Jim Power: Weak budget exposes ‘new politics’ concept
As I watched Michael Noonan deliver his offering, I could not help but reflect on this prediction, which in hindsight looks very prescient.
It was effectively a budget prepared by Fianna Fáil and the Independents, but presented by a Fine Gael minister.
The 3:1 victory for expenditure over tax reductions was never a Fine Gael policy, at least not to my knowledge.
It was very much the stance adopted by Fianna Fáil and the Independents and one wonders what satisfaction Fine Gael could possibly get from being a Government in name only. The allure of power does many things.
That is, of course, what ‘new politics’ is all about and I probably should not have been terribly surprised that Budget 2017 has turned out to be a populist scatter-gun budget that left many people slightly better off, but nobody significantly better off.
Perhaps I am an old- fashioned traditionalist, but the more I see of ‘new politics’ the more disgusted and disillusioned I become with the whole concept.
The ‘new politics’ budget lacked any strategic vision or direction, which is exactly not what was called for in an environment where Ireland is facing into immense domestic and external challenges.
I watched the budget on a TV screen on my desk, which is situated beside a Bloomberg terminal.
As I watched the two ministers present their respective offerings, I was simultaneously watching sterling weaken sharply on the exchanges.
This is not to suggest causation or correlation, but in an ironic way it highlighted the importance of delivering a budget that had a clear long-term strategic focus that would set Ireland up in a better way to cope with all of the challenges in the short to medium-term and beyond, but particularly with the immediate issue of Brexit- induced sterling weakness.
I am not naïve enough to believe that a single budget can change the world. This week’s budget package of €1.3bn may sound like a significant amount of money, but when considered in the context of projected gross voted current expenditure of €53.5bn in 2017; gross voted capital expenditure of €4.5bn; and projected tax revenues of just over €50bn, it is a relatively insignificant amount of money that would not be capable of changing very much.
Having said that, Budget 2017 was presented in a markedly different environment than we have seen for some years and could have been used as the beginning of a strategic exercise aimed at enhancing Ireland’s competitiveness, rewarding work, and improving Ireland’s overall long-term productive capacity.
Instead, we were treated to a ragbag of policy initiatives, none of which amounted to very much in isolation, and when taken as a package lacked any sort of strategic coherence.
This is not the fault of the Minister for Finance, but rather is the product of so many diverse political interests all feeding into the trough.
The USC package is costed at a not insignificant amount of €335m in 2017. Yet, when spread over hundreds of thousands of taxpayers, it will not make very much difference to anybody.
Most workers will be better off by an amount of between €150 and €350 in a full year, much of which will be clawed back by the non-indexation of bands and allowances.
In the aftermath of the budget there has — to my knowledge — been little reaction at the manner in which income taxpayers were treated. In my view, they were treated with total derision. However, that is the way taxpayers are dealt with in this country.
We are just seen as a bottomless trough from which populist politicians can extract monies to curry favour with the non-tax paying sections of society.
For example, the total failure in Budget 2017 to address a situation whereby somebody earning over €33,800 ends up paying the top marginal rate of tax, is criminal.
In most EU countries, one would have to be earning over €150,000 before one would end up paying such marginal rates of tax.
It is time that the rights of taxpayers and the contribution they make to society are recognised and appreciated, rather than demonised.
