independent

Wednesday 16 April 2014

Business leaders hit back at kite-flying ahead of Budget storm

EVERYONE knows that you don't fly a kite in a storm. Even the well-loved tale of electro pioneer Benjamin Franklin steering his contraption into the clouds to tap lightning has recently been debunked – not least on the scientific certainty that Mr Franklin would have gotten himself blitzed for his troubles.

But it's a tenet that the current Government seems blissfully keen to ignore – a whole squadron of kites are now strung out from Leinster House as Budget 2013 looms into view and the country continues to try to extricate itself from the economic storm.

Kite flying – the process of publicly floating a policy idea purely to gauge the reaction to it – has always been a favoured tool in Irish politics, particularly in the run-up to a Budget. The problem is that after a time, no one can discern kites from actual policy proposals with the result that political uncertainty prevails.

The wider ideological spread of this particular Government has meant that a second type of renegade kite is now also being frequently flown alongside those raised on government policy lines – the squabbling of extreme elements from both parties.

These are the "non-compliance" solo pirouettes of policy proposals conducted by maverick government members who are anxious to demonstrate a "rebel" credibility to their own grassroots support – whether it be left-wing Labour people eager to demonstrate their anti-austerity credentials or right-wing Fine Gaelers touting anti-welfare, anti- Croke Park and pro-business positions.

Business leaders have now mobilised to say they've had enough – that the petty political practice is now causing real damage to business on the ground.

In recent weeks, more than one group representing Irish business interests has broken cover to attack government kite flying on the basis of tangible and sustained damage to commerce and the economy.

As we approach Budget 2013 we've had the Anglo promissory notes kite, the reducing funds to fee-paying schools kite, the property tax kite, the PSRI hike kite and the sick-pay kite – the latter suggesting employers pay more.

So prevalent have the kites become that Minister Leo Varadkar was recently spurred into flying his own suggestion that his colleagues should put the kites away.

Retail Excellence Ireland, ISME and IBEC have all called for the scissors to be wielded right away.

Mark Fielding of ISME says political kiting has been killing jobs – all year long. "The threat of PRSI increases and the increased sick pay commitments for employers must be the longest stringed kites ever flown. They've been up there since January, before the ink was even dry on the last Budget. The uncertainty they have created has stopped companies taking people on over most of this year.

"I recently talked to a plastics manufacturer based in the midlands who wants to expand – to bring in some new machinery and take on 15 more people – but he's put the whole lot on hold until it's clear what the Government is going to do.

PRSI increase

"If they do increase PRSI and/or increase sick-pay commitments, then he's going to relocate that operation instead to his UK-based plant. I hear this type of story from small businesses every day.

"Then there's the consumer who won't commit to spending – whether that's buying some furniture or a new car in January – because they don't know what to expect. They're afraid of unexpected impact on their budgets.

Not surprisingly retailers also have the government kites in their sights stating – amidst evidence of falling consumer sentiment – that pre-Budget uncertainty has now become the Grinch that kills Christmas. They feel so strongly about this that Retail Excellence Ireland, the largest members' group, is demanding that the Budget be moved to another less damaging time of the year.

REI's most recent retail trading figures showed September to be the worst performing month of the third quarter (normally it should be the best) and the organisation says it now fears for the final quarter, which would normally be expected to provide the usual seasonal lift.

REI's David FitzSimons recently told the Irish Independent: "The closer that this year's Budget gets, the greater its impact on consumer sentiment. We're already seeing the sort of kite-flying nonsense by Government which gets people worried and stops them spending. The timing of the Budget just before Christmas – a season in which many retailers achieve up to one-third of their annual sales – continues to be hugely damaging."

REI has since called on the Government to implement a "clear and concise communications policy for Budget 2013".

IBEC, which represents employers, says kite fallout is now impacting on exporters, one of the few bright sides of the recovery so far, and also cites the damage caused by PRSI and sick-pay proposal uncertainties to business.

"We saw a drop in the ESRI Index in September and on the other hand business employment sentiment has also taken a downward turn," says its senior economist Reetta Suonpera.

"Uncertainty feeds into how outside companies see us and in turn creates uncertainty around company planning and budgets for the years ahead.

"As it happens, many companies make their budgets up in September going forward for a year. We also have Irish consumers postponing spending because they don't know where they stand with property tax."

So, amidst the recent hail of criticism, will the Government finally cut the strings on its fanciful kites? Or will it continue to invoke the numbing seizures of uncertainty that they cause in the marketplace?

For its part, business has made it crystal clear that the outcome of the more feckless course – as demonstrated by Dr Frankenstein (another of popular culture's enthusiastic storm kitists) – could only be monstrous.

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