Hey, big spender, think of the kids who never have a birthday party

HERE’S a Nostradamus prediction that can’t go wrong. It may not seem like it at first glance, but it’s good news and it’s bad news.

In the month of April 2007, our economy isn't going to know what hit it. In that month, the people of Ireland are going to acquire more spending power than in any six-month period up to this point in our history.

An extra get this, an extra seven billion euro.

That's an extra €1,800 spending power for every man, woman and child in the country. If they all went on a spending spree the day they collect it, they would clean out every department store, every electrical goods outlet, every car dealership, every off-licence and every DIY shop in the country in less than a week. We could be about to witness the biggest spending spree in the history of the world.

Now I know there have been all sorts of surveys published most of them commissioned by banks and insurance companies that announce grandly that people who took out SSIAs intend to "continue the saving habit."

Yeah, right. I don't know anyone with an SSIA who hasn't already decided what to do with it once it matures. And every single one of the financial institutions that are 'encouraging' people to be prudent with their new-found riches will only be too willing to finance the little property in France or the nice new car. At the usual interest rates, of course.

Because whatever they might say, the financial institutions know that the vast majority of people intend to spend the money as quickly as they can get it.

That's if they haven't already borrowed against their SSIAs because they couldn't wait. And no-one has told them that they shouldn't. No-one has told them they could wreck the economy, and create the biggest hangover in the history of the world to follow the spending binge. No-one has offered them any alternative. No-one has told them that it's a good idea to save, if you can, against the wide range of life's contingencies.

Instead, people have been told that if they save a bit, the Government will give them more. Get rich quick was the mantra on which the SSIAs were sold, and get rich quick is what most people want to do. April 2007 is the month when 40% of the SSIAs mature. Altogether, over the preceding 10 or 11 months, (starting in about 250 days from now) €16 billion from the SSIAs will flow back into the economy.

But because so many people signed up for them right at the end, the biggest single payout is in the last month.

Of course, it doesn't work out exactly as the averages suggest.

The SSIAs were designed for people already doing reasonably well out of the Celtic Tiger. The plan was to say to people, the more you have, the more we'll give you (and don't forget to vote for us). An awful lot of people in our economy didn't have the disposable income to invest in them. If you're already in hock to a moneylender, the idea of putting money away to invest in a get-rich scheme is a bit of a sad joke.

The End Child Poverty coalition published some facts and figures about children this week. One statistic has haunted me ever since I read it. Around one in every ten children in Ireland has never had a birthday party. You can bet that none of their names, or their parents' names, are on an SSIA account. The rest of us may be about to have a very lavish party. Not them.

But, and here's the real obscenity, the poorest of the poor subsidised the SSIAs anyway. They subsidised them in two ways. Those on incomes sufficient to pay tax saw their taxes going to swell the SSIA accounts. And those with little or no income saw some of the services on which they depend being cut or frozen, while the tax money was flowing into the SSIA funds.

Those two subsidies ensured that of the 16bn of SSIAs that will be paid out, three billion of it will be accounted for by the Exchequer contribution. Just imagine what that three billion would have done for the 150,000 Irish children who live in consistent poverty each year.

Imagine what it would have done for the capacity to provide decent health services in a country where elderly people are allowed to die for want of routine medical treatment. Imagine what it would have done to ensure that every kid in Ireland is taught in a decent classroom, with decent facilities.

BUT the Government giveth, and the Government taketh away. Already some experts are predicting that the Government will clean up in extra VAT receipts and on the tax take from the SSIAs themselves, to the tune of a couple of billion.

Now, given that they have poured over three billion into them, you might well say that wasn't much of a bet, was it? Pay out three billion or more, get back something under two. But you can bet it won't be spun that way. And the extra money in Government coffers in 2006/'07 will mean only one thing extra spending on the important business of purchasing votes. Politics, of course, doesn't always work out the way politicians want it to. The Government may be banking on a unique double-whammy to encourage people to vote for them again a combination of the feelgood factor and all that lovely lolly in VAT receipts from the extra spending. It's much more likely, though, that people will spend the money all right but it won't influence their voting behaviour to any significant degree.

What it will influence is a further widening of the gap in our country, a bigger separation between those who have lots and those who have little or nothing. And that's the bad news.

By the time all this is over, a lot of people at the bottom of the pile are going to have to struggle even harder to make ends meet. Quite a few of the experts are pointing to the risk of higher inflation from all the extra consumer spending.

Inflation hits the poor hardest especially when the Government has failed to take account of it.

And apart altogether from inflation, nothing is going to hurt quite as much as the rash of advertising aimed at parting the better-off from their SSIA money. Parents who can't afford new shoes, or a school outing, are going to be told about the other kids in the schoolyard with brand new iPods and mobile phones.

So do I begrudge the spending spree? No, I don't. I didn't open an SSIA account, but I hope that people who did, and who kept it going for the last five years, get genuine pleasure out of the windfall. Go for it.

But let me plant one little thought at the back of your head.

There were others who couldn't afford to open an account, though they would dearly have loved to. Enjoy the good fortune when it starts, but share a bit. You can afford it.