If you need to know the costings of the Programme for Government agreed on Monday, you can’t afford it. Gone are the days when politicians campaigned in poetry but governed in prose. What is intended now brings the Government to lyrical heights. We are on the cusp of the Ireland de Valera spoke of in his 1943 Saint Patrick’s Day address: “The home of a people who valued material wealth only as a basis for right living".
We are a people “satisfied with frugal comfort” who “devoted their leisure to the things of the spirit". The Programme for Government makes perfect sense if read as a spiritual aid, not an economic plan.
By any rational measure, it is a plan that is unaffordable. It is unfunded. However, some essential safeguards are built-in. From 2022, tax bands and allowances will be indexed. There will be no tax increases except on carbon, sugar and plastic. There is yet another commitment to rejig the Local Property Tax. Indexation, however, costs about €600 million a year, at least. There is a commitment to abolish the 3% USC surcharge on incomes over €100,000 which is a snip at €130 million a year.
Add in backsliding on the old-age pension eligibility increase to 67, and you have a billion a year, every year, right there. This will bear down on spending, unless funded by borrowing. But on borrowing, we will somehow move back towards a balanced budget regardless.
Deficit reduction, plus no tax increases except on carbon, sugar and plastic = spending cuts. If there aren't spending cuts, tax increases, broken promises or a combination of all, then there is only borrowing left. At some point, there will be an unpleasant reckoning. But that is in the future. For now, unfunded and uncosted, the Programme for Government, floats ephemerally in the ether.
Ideologically it is a win for the Greens. Economically it is a backstop for Fine Gael. Politically those clambering aboard from Fianna Fáil believe it is a life raft. There is only a single hinge joining it to any credible framework. Economic growth must be swift and strong enough to close a dangerously widening budget deficit without the need for spending cuts or tax increases.
To state that the Programme for Government is not an economic plan, is not opinion. An actual plan is, in fact, separately provided for. But in the future. First off, there will be a ‘July Jobs Initiative'. It seems to be a short-term initiative to the end of 2020. It will particularly focus on tourism and hospitality, retail, entertainment and the arts, construction. But in October, comes the big one. It’s called the National Economic Plan and will chart our long-term recovery.
The real plan comes in October. The difference is that, what was agreed this week and is on its way to newly empowered party members around the country, is a list of things we think we would like to do. The October plan, is the list of the things we actually will do, because we 'found' money — mainly borrowed — to pay for them.
Readers of this column might recall last week some fretting about the unaccountable power of party members, to hold a domino-style set of plebiscites, to second-guess our general election. I am happy to report that, based on careful reading of the document sent to them, all the real decisions are reserved for the government that will take power after they ratify the project in principle. There is almost no danger the eventual outcome will bear much resemblance to what is proposed. That’s my analysis, not a value judgement.
If Fianna Fáil’s success is simply being there, and the Greens' to have set the tone, Fine Gael’s is to have set the terms and conditions. Indexing tax bands, is both a colossal cost in itself and a highly effective means of shutting down new spending. It is about greenbacks not the green agenda. It takes care, and shows cause, with those who that party will want to vote for them. It is hiding in plain sight, apparently its full consequences not seen. Its costs will bear consecutively with the commitment to rein in borrowing, and that will make the difference between the things we aspire to, and what we can actually afford.
Some of what is aspired to is changed patterns of farming. Watch carefully for sharp elbows between Fianna Fáil and Fine Gael to avoid the agriculture portfolio. It may replace Health as the new 'Angola'. Before the next minister arrives there is a looming Brexit. A comprehensive deal by December 31 seems a pipe dream. A partial deal is the best that can be realistically hoped for. In any event, dislocation for the food sector is imminent. That could be further bad news for an already depressed beef sector. And that’s not to mention changing consumption patterns. As a commodity, dairy may have plateaued and farming is ultimately tied to the price of commodities. In tandem, there will be a heightened need for environmental delivery. So far, so good. We are all for that.
Except, it must be paid for. The current GLAS scheme gives participating farmers about €3,500 each.
But there is talk now of reinstating the former REPs scheme, which was more popular and delivered more too. So it might. It cost more than €10,000 per farm. And that was then. Clean isn’t cheap — unlike promises.
Purposeful vagueness is a political skill. In the years between the Good Friday Agreement and the establishment of the Northern Ireland Executive, acting occasionally as government press secretary I had to learn smooth, soothing lines and deliver them to a sceptical media with solemnity. Sceptical media is now in short supply. There is groupthink in the concerted enthusiasm of many for what is intended. That should be a warning for those entering into it. You cannot exit by the door you entered. And some will not find any exit ever. The purposeful vagueness in the Programme for Government seems sufficient to achieve its aim, of delivering a government. It is that government which will then take the real decisions at a future date.
Those decisions will have context. Some like Brexit and Covid-19 are largely outside its control.
Others, like the parameters it sets itself, are intended to forcibly shape its ultimate objective. It would be the greatest mistake to confuse that ultimate objective with promised delivery of any specific plan. As de Valera said of Saint Patrick he came “promising happiness here no less than happiness hereafter". So it is in the Programme for Government.