A promised €1.5bn budgetary package doubled magically into a €3bn one. Just like that, writes Gerard Howlin
IRELAND is ready to receive its returned emigrants again. David Drumm, the ex-CEO of Anglo-Irish Bank, will feel at home, if he returns. On the basis of yesterday’s budget, little has changed since he went away. Strip away the veneer of economic-ology, or the blather about stability, and we are about back to where we started. Yesterday was a smash-and-grab at taxpayers’ money, to be spent before a general election. The only real issue — the one they almost messed up — was when that election would be. It doesn’t augur well, if they are fighting over the keys of the getaway car while attempting to leave the scene of the crime.
A promised €1.5bn budgetary package doubled magically into a €3bn one. Just like that! You have to wade through the “White Paper on Receipts and Expenditure”, published last Friday, to know why. When you include the supplementary budgets for 2015, there is as much additional money being spent on public services that ran over their budget, this year as is being spent on tax cuts and extra spending for 2016.
It is the sort of pre-election spending splurge that makes the excesses of the Celtic Tiger seem like innocent pleasure. It means management systems in the public service are as poor and unaccountable as ever, especially in the health service. Perniciously, from boom-to-bust-to-recovery, little if anything has changed institutionally in Ireland. Not only has the economy recovered tentatively, the underlying political and public service systems that so recently failed us have returned like ragwort to rude good health.
Listening to Michael Noonan and Brendan Howlin yesterday, I was hearing an imaginary Oliver Callan overlay their budget speech with Drumm’s oration from the infamous Anglo tapes, “Get into the fucking simple speak” he told his minions. “We need the moolah. You have it, so you’re going to give it to us, and when would that be? We’ll start there,” he said about Anglo’s proposed approach to the Central Bank. He’s right. The punters have the moolah — they pay the taxes that are given back to them as payday loans. That’s what we got yesterday. A payday loan.
It should have been different. In Budget 2012, Howlin announced “our budgetary process... is about to change fundamentally”. The Government would be moving to “a new whole-of-year budgetary timetable to allow for Dáil committees to engage earlier, and more fully, on estimates allocations, before they are settled in each year”. It never happened. We are back to the future, in the greatest pouring of new wine into old wineskins since they jived in the Galway tent.
There were two finagles yesterday. The first was to find money outside the €1.5bn budgetary framework. That figure is at the absolute outer range of what is compatible with any narrative of stability or prudence. Politically, however, it was not nearly enough, so it was doubled by the old-fashioned fuddle of plumping up this year’s expenditure, in advance of next year’s budget. Some of the last-minutes increases in 2015 expenditure are eye-watering. Nearly €500m for social protection, and €600m for health. They will now form part of the floor for expenditure in 2016, on top of which comes the additional expenditure announced yesterday. It is easier to come in under your expenditure ceiling if you move the floor. That’s what a department of public expenditure and reform is for.
The second finagle was about timing — and timing is everything. Of the €479m extra provided last Friday for social protection in 2015, above what was provided on budget day last year, and at a time of falling unemployment, €197m is for increasing the Christmas bonus from 25% to 75% of a recipient’s payment. That includes all old-age pensioners, including wealthy ones. The hugger mugger and unreformed process is cameoed by Tánaiste Joan Burton’s recent appearance before the Oireachas committee on Social Protection.
Four weeks ago, she told the committee: “it remains too early, at this stage, to be definitive as to whether a supplementary estimate will be required later this year or not”. Four weeks later, uncertainty had vanished and nearly €500m was required. The policy basis for the U-turn, and the good reason for not discussing it with the committee, in the context of other policy options for the same resources, were the same. The Christmas bonus is the quickest way of getting the “moolah” out the door before a general election, which will now take place after Christmas, thanks to the Tánaiste.
Times have changed, but our culture remains remarkably consistent. All in all, it is a remarkable tour-de-force by Joan Burton. It puts the brasso on the brass neck.
Lump the €1.5bn slipped out the back door in supplementary spending with the €1.5bn in extra spending and tax cuts announced yesterday, and not only have prudent parameters been bust, so, too, has the 50:50 share between tax cuts and additional spending. It’s actually 75:25 in favour of spending; with borrowed money.
Whether it will do them any good, or if it’s to your taste, remains to be seen, but Burton has effectively enforced Labour’s agenda across most of government, politically and economically. The emphasis on cutting the USC, rather than cutting tax rates, is, in part, more of the same agenda. The lady wasn’t for turning on an early election. The Government goes into the spring with public spending at full throttle. It’s Labour’s way, not Fine Gael’s. I hope they are happy.
Will it work politically? Remarkably, it might. The Government decided it’s better to do business as usual rather than invest in lasting institutional reform. Entrenched interests in the public service have to be placated, in order to govern all. That’s why they got paid off first in the Lansdowne Road Agreement.
And, compared to a few bob in your pocket, who is interested in that democratic revolution nonsense anyway? Virtually nobody, it seems. It was great to have a ‘vison’ in opposition, but in government it’s about delivery. And to have traction, delivery must be personalised; in your pocket. The primary drivers in elections are greed and fear. Greed, importantly, is always called “hope” and never, ever referred to by its real name. That would be deemed offensive. As David Drumm now knows, your choice of language does matter. Fear, if they can foment it, is fear of an unknown alternative government’s capacity to deliver on our ‘hopes’.
It is astonishing how the meaning of words matters. It’s all about “our money”, it seems. The fact that every extra cent spent is borrowed doesn’t matter. When the Tiger was roaring and the State was ostensibly solvent, we treated borrowed money as if it was our own. Drumm won’t find fitting back in difficult at all.
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