Jim Power: We don't need the circus of Budget Day. We need long-term strategy
Mininster for Finance Pascal Donohue will deliver his Budget 2026 in just over five weeks. Does Ireland need a performative Budget Day presentation in the Dáil? Picture: Government Information Service
With just five weeks to go to Budget 2026 and a little longer until the presidential election, these two topics will dominate economic and political discourse over the coming weeks.
Personally, I don’t see the point of an expensive presidency in the first place, but it is enshrined in our constitution. In relation to the annual budget, I see even less of a rationale for it.
Fiscal policy should evolve on a strategic gradual basis during the year and from year to year, and should not be subject to an annual spectacle in the Dail when fiscal goods are dispersed like candy at a kids’ party. The political players on both sides of the house obviously see a lot of value in the annual spectacle and unfortunately, we are stuck with it.
The annual budget presentation does militate against longer-term strategic planning and policy formulation. Think back to one infamous budget when decentralisation was picked out of the air.
An amazing amount of verbiage, cyber space, and old-fashioned paper is wasted every year on an annual fiscal event that really changes very little in a real sense. This year, the Department of Finance has promised a budget-day package of €9.4bn, with €1.5bn on taxation measures and the rest on expenditure. Given that the Government has given a commitment to reduce the VAT rate for some of the hospitality sector to 9%, there won’t be a lot left over for other taxation measures if this materialises.
On the expenditure side, at least we are likely to see the end of poorly targeted cost-of-living measures, but we can be guaranteed that the budget will contain the usual heavy sprinkling of populist nonsense. I can already hear the response from the opposition along the lines of missed opportunities.
Population data published by the CSO over the past week highlighted the requirement for a long-term strategic approach for managing the economy and the public finances. In the year to April, the population is estimated to have increased by 78,300 to reach 5.458m. The growth was attributed to positive net migration of 59,700 and a natural increase of 18,600.
Growth in population is a positive indicator for a country like Ireland where there is a strong requirement for non-Irish citizens to come into the country and help provide essential public services. It stands out in marked contrast to countries such as Japan and many older European countries where populations are declining and ageing, which undermines economic and social momentum and vibrancy.
The fact that so many people want to come into the country to live and contribute economically and socially does say something very positive about Ireland as a place to live and bring up children. It is also good to see that while 35,000 Irish citizens emigrated over the past year, 31,500 Irish citizens returned to live in the country.
Of course, a growing population has stark implications for the provision of public services such as health and education, and indeed for many other public services and amenities.
However, the implications for housing demand are even more stark. We have failed badly over the past couple of decades to supply anything like enough residential housing and one cannot be confident that we will succeed over the next couple of decades, such is the paucity of long-term policy and real vision in this area.
Apart from the ongoing growth in population, the other stark feature of the latest population data is the ageing of the population. In April, it is estimated that 861,100 people were aged over 65, representing 15.8% of the total population. This age segment has increased by 22.8% since 2019, and the demographic projections suggest that it will continue to grow strongly over the coming decades.
Such an ageing population has profound implications for the health service, for pension provision, care for older people, and the tax base. These areas need to be planned for now and not be recognised as an issue when it is too late to do anything about it.
Demographic developments tell us more about the present and the future than any other indicator. Fiscal policy should have a long-term strategic focus and not be undermined by the circus that is budget day.
