Government swallows bitter pills to display their fiscal responsibility

THIS Government preaches fiscal responsibility from a high pulpit — but then it can be capable of collapsing like a cheap suit when demands for extra cash are put its way. We saw it this week, somewhat bizarrely, with a decision taken on vitamins.

It all raises interesting questions as to the exact centrality of the command structure within Government, and how much autonomy Finance Minister Paschal Donohoe does or does not enjoy. Needless to say the Taoiseach of the day is always seen as the ultimate boss but in each administration there is a different dynamic in the relationship between the Taoiseach and his Minister for Finance.

Does Mr Donohoe have his own bottom lines or are they all drawn by Mr Varadkar? Does the fact that the Minister came from a corporate background before entering politics mean he adapts more easily to a hierarchical structure. Back in the day Charlie McCreevy apparently thought nothing of keeping his then boss Bertie Ahern in the dark on some issues right up to Budget day. More recently Michael Noonan managed to maintain an air of mystery about himself and his portfolio, and where he might take things fiscally speaking.

Clearly you can argue about the merits of each approach, all involving different personalities, different financial circumstances or indeed if you are dealing with a coalition government or another variation of single party government. In this instance it is unclear as to how things work between this minister for finance and Taoiseach and where the upper hand lies. Certainly both sing the same tune when it comes to the need to avoid the boom and bust politics of the past, and the need for holding steady given all the knowns, and the unknowns and Brexit and all the rest. Anyone with even a passing knowledge of politics could write the script.

The Taoiseach favours doing it in a manner where he gets to needle Fianna Fáil for their past economic “sins” bringing the country to its knees financially and all that. The finance minister takes a more thoughtful approach and despite being a nerd when it comes to being on top of all the latest in high brow economic philosophy, manages to break it down in a manner that ordinary people understand in that nicely polite and respectful manner that is his own.

It’s difficult not to find yourself nodding in agreement as he explains how it’s important to learn lessons from the difficult times and to mind the money carefully, and that we will all be far happier if we have a nest egg to fall back on when the bad times, inevitably, hit. As mentioned on a number of occasions previously he reminds us often of the importance of the centre ground holding in our politics and that one of the ways of doing that, and getting support from the voters, is maintaining this steady economic course.

So far so good. But then we are thrown for a loop when things happen that make it seems like the national purse has, in fact, an elasticated bottom to it and it can be taken from its hiding place down the back of the sofa when the going gets tough, like with the vitamins this week.

In brief the Revenue Commissioners has delayed the introduction of Vat of 23% on food supplements until November 21. The planned change, which was announced last December, saw a well-orchestrated campaign from health food stores and their customers with more than 60,000 people signing an online petition urging the Government not to go ahead with the hike.

Until now food supplements have been treated as food for Vat, therefore having the zero rate of Vat that has applied to food over four decades.

Cue the cave in from the Government. The Revenue Commissioners say it took it’s decision after getting a letter from Donohoe who is to examine the options for the taxation of food supplements.

It’s interesting to see the minister say in his letter that he appreciates Revenue must administer tax legislation without fear or favour, independent of outside influences, but added that he had been approached by a wide range of individuals and organisations on this issue.

Now there is no one who likes a trip to the health food shop better than I, and despite the fact that in the vast majority of cases there is little scientific evidence of anything that you buy there actually working, the expenditure when you feel under the weather can be wonderfully comforting. This sector is now big business. This was an entirely legitimate move on the part of the Revenue Commissioners.

Moving on to the area of actual drugs with scientific research behind them. We learnt in recent days that the HSE has “almost exhausted” available funding it has for new drugs in 2019 — just two months into 2019. This is news that will have upset a number of very sick people hoping for access to a variety of these new, but highly expensive medicines.

Link that back to a decision taken in December by Minister for Health Simon Harris to make cancer drug Pembrolizumab (Pembro) available to all women with advanced cervical cancer, not just the 221 affected by the CervicalCheck controversy. It’s difficult to argue with that on a human level — knowing that if you or a family member of friend was in that position you’d want access to it. Except that Prof Michael Barry, in charge of the National Centre of Pharmacoeconomics whose job it is to decide on which of these highly expensive drugs should be made available and to whom, advised the minister should “stick with the system” already there. That’s what is fair, rather than popular or political.

WHILE Pembro, which costs €8,500 a dose — up to €140,000 a year — has worked incredibly well for campaigner Vicky Phelan, it is not currently licensed in Europe for the treatment of cervical cancer. She received it off licence. However around 85% of people who receive Pembro may not have that same positive result.

Continuing with the health theme (without even getting into the budget overruns on the National Children’s Hospital project) there was the recent nurses strike. This was no easy situation for the Government, particularly the minister for finance. The agreement was a deal well done in a number of ways with the nurses getting less than they wanted, but at the end of the day it was just that, a deal.

It signalled that no matter what he may say Mr Donohoe’s wallet has some very deep pockets. Just watch the queue forming now. It’s all money, money, money.

None of this can be examined without factoring in the growing prospect of a general election and Fine Gael’s desire to simultaneously appear economically responsible yet also open to buying votes. It’s quite the tightrope to walk when you have such mixed messages.