#Budget18: Prudent Paschal on dry land with politically-proofed plan
"Harmless, I suppose, is how you would describe it,” came the description of Budget 2018 by one Cabinet minister in the Dáil canteen yesterday evening.
A “damp squib” is how Labour’s Joan Burton branded it.
Paschal Donohoe’s first full budget was underwhelming in its build up and it was similarly low key on delivery.
It turned out that my media colleagues and I were well informed in recent days in our speculation with virtually no surprises in the end.
Donohoe made a virtue of how modest his increases are, emphasising that the spending increases lag well behind the level of actual economic growth in the country at present.
His speech, which was more than an hour long, did its best to fulfill its Late Late Show obligations in seeking to give out something to everyone, but the amounts involved were so small that there was no jubilation from any quarter to what was revealed.
If you were to listen to the Opposition, it was less Prudent Paschal and more a case of Penny-Pinching Paschal.
But, in truth, they struggled to land a blow on what would appear to be a well politically-proofed budget.
Perhaps that is a result of the exhaustive talks Donohoe had to undertake with his Independent Alliance colleagues and with Fianna Fáil.
Sean Fleming, the chair of the PAC, told me he was impressed by how Donohoe managed to expand the amount of money he had to hand out by raising taxes in areas where they would not impact on the public.
It is in the quiet conversations along the corridors of Leinster House that the temperature is best gauged and, unlike so many occasions in recent years, there was no landmine, no own goal for the Government to try and resolve.
In total, Donohoe announced a budget day package of up to €1.2bn but, because of his desire to spread out the benefits, he stood accused of spreading it out too thinly.
He denied his package lacked focus insisting that he made a priority of increasing funding for health and housing, which he said received “significant increases”.
The budget for the Department of Health is getting an extra €685m, bringing the total 2018 budget to a massive €15.3bn.
He said there will be an additional 1,800 frontline staff.
Donohoe also said he delivered what he called a focused tax package, which sees the Universal Social Charge cut marginally on the two middle rates while the level at which the higher rate of income tax is paid has been increased by €750 to €34,550.
There was something, too, for the 147,000 self-employed people by way of the €200 increase in the Earned Income Credit but they remain at a loss compared to their PAYE counterparts.
He also said he delivered a similarly focused social welfare package which sees a €5 increase to all of the main social welfare benefits from the end of next March.
Labour’s Alan Kelly said the deferred entry of the increases means the net increase is not €5 but really €3.85.
When challenged about the small increase in the pensions in media interviews, Donohoe said he did what he could afford.
“We could have set it at €50 a week, but then I’d hit the budget next year and find I’m in a position where we can’t actually afford it,” he said.
“I not going to go down that route again. I want an economy that’s more resilient. I want people at home feeling more secure about their personal financial futures.
“The way you do it through taxation is step by step [and] that’s what we’re doing today.”
Much of the new spending is set to be paid for through a significant trebling of stamp duty from 2% to 6% on commercial property sales.
The hike, all going to plan, will deliver an extra €376m but it led former public expenditure minister and Labour leader Brendan Howlin to accuse Mr Donohoe of engaging in Charlie McCreevy-style economics.
“Using property-based revenues to reduce income taxes is incredibly unwise. Echoes of McCreevy economics,” Mr Howlin tweeted.
Using property based revenues to reduce income taxes is incredibly unwise. Echoes of McCreevy economics #Budget18
— BrendanHowlin (@BrendanHowlin) October 10, 2017
Donohoe denied this was the case. He also moved to put out a potential fire when he clarified that while agricultural land would be subject to the rate increase, there would be a number of exemptions for those selling land to family members.
Howlin also took issue with the revelation within the budget documentation that Taoiseach Leo Varadkar’s controversial Strategic Communications Unit will cost €5m in 2018.
“This is extraordinary,” he said. “Taoiseach told the Dáil this would be cost-neutral. €5m could have increased book rental funding by a third.”
Others made the point that the increase in spending on cycling initiatives totalled just €3m in comparison.
Donohoe responded to such criticisms by saying good communications are a virtue and in reality, resources have been moved around to cover the cost of the new unit.
Donohoe and his Government colleagues were also accused of using the budget to cover up the bad news that Dublin is set to lose out in the race to host the European Banking Authority and the European Medicines Agency following the UK’s departure from the EU.
The news broke amid the height of activity in the Dáil, but Opposition TDs such as Stephen Donnelly vented his fury.
Dublin was an outside favourite to win out due to Ireland’s lack of natural geographical allies, while Frankfurt is viewed as one of the leading candidates for the EBA, with Amsterdam and Copenhagen among the leading contenders for the EMA.
Meanwhile, Finian McGrath of the Independent Alliance, who had marched up the hill amid threats of resignation in recent days, quipped with colleagues and members of the media, yelling “stable government, stable government”, as he passed by in the corridor.
Ultimately, despite the criticisms, Donohoe has delivered his first full budget safely.
While not an election budget, it could well be his final budget before we find ourselves at the polls.
Some Fine Gael TDs expressed some concern that there wasn’t enough in the budget for their supporters, i.e. the wealthier income earners in society, but said they were happy there was some progress in reducing taxes.
Donohoe will have to face the public on the airwaves this morning ahead of addressing his own party colleagues at the Fine Gael parliamentary party meeting this evening.
If he escapes without any acrimony, then the true success of his budget will be known.
It has slipped out that Donohoe decided to go on the dry in recent months in order to prepare for the big day, and has had to make do with his favoured non-alcoholic beverage.
Given that the hard work is now largely done, he may be tempted to break out and go mad, but in keeping with his personality, I doubt it.
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