This Budget is the last throw of the dice by a deeply unpopular government desperate to be re-elected.
It is not a Budget to shape Ireland’s future – it is a Budget to help two parties get through an election campaign. Instead of a plan to address deep problems which have developed in recent years what we have is a series of policy soundbites. And this, fundamentally, is why Fine Gael and Labour’s last throw of the dice will fail.
This government has debased the Budget process through its extreme manipulation of figures and its policy of always hiding the negatives. For this year the government has set a new standard of cynicism in seeking credit for partly restoring cuts which it promised the people it would never make in the first place. Every little did hurt and no matter how successful you are at getting your lines covered the legacy of broken promises and unfair decisions remains.
People have had enough of the constant over-spinning by this government. They are sick of the never-ending abuse of language where there is no relationship between what is announced and what is actually provided for.
They have had enough of a government which has failed to anticipate or address any of the major crises which have arisen in recent years. Most of all they have come to understand that you can trust almost nothing this government says.
After six months of hype and daily stories planted in our newspapers the sum of what has been announced is cynical Budget full of inflated claims which are already unravelling.
It is clear now why Fine Gael was so eager to run to the country in four weeks’ time – their ministers know that the impact of this budget will disappear as soon as people see how many problems are not being addressed, how they have no plans to tackle them and how many of their regressive policies will remain in place.
The Budget fails to provide a credible long-term approach to any major problem. For childcare, support for the elderly, health, homelessness, education, employment conditions, community development, drugs, rural crime, disability supports or any other important societal issue the very most that has been announced is a token provision.
The shambles and waste of Irish Water didn’t even merit a passing reference. The horizon is purely to get through election day and all other considerations have been pushed aside.
To listen to the ministers’ speeches yesterday you would have imagined that everything is fine. The scale and impact of crises which are hurting hundreds of thousands was completely ignored. There wasn’t even a token acknowledgement of the health shambles, the acute pressures felt by the elderly or the mounting evidence of a two-tiered recovery where some get ahead but too many are being left behind.
A Divisive and Unfair Government
The growing cynicism of Fine Gael and Labour’s budgets is well beyond a joke. They have radically reduced the amount of information which is available to assess the impact of the announcements. In presenting figures even the reduction or maintenance of current funding is claimed as an increase.
Ministers Howlin and Noonan went as far as to refuse to produce core data on the income distribution effects of budget measures. This information was a basic part of budget documentation for 20 years until they decided it might get in the way of their political claims.
All that we get now is their info-graphics showing a part picture of what happens for a small selection of households. Even including the increase in the minimum wage as a budget measure when employers will pay it was a claim too far.
They have done everything possible to hide the true impact of their budgets because their record is one of actively increasing inequality. In every single one of their budgets the highest benefit has gone to the highest earners. This is particularly true when you factor in the huge impact that cuts targeted against the weaker sections of society are included.
Minister Howlin’s speeches are always masterclasses in how to hide reality in a cloud of smoke. Yesterday’s performance was amongst his most brazen.
Clearly Labour has been hurting from the claim that it has supported deeply regressive policies in government.
So Minister Howlin decided to claim that Labour had, in fact, been incredibly fair. The proof of this is, he claimed, the fact that Ireland has one of the most progressive income tax regimes in Europe.
What he didn’t say is that 100% of this is accountable to Budgets introduced by Fianna Fáil and voted against by Fine Gael and Labour.
Every single independent study of budget policy from 2007 onwards has said that Fianna Fáil’s budgets made the wealthiest pay the most while Fine Gael and Labours have given them the most. The studies also said that the clear majority of budget corrections were implemented before Fine Gael and Labour took up office.
It takes a peculiar brand of political cynicism to attack people at the same time as trying to claim credit for their policies.
Labour will never get out of the hole it has dug for itself until it is willing to accept the evidence understood by everyone in this country – this has been an unfair and divisive government, obsessed with politics and oblivious to the damage caused by it policies.
Every one of the last four budgets was announced with a claim that it was fair. Go back and look at some of the claims made and you see Ministers living in a parallel universe where they imagined that nobody would notice the reality of tax after tax levied with no concern for ability to pay.
Fine Gael’s obsession with pretending not to have increased tax has been central to this crude, right-wing approach to tax.
And this year, yet again, the highest benefit has been felt by higher incomes.
The tax changes result in a gain of 1.9% for an earner on €75,000 but only 0.8% for someone on €20,000. Dress it up any way you want, but this is not a progressive tax policy. There is still no direct tax relief for parents to help with the huge cost of childcare.
One of the innovations this year is for Ministers to claim the minimum wage increase in its budget ‘giveaway’ figures for households. So it is now the official policy of Labour and Fine Gael to balance wage increases paid by employers to the low paid with tax reductions for the highest paid.
The clawing back of €300 million through the failure to index tax bands is a significant policy decision. The obvious purpose of this was to give space for changes which might win a few more headlines.
At the conclusion of five budgets the net impact of the income policies of this government is entirely clear. It has significantly increased inequality.
It squeezed the middle further and then failed to relieve it in spite of endless stories promising action. In doing this it has damaged domestic demand beyond anything which was necessary to meet fiscal targets and it undermined growth for three years.
This government has put political positioning ahead of everything during its term. It entered office with the objective of claiming credit for the recovery which it knew would come.
Selling the fairy tale of a decisive government coming to office and turning things around quickly no matter what the impact became its single guiding obsession.
It did not seek to shape a recovery which would benefit all parts of our society it merely wanted to play politics with recovery.
To the mounting fury of many government members and backbenchers the public have been reluctant to shower them with laurels and to re-elect them by acclamation.
The problem is that everyone knows that the government didn’t deliver this recovery. The Irish economy today is growing at roughly the long-term trend rate predicted by all major research bodies.
This is a growth built on the foundation of skills and enterprise developed by the Irish people over decades. Ireland is recovering because its core strengths not because of a politically-obsessed government which has no interest in long-term issues.
This government didn’t deliver recovery – but it did make it more unfair and divisive. It also allowed crisis after crisis to develop because of a refusal to do even basic planning on fundamental issues and its addiction to short-term action.
One of the major problems for the government is that it is trying to claim credit for growth which it doesn’t understand and didn’t predict.
For the first half of its term, growth was lower than it predicted and now it is higher. The majority of measures to fix the structural deficit were in place before the government took up office – so if it wants to claim that fiscal retrenchment delivered recovery then it has an enormous problem of having voted and campaigned against it.
Ireland has a great economic story to tell the world of a dedicated and skilled people and solid foundations, but our government is refusing to tell it because it gets in the way of its political strategy.
Minister Howlin was absolutely right when he said that those who promise to simply throw out tough policies are making promises which are both unrealistic and foolish.
It does, however, take some neck for this government to attack the policies of the far left here and to say “who speaks of Syriza now?”
It was Labour and Fine Gael who were promising the radical alternative in 2011. It was they who promised “not a red cent” and “Labour’s way or Frankfurt’s way”. They were the Syriza of 2011 with one major difference – Labour and Fine Gael didn’t even try to implement their promises.
And year after year Deputies who now lecture us all from the government benches were on their feet demanding more tax cuts and more spending. It is quite striking that in their recent appearances before the Banking Inquiry, the leaders of Fine Gael and Labour couldn’t find anything wrong with their own policies or priorities before the financial crisis.
All that the left parties are doing today is copying the Kenny/Gilmore model – so a bit less of the smug sanctimony is in order.
As it comes to the end of a five year term this government is distinguished by the fact that it has never produced a long-term statement of economic policy. It has maintained a fiscal plan it once attacked as unacceptable and it has produced a mountain of self-serving economic commentary, but it has never actually set out a vision for the future of our economy and the society we want it to support.
The Capital Investment Programme is a loose collection of projects thrown together with no sense of vision and no clear objectives. It sets out no service standards which are trying to be achieved and no sense of what the bigger picture is. All major projects involve completing plans made by previous governments.
Fine Gael’s decade-old commitment to compulsory health insurance is a shambles which the party’s ministers and backbenchers are now too embarrassed to talk about.
But other than that all we have seen is public relations initiatives. Many publicly-funded bodies have been closed down in order to be reopened and renamed by ministers.
Basic every-day activities have been rebranded and public servants put under orders not to allow anything happen without a minister present to announce it. In fact the entire machinery of government which should be focused on anticipating and addressing real problems has become dominated by ministerial obsessions with PR.
Innovation and Employment
This has shown itself particularly strongly in the enterprise sector, where announcements which used to be seen as run-of-the-mill are now held-up until the right branding is produced and half the Cabinet can attend.
One of the biggest components of the Government’s economic fairy tale is when it claims to have ‘delivered’ or ‘created’ tens of thousands of jobs. In the first weeks of his administration the Taoiseach signalled his intention by demanding that salary caps be lifted so that Fine Gael’s most senior press officer could be placed in the Department of Jobs, Enterprise and Innovation with a special brief to relentlessly sell the Action Plan for Jobs as the source of all new jobs.
The fact is that the OECD reviewed the Action Plan for Jobs and said that it was impossible to show that it had created extra employment – and that the bulk of employment growth was undoubtedly down to other economic fundamentals. In fact, there are elements of the Action Plan which actually represent reduced activity and, therefore, lost jobs. This is, for example the case of research, where a major exodus of scientists has been underway.
This hasn’t stopped the roadshow of the Action Plan.
In the IDA’s 66 years it has never had such a clamour from government to make a media event out of every announcement. Once again, the core long-term strength of a state agency and policy is undermined by the focus of political spin. Even during the worst years of the crisis inward investment continued. The export sector performed strongly and led the return to growth at the point where government policies were supressing domestic demand.
The Action Plan also introduced a policy now common in all government actions of renaming existing activity in order to claim something new. The most cynical example of this was the closing of the County Enterprise Board and then their rapid reopening with a new name.
Job growth has been and will remain strong for the medium term – however this is where the real force of the two-tiered recovery is being felt. A drift towards almost separate labour forces is underway – where one has access to highly-paid, secure jobs and the other is caught in lowly-paid and insecure jobs.
It took three years before the government even admitted this was happening. In spite of lots of inflated claims, yesterday there was no indication of a genuine commitment to addressing it.
In addition to the banning of exploitative contracts we need an all-out effort to stop people getting caught in low-pay, low security jobs.
We need to significantly improve provision for apprentices, both in terms of numbers and regional spread. We need an initiative to give people access to generous support for upskilling.
Of course we also need a comprehensive childcare provision – which I will return to.
A number of half-measures were included in the Budget to help the SME sector. Again they come nowhere near showing a vision for relieving the pressures felt by the sector and setting out a model for its development.
Every single target for making credit available to SMEs has been missed. SMEs continue to be squeezed by state-owned banks being fattened for a rapid sale.
If Ireland is to have any form of long-term balance and sustainability in its economy it needs to have a vibrant and innovative SME sector. This work has barely started.
One of the striking things about current industrial and employment policy is how little it has changed. The core strategies of the main agencies are largely those which were put in place a decade ago. They target the same general activities and have evolved rather than reinvented supports. Given just how much has changed in this period this suggests that we need more innovation in policy and less innovation in publicity.
A long-term policy which has unequivocally worked for Ireland was the decision to invest heavily in advanced research. When the last Fine Gael/Labour government left office the entire dedicated budget for basic research in our education sector was zero.
In the following decade this area was transformed. It dramatically improved the work of our universities and provided the foundation for the huge expansion in research activity in business.
The Budget documents talk solely about activities already in place so we have to assume that this government’s policy of drift and damage to our research base is going to continue.
In an unprecedented petition signed by 800 scientists earlier this year the government was warned that some of the best scientists who have ever worked on this island are leaving because of a short-sighted and damaging set of policies implemented by this government.
The so-called ‘new’ world-class research centres are anything but new. Most of them were established 12 years ago and all are funded under a competition launched over five years ago.
Basic research, which is funded in every country that has a high standard of living, is being undermined. One research centre which is ranked number one in the world in the critical area of immunology was actually refused funding because of this government’s policy.
Professor Bill Campbell is the first Irishman to win a Nobel Prize in a science area for 64 years. This government’s policy means that his studies could not be funded in Ireland.
Clearly the government decided that there were not enough votes to be bought in committing to long-term industrial and research policies, and our country will suffer because of this.
Before she became leader of the Labour Party the Tánaiste went to great lengths to present herself as a radical alternative to Deputy Gilmore. But beyond this rhetoric was the reality of a minister implementing cuts which were almost designed to maximise the hurt which they caused.
After this Budget 38 out of the 40 major cuts implemented in social protection schemes will remain in place. There is a Fine Gael agenda for helping the highest earners but none for those hit by the social protection cuts.
The €3 pension increase is a case of doing something in order to claim you care rather than to acknowledge the real issue. The anti-women changes to eligibility continue to cost many people thousands. The cuts to lone parents which are unjust and unfair remain.
Pensioners have been hit by over €1,200 in direct cuts to payments and tax increases by these governments. The removal of thousands from the medical card and the 400% increase in the prescription charge are joined by many other costs and cuts which have hit the elderly disproportionately.
Minister Noonan announced the end of the private pensions levy as if it were some major concession. It has been both socially and economically damaging. It was a bad policy which probably cost the state more than it collected due to reduced investment. It should never have been introduced in the first place.
Overall, no significant improvements or reforms have been proposed for social protection which is an appropriate symbol of 5 years of neglect and regressive cuts by this government.
Childcare is another area where the government continues to make it up as it goes along. It clearly decided that it needed to announce something on childcare but it was unable or unwilling to do it comprehensively. The announced scheme is a mess which does not extend childcare in a sustainable way.
3 hours care for 38 weeks a year means that working parents will still have to put in place close-to full-time arrangements paid from their own pockets.
A comprehensive childcare system is urgently needed and it is affordable. That is why Fianna Fáil gave a priority to childcare in its budget proposals and I have no doubt that this will be a major area during the coming election.
Fine Gael and Labour spent four years sitting on their hands as an entirely avoidable housing emergency developed. As soon as public outrage reached boiling point they started announcing emergency measures. Yesterday we had the 6th housing announcement of 2015. It is still too little and too late.
Minister Noonan made the entirely false claim last night that “there wasn’t a single social housing unit built under Fianna Fáil”. In fact, in every single year under Fianna Fáil the funding and output of social housing was higher than in any year of this government. This year, with a housing and homelessness emergency underway, the allocation is less than one third of 2010.
This government is the sole author of the housing emergency. The Tánaiste instituted cuts and denied any change to the rent supplement scheme which directly drove and is still driving people out of homes.
The government had projections of housing demand but did nothing – the government failed even to plan let alone fund urgently needed housing units. There are ten local authorities which have not build a single house this year. There are 1,500 children in emergency accommodation. This is a national disgrace.
The failures of the government on housing have been so complete that they have resorted to fixing the figures. There are 130,000 on the social housing list – 40% higher than Minister Kelly will admit.
Did the 6th housing announcement of the year provide a route to meeting the social housing need or making home ownership affordable for the squeezed middle? No, it didn’t. It was another policy soundbite designed to get through a tricky period.
This government ends its term with a full-scale crisis in the health system and no idea how to deal with it.
First they said they had the answer to everything and the Taoiseach claimed that everything was heading in the right direction. Last year he made a scapegoat of Minister Reilly and installed a new tough-talking Minister who said he would quickly get things under control as he had a better bedside manner.
Two massive supplementary budgets, trolley crises in Emergency Departments , waiting times and waiting lists exploding even after they have been manipulated downwards and chaos in recruitment to vital jobs.
This is what the new broom has delivered. In fact he has seen a 550% increase in inpatient day cases which are waiting for over a year. So today his principal policy appears to be “I don’t know how to deal with it but heads will roll if you embarrass me this winter.” Clearly this is why he was a leading member of the November election caucus.
The Budget provides for no significant new activity next year. Simply the rate of decline is being managed. A few million is being thrown at a GP card initiative which will almost inevitably not be delivered next year – but other than that nothing new is promised.
The size of the supplementaries is not down to a failure by professionals in the system it is down to political decisions. For three years now Ministers have demanded that the HSE promise certain levels of service but have refused to provide the required funds. That is why the funding has run out early and why there is growing inefficiency in the planning of services.
Just like the housing emergency, this is a crisis directly caused by ministers.
Fine Gael has committed itself to running the most negative re-election campaign of any Irish government. As part of this it has apparently produced a booklet outlining attacks which should be made on me for my time as Minister for Health.
One of these attacks is that I was supposedly not able to control spending. You may wish to update that given that this year’s supplementary estimate is ten times the size of the one in my last full year in that Department – and that came from increased demand not unplanned services.
The House should also remember that two years ago the Taoiseach told us that he was taking personal charge of ensuring that Health stayed within budget and that there would be no more supplementaries. €1.2 billion later he has some explaining to do.
There is little or no chance that the GP card extension will be in place next year. The first phase was delayed by nearly four years from its first announcement. It has been funded by the removal of tens of thousands of medical cards from the elderly and families under pressure. It represents a direct wealth transfer from the neediest in our society.
After five years of growing failure on health this is all you have to campaign on. For all your posters promising no more trollies and instant access for everyone, your health policies have been a shambles and I look forward to this being a core issue in the general election.
Minister Howlin has introduced the tactic of announcing allocations which are automatic due to demographic changes as being ‘new’ or ‘extra’. The great bulk of the additional allocation to education is to cater for growth in pupil numbers.
For other improvements, the fact that only a third of a year needs to be shown in the 2016 figures has allowed ministers to try and take the bare look off what has been a consistent targeting of education for disproportionate cuts.
The bulk of the most regressive cuts, such as to guidance counsellors for disadvantaged schools and the abolition of post-graduate grants for poorer students remain fully in place and part of a legacy on education of neglect and drift.
It was a brave decision of the government to send its ministers into the house to speak for over an hour but not once mention the biggest political and budgetary fiasco of many years.
Irish Water was not imposed on this government. It was announced as Fine Gael policy years before the troika was ever heard of. And neither were the form, content and size of the water charges imposed on the government. The troika confirmed, if Fine Gael and Labour had wanted to do something else they could have.
We have the absurd situation where we are paying millions to install meters which aren’t being used and won’t be for the next seven years. We have constructed a massive bureaucracy in order to impose a charge and another to give people some of the money back. 1200 people who fix pipes are to be laid off using money raised at a higher cost than state debt.
Instead of ignoring Irish Water it should be abolished.
Local Property Tax
The other massive and regressive tax introduced by this government, the Local Property Tax was mentioned in the Budget speeches – but only in order to say that nothing will be done for the next three years.
There are serious design flaws in the tax, most notably how it takes no account of ability to pay and penalises people who live in many urban areas. Simply kicking the can down the road for three years is not the reform which is badly needed.
During this government’s term there were many difficult choices to make – but they chose to be more unfair than was required. The direct impact of this was to further divide our economy and society.
In area after area this government also neglected issues until they were allowed to become crises. It refused to even plan.
It abandoned its ‘democratic revolution’ and has refused to change a single significant thing about how Ireland is governed.
It has put politics first in everything.
This over-hyped budget lacks any vision or direction for our country.
It doubles down on an approach which is making us a more divided society.
This government said it wanted change but all it really wanted was power – and all it now wants is to keep it.
I have no doubt that the Irish people will not be fooled. Parties who so readily broke their promises before will do so again.
A budget designed to last five weeks has nothing to offer a country which needs a commitment to deliver a state which works for all of its people.