Budget 2013 - Fairness must define the budget

Budget day is a little over a dozen weeks away but already the covering fire has been laid down and in some sectors it is already intense.

Primary battle lines on how the State spends money were drawn decades ago and like the frontlines in the First World War, they move a bit here and shift a bit backwards there but remain essentially fixed within modest parameters.

The never-ending conflict between creating wealth and redistributing it may not shape Finance Minister Michael Noonan’s deliberations, but the social truths at the heart of that process cannot be set aside. Equally, it must be recognised this budget will be about survival first, regeneration second and everything else third.

Despite all of this, it is essential the budget is seen to be fair and that the great challenge of stabilising the State’s shot-through finances is achieved without overburdening any one sector. And that’s where the fun begins. Nearly every group feels it is hard done by and that the solution to the crisis is in someone else’s pocket, welfare payment, untouchable state salary, pension scheme or off-shore account.

Already we have had threats of a Fine Gael revolt if Education Minister Ruairi Quinn moves to include the value of businesses and farms in income assessments for third-level grants. Like so many reactions to so many of the measures suggested to confront the €20bn gap between income and expenditure, it has been emotional rather than rational, especially as nothing approaching a concrete proposal has been made. It is undeniable though that those fortunate enough to own a farm or a business, even in these very straitened times, enjoy an advantage that cannot be entirely ignored. This is especially so as everyone has come to recognise the we must change how we fund third-level education.

Equally, any suggestion that welfare rates might be cut is met with outrage and warnings of social collapse. Unfortunately, anyone who can count will realise that the social protection budget — the biggest area of Government expenditure — cannot be entirely ring-fenced. If Government can do means tests for third-level grants why can’t they be carried out for something like, say, children’s allowance payments? Some families, though not as many as before, enjoy incomes that make the children’s allowance little more than a holiday fund and they should not get it. And it must be admitted that this has been recognised by many who benefit from an allowance they do not depend on.

Considerable progress has been made, as a Revenue Commissioners’ report conforms, in closing the tax loopholes once so divisive. The report showed 387 individuals earning over €400,000 a year paid an extra €53m in tax in 2010. Just as the job of ensuring that no one struggles in desperate poverty and reaches their potential is never-ending, so is the job of ensuring that all incomes are taxed at a level that represents social equity. For far too long this objective was not pursued with the focus it deserves. Mr Noonan’s budget is unlikely to be a champagne occasion but if he can continue this work and if the principle of equity is obvious and active then he will have achieved something worth fighting for.