Budget spin and the art of expectation management

Figures from both Coalition parties have called for Budget 2015 to give back something to the people, then the big guns blasted those hopes. But it’s all just spin, writes Michael Clifford.

A GREAT political feat perfected in this country over the last decade or so is to have your governmental cake and eat it — just like the opposition.

Bertie Ahern was good at this kind of thing, often throwing his hands up in the air when his government took an unpopular decision. He would frequently reference “they” as if he was helpless to stop one of his ministers initiating a measure that elicited public opposition. Another tactic was to send backbench TDs out to the plinth in Leinster House to express opposition to something the government was doing. Where once this might have attracted disciplinary sanction from HQ, under Ahern it was regarded as good politics.

The nadir in this regard was reached when Michael Smith, then a government minister, marched in his native Tipperary against government policy to close a local hospital.

Like much else to do with spin, the current government have brought matters to a new level. Over the last number of months, voices in both parties have been raising expectations of some element of giveaway in the forthcoming budgets. This began after the massacre suffered in the local and European elections, and continued right through the summer.

Most recently, Junior Minister Simon Harris pumped up the volume. Ten days ago, he declared that the income tax take from workers should be reduced in the upcoming budget.

Turning out for the senior team was another Simon — Coveney. He told the Irish Examiner last week that he would like to see some tax cuts pencilled in. “It’s time to give something back to the people,” he said. “I’d certainly like to see some tax breaks through the tax system. This Government is making an effort to increase people’s take-home pay. That’s the most important thing we can do with this budget.”

Those are only the latest examples emanating from figures in both governing parties through the summer.

Then, over the last two days, the big guns moved in, to blast these party colleagues out of it.

On the back of better-than-expected Exchequer returns, Enda Kenny applied the dampeners.

“All I want to say is that our situation continues to be fragile,” he said.

“We still have an enormous debt. We are not in a position to write large cheques. What we are in a position to do is to continue to manage the economy in a way that continues to make Ireland really competitive.”

Joan Burton sang from the same limp sheet. “These figures are obviously encouraging, but nothing will be done to jeopardise the recovery.”

Yesterday, Michael Noonan put a lid on expectations when he told Sean O’Rourke: “I don’t think I’ll have to increase taxes very much in the budget. Brendan Howlin won’t have to cut expenditure much further. But if we are going to give additional relief beyond the adjustment we’re making, that might require extra taxes.”

Having allowed their colleagues to raise expectations, the two leaders and Noonan have now moved to put a dampener on it all. The spin being propagated, has it that most of the parliamentarians on the Government benches want tax breaks, and are voicing their opinion in that regard, implying that they will do all they can to ensure it comes to pass. Unfortunately, they must cede ground to the responsible leaders who are determined to act in the national interest.

The political manoeuvring will also now ensure that any tax cuts at all will be packaged as a “giveaway” by the Government. For instance, one idea floating around the public square is that the universal social charge will be tackled.

A 1% cut would deliver a saving of around €460 a year to workers on a wage of €44,000.

That’s about €8 a week.

The cost of such a measure would be, according to figures from the Revenue Commissioners provided to the Dáil, around €750m. Where will that come from? What services will have to be cut in order to accommodate such a change? We were told yesterday that the budget adjustment might now be around €1bn, which is a hell of a lot better than the €2bn originally earmarked. But throw in a cut of 1% to the USC, and somebody, somewhere, is still going to have to pay a heavy price for the tax cut.

Another measure being tossed around is the possibility of raising the threshold at which earners begin paying the marginal rate of 41% income tax. According to a study by Ernst & Young, raising the threshold by €1,500, would yield no more than €315 to taxpayers. Again, that’s not to be scoffed at, but when put in the context of the additional burden of both the property tax and water charge, the notion that these changes will put more money in the pockets of workers is entirely fanciful.

SPIN is all about creating impressions, and nowhere does the elastic nature of spin apply more than in the categorisation of those whom the Government claims to wish to prioritise in the forthcoming budget. The main categories are “lower- and middle-income earners” and “hard-pressed families”. What constitutes a middle-income earner? According to data from the Nevin Research Institute, compiled last January, the bottom quarter of earners in the Republic have incomes of less than €15,000; the next quarter have incomes of between €15,000 and €30,000; the next quarter between €30,000 and €50,000 and the top quarter earn above €50,000.

With three quarters of earners pulling in under €50,000, it would surely be reasonable to assume that that figure represents the ceiling for “middle-income” earners.

Yet earlier this year, Michael Noonan suggested that a couple with a joint income in excess of €100,000 were “not well-off”. In some instances, he said, a couple in this range “are struggling, they barely make ends meet”. That is undoubtedly the case, but the question remains — who is not a lower or middle-income earner? The 5% who earn more than €200,000? Is the “lower and middle- income” category no more than a political construct which allows practically everybody to consider themselves included, and therefore in line for prioritisation? Another cuddly construct is that of “hard-pressed families” who will be to the top of the queue. Everybody loves families. And as with our friend, the middle-income earner, most can see themselves as part of a family, and therefore to the fore of the thoughts of lawmakers. It matters not that a “family” on welfare lives on a different planet from a “family” whose income exceeds €100,000.

So goes the spin. Between “middle-income earners” and “families”, not just the Government, but every political party, ensures that practically every voter out there gets the message. Why couldn’t they all just come clean and say they’ve something for everybody in the audience? That of course would beg the question — who is going to foot the bill? Why, the legions of high-income earners, non-family persons and whatever you’re having yourself.