WHEN you’re hot, you’re hot.
And when you’re not, you’re not. Around the end of May this year, most PAYE workers, especially those in receipt of monthly salaries, are going to be hit by a bombshell.
They’re not going to be able to believe the amount of money that will disappear from their pay packets as a result of Brian Lenihan’s budget. It’s going to be staggering, painful in a way that no previous budget has ever been.
Some people who are not that highly paid are going to see monthly take-home pay drop by amounts of several hundred. Everyone is going to take an unmissable hit, the kind of hit that makes you do a double-take when you see your pay packet.
And then they’re going to go out and vote in the local and European elections. Fresh from feeling the effects of some of the most savage impositions in history, they’re going to have one thing in mind: don’t get mad, get even.
The result, I suspect, will make last weekend’s opinion poll seem like good news.
If you remember, the Red C poll in the Sunday Business Post essentially predicted that Fianna Fáil would be decimated in the local elections and would be very lucky indeed to hang on to its European seats. The pattern of Red C polls over a number of months has now arrived at a point where it is virtually impossible for Fianna Fáil to turn the figures around by early June when the elections take place.
And even if it were, the disaster that is going to hit the nation’s pay packets at the end of May makes it certain the electorate’s revenge will be immediate and total.
There may be poetic justice in this. For years, and especially under Charlie McCreevy, the fruits of economic growth were used, systematically and with precision, to buy votes.
Indeed, if he hadn’t been so adamant, and adept, at using his budgets to shore up Fianna Fáil’s electoral base, our position today wouldn’t be as weak as it is.
Much has been written over the years about the genius of McCreevy. I’ve even heard it suggested that Brian Cowen needs to bring him back from Brussels to save the economy. That’s nostalgia, nothing else. People remember the McCreevy years as great years because he was so busy, year after year, spending our money to persuade us to vote for his party.
It would be very difficult to point to something lasting and permanent that he put in place, despite all the budgets he brought in. On the positive side, maybe, the tax credit system. Among the negatives, a madcap and irresponsible scheme of decentralisation. But most of his achievements were like good magician’s tricks. They were illusions, but they made you feel good. And you could never figure out exactly how he had done it.
Remember the SSIAs, for example? The day he introduced them, McCreevy said he had two purposes in mind for this very generous tax scheme whereby the Government was going to increase everyone’s savings by 25%.
“There has been much focus in recent press coverage on my proposal for a savings incentive as a means of taking demand out of the economy,” he said. “This is an important aspect. However, I have another goal, which is to encourage individuals to provide for the future by a regular pattern of savings.”
Well, tell me this. Did you notice any drop in demand in the economy in all the years that SSIAs were in vogue? And are your savings, the ones he encouraged you to make, tiding you through the tough times? No? I thought not.
That’s because they weren’t actually designed for that purpose at all. They were designed to create a feelgood factor, and a bit of economic buzz, in the run-up to the 2002 election — and a massive spending spree (the biggest in our history) in the months preceding the 2007 election.
McCreevy was a farseeing minister for finance — he designed a tax-break for savings that we never needed, that cost hundreds of millions, in order to get five years of political spin out of it.
But he never left anything to chance either. The 2002 election was his masterstroke — and if you wanted a demonstration of how much the tide has run out for Fianna Fáil, you could compare the preparations for that election to the one we’re about to have.
In Charlie McCreevy’s first budget in 1998, he increased child benefit by £1.50 per month for the first and second children and by £3 per month for third and subsequent children.
A mother with four children received almost £34 per week as a result of that budget — but she didn’t get it until the following September.
But in his budget speech at the start of 2002, he increased child benefit rates by £25 per month for the first and second children, and by £30 per month for third and subsequent children.
As a result, a mother with four children was going to get more than £417 a month in child benefit — four times what she got in his first year in office.
And in his budget speech, he announced that these huge increases would be brought forward to April, but for administrative reasons couldn’t be implemented until May. The result was that tens of thousands of women got huge increases in child benefit — and they got a double helping of it a couple of weeks before the election.
Just to make sure he had the women on his side, he also made massive improvements to social programmes like the back-to-school clothing and footwear allowance... 70,000 children benefited from an increase in the payment rate, which went to not far short of £100 per child. And he eased the means test to include 8,000 more children in the allowance.
McCREEVY was only getting started. The same day, in the same budget speech, he removed 57,000 taxpayers from the higher rate of income tax at a single stroke and took 68,000 low-income earners from the tax net.
And he announced huge new money for the health service. How was that to be spent? Well, about 10 days before the election that year, on May 6, 2002, Bertie Ahern was able to tell a press conference that Fianna Fáil would “permanently end hospital waiting lists within two years if returned to power”.
Why am I reminding you of all this? Well, think about it. Most of those low-income workers they took out of the tax net back then, with their grand pre-election gestures, are well and truly in the tax net now.
Most of the social programmes that were going to transform the lives of mothers and children have been chipped away at ever since.
Most of the extra spending on health has failed to eliminate a single waiting list. It was, most of it, an illusion, a conjuring trick that could never be sustained.
Our votes were bought not once, but several times, with our money. And it did us no good in the end. At least, this time, they can’t pull that trick.
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