to large capital projects and their likely cost. 

The truth is that auction politics is back with a vengeance and Fine Gael’s reputation as the party of fiscal rectitude is going up in smoke.

For some nervous supporters, it is a bit like watching your steady-if-dull parent undergo a mid-life crisis and start shelling out the family savings on facelifts, fast cars, and sun holidays. 

The Taoiseach, Leo Varadkar, appears to regard a billion thrown here or there as the equivalent of loose change.

Opposition leaders, meanwhile, are forced to play a double game: look on like outraged matrons, aghast at the spending spree, while simultaneously coming up with yet more ideas for laying waste to the national finances.

All of this is made possible by an upsurge in corporation tax revenue, which largely caught the forecasters by surprise. 

It is, for Ireland, the equivalent of a gusher that could soon — perhaps quickly — run dry.

They realise this only too well down in Merrion Street. The failure to make real inroads into the mountainous national debt has been noteworthy.

According to the latest Department of Finance Stability Programme update, “the Government is acutely aware that the ratio of debt to modified gross national income is too high, at over 100%.”

The problem lies in the failure of the Cabinet to set about managing peoples’ expectations, and this, in turn, can be traced back to the 2016 general election, which has resulted in effective political deadlock.

Since then, we have been in pre-election mode. 

However, it may not be too late for the finance minister to take hold of the situation and assert his undoubted authority in the manner of his 1980s predecessor, Ray MacSharry, who faced down the then Taoiseach, Charles Haughey.

The difference, of course, was that MacSharry was operating in a time of crisis and it is usually only at such periods that the Merrion Street mandarins get to assert their authority.

But would it not make sense to start preparing the administration, ahead of time, for the almost inevitable turn down in the economic cycle, not to mention the possibility of a sudden shock?

The business of seeking cuts in spending programmes within government should be ongoing and constant.

Where financial or managerial incompetence is discovered, it often says something about the culture of an organisation. 

A case could be made for the organisation to be taken over by groups of handpicked public servants and outsiders who have the required accounting and financial skills.

Where certain public bodies are repeat offenders in mismanaging resources, they should be treated like failing schools. 

Such a shake-up may be traumatic, but can surely be cathartic, allowing for the unearthing of talent in the junior ranks and for the sending of a message to other underperformers.

Some years ago, the head of the economic and financial affairs directorate in the European Commission, Caroline Vandierendonck, wrote about the need to reconnect funding decisions with policy priorities. 

She stressed the need for regular spending reviews within government, drawing a distinction between strategic reviews, where the very future of spending programmes is questioned, and tactical reviews focused on increasing the efficiency of spending.

At the very least, a strong finance minister will represent the interests of the taxpaying voters and will present, in an honest and straightforward manner, the various options. 

The problem currently is that the cards are politically stacked against the minister, what with the prospect of an autumn election looming.

But it is in times like this that the political orthodoxies — that voters like to be ‘bought’ with goodies — are best challenged.

Earlier this month, the Taoiseach was halted in his tracks by a determined 12-year old girl in Co Mayo.

Aoibheann Mangan gave him a talking to on the continuing lack of decent broadband services in rural Ireland.

It can be hard to stick to the path of fiscal virtue when one is being constantly waylaid by single-minded citizens with little interest in boring matters such as cost containment. 

In today’s political world, emotion usually trumps analysis and rational decision-making is an early casualty.

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