Budget cuts show Government has failed to learn from predecessors

I WATCHED the movie The Iron Lady on Sunday night.

I know it was criticised when it first came out, but it seemed to me a sympathetic portrayal of a sad lonely old lady, haunted by the decisions she had made. And wondering, perhaps, if she had ever made a mistake.

Love her or loathe her, Margaret Thatcher was one of the most remarkable political figures of her generation.

The qualities of intellect, tenacity and resolve that made her great were, in the end, the same qualities that destroyed her. Intellect became an incapacity to see any point of view other than her own; tenacity became an inability to negotiate and compromise; resolve became obduracy.

All of that was captured in Meryl Streep’s magnificent performance. Of course Margaret Thatcher has never admitted to a mistake — never explain, never apologise, she’s reported to have said — but in the movie she is haunted by the possibility that she might have made some. It’s the ghost that haunts all political careers, isn’t it? The thing they might have done differently. The mistake made in history they didn’t learn from.

Our government has just done it. They’ve failed to learn from a ghastly mistake in the past — even though many of them were there at the time — and they’ve just repeated the mistake, with considerable political consequences and even worse social ones.

Strangely, though, they seem to have got away with it. At least, I have yet to see any media commentary pointing out the unnecessary and gratuitous nature of some fog the budget decisions, in the light of the unfolding budget arithmetic.

Perhaps someone has already been impolite enough to mention that some of the more and anti-social cuts in the budget were unnecessary, and that the government now knows they were unnecessary. If they have, I haven’t seen it.

What it reminds me of is everything that happened on the long night of Jan 27, 1982, and in the weeks after that night. That was the night of John Bruton’s second budget speech — and the last one he ever made.

It was an extraordinary speech — forbidding in its length, and appalling in the economic picture he had to paint. The Irish economy was on its knees, largely as a result of appalling mismanagement by a four-year long Fianna Fáil administration which had famously “cooked the books”, among other things, in 1981.

Bruton’s speech that night was not just long, it was radical. He introduced tax credits, he proposed the taxation of short-term social welfare payments alongside a massive increase in them, he had a number of capital taxation measures.

But his main purpose was to raise revenue to lower the national deficit, and in the body of his speech he announced that he was, for the first time in Ireland, imposing Vat on clothing and footwear. The rate he proposed was 18%.

“The possibility of omitting children’s clothing and footwear from this increase has been considered,” he told the Dáil. “I am aware that this is done in the UK, but I am aware also of the major difficulties which it poses in practice and of the anomalies it has created.”

A very angry and hostile debate ensued in the Dáil, with Fianna Fáil leading the charge. But the real drama happened in the Dáil chamber, as it became clear that one government supporter in particular was deeply unhappy with the taxation of children’s clothes and footwear.

That Fine Gael/Labour coalition in 1982 had a tiny majority, and only when it had the support of several Independents. One of them, Jim Kemmy from Limerick, was not willing to vote for the budget because it contained that one cut too far.

As the evening wore on, and the extent of Kemmy’s unhappiness became clear (although he never spoke in the debate) ministers began to panic. At one point taoiseach Garret FitzGerald was seen on his knees beside Kemmy’s seat, evidently trying to persuade him to support the budget. But it was in vain, and Kemmy voted against the government on the first available vote that night (ironically, a financial resolution imposing excise on beer).

As a result, the budget was beaten by one vote — 82 to 81. FitzGerald dissolved the Dáil immediately and a general election began that night. (It was, of course, the famous night that a number of Fianna Fáil members tried to contact President Hillery to persuade him to use his discretion to refuse a dissolution to FitzGerald. That would have led to... but that’s another story.)

A number of other ironies arose from the events of that night.

Among them were the fact that when the new Dáil reconvened some weeks later, Jim Kemmy voted for Garret FitzGerald to remain on as taoiseach. But it was a brand new TD, Tony Gregory, who effectively had the deciding vote, and he cast it for Charles Haughey, in return for what subsequently became known as the Gregory deal.

It involved an injection of £100m in housing and other infrastructure in the north inner city of Dublin — perhaps the largest price ever paid for a single vote in Irish politics.

But there were two further ironies.

First, FitzGerald was questioned during the general election about why children hadn’t been exempted from the clothing and footwear tax. He explained that one of the anomalies that had emerged in the UK from such an exemption was that women with dainty feet were able to get away with buying children’s sizes.

The single greatest irony was that the tax wasn’t necessary in the first place. During the general election, FitzGerald discovered that the gas company was about to declare a much larger than expected dividend. He realised that if that had been known when the budget preparation was going on, they mightn’t have had to lose Kemmy’s vote.

The entire course of Ireland’s economic and social history since then could have been different.

WHICH brings us bang up to date. When you think about it, the “then and now” comparisons in this story are all rather striking. But the most striking one is this. In the recent budget, we cut child benefit and carers’ benefits to save around €100m. Now look at just one the facts in a press release jointly issued last week by Michael Noonan and Brendan Howlin (I could list a lot more, but this one makes the point accurately and adequately).

“December’s tax receipts surprised on the upside, coming in €440m above profile. In light of this, tax revenues were €271m ahead of target for the year as a whole. Budget 2013 in early December had estimated a €210m shortfall ... Expenditure for 2012 is in line with target ... The majority of departments have come in at or below profile.”

We’ve done it again. Labour lost its chairman, the Government was sorely embarrassed, and thousands of peoplewere hurt, for cuts that were entirely unnecessary. If we hadn’t made the cuts, we’d still have been ahead of every target.

In politics, it seems, you don’t have to learn from previous mistakes. As long as you’re never prepared to admit to today’s mistakes.