Analysis

Friday 1 August 2014

Plenty of damp squibs among fiscal fireworks of Budget 2013

Published 09/12/2012|05:00

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Last year's failure of a Budget looks like a masterpiece compared to the latest offering, writes Willie O'Dea

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One way of assessing what impact the Budget announced last Wednesday might have on the country is to look back and see what last year's budget had.

Last year, the Minister for Finance said: "The core [mission] of this Government is to get Ireland working again."

So, measured up against the yardstick the Government set for itself, how did it do? Badly. When the Government took office, the unemployment rate was 14.1 per cent: it now stands at 14.8 per cent. However, that does not even begin to tell the story. It does not relate how almost two out of three have been unemployed for at least 12 months and more than one in three has been so for at least two years.

Neither does it reveal that many people are leaving the workforce. Nor does it take into account the numbers hidden in the education system and training schemes or, most tragically, the 200 people who emigrate each day in search of a future.

Yet Michael Noonan would have us believe that all is well on the jobs front. He told us last Wednesday that: " Unemployment fell by 3,600 on an annual basis in the third quarter of this year."

This type of statement makes James Reilly's recent "it is a logistical logarithmic progression" comment to the Dail look insightful.

Last week in Limerick city, a small local business advertised for two full-time jobs and one part-time job. The pay was not high, the work was tough. They got 700 replies, most from people hugely over-qualified. This is the reality of unemployment in every quarter, not just the third one the minister picks.

By any measure last year's budget was a failure, yet it now looks like a masterpiece of coherence and planning in comparison with what the Government's twin Finance Ministers produced last Wednesday.

While budgets may often look like just arithmetical exercises, they must also be underpinned by an agreed strategic approach.

This year's offering had all the coherence and solidity of a bunch of fireworks.

While, as part of the process of closing a yawning fiscal gap, you will necessarily have to take money out of the economy, which will in turn reduce activity, you must subject any Budget proposal to two simple tests.

First, is it geared to do minimal damage and create opportunities for the country to begin to grow?

Second, does it ensure those with the broadest shoulders take the hardest hit?

This Budget had neither direction or fairness. In place of strategy and coherence we got compromise and trade-off. Worse yet, we got compromises and trade-offs that contradict each other.

The result was a mish-mash of some Labour fig leaves like the mansion tax stapled over what is essentially a Fine Gael document.

While many see the leaks, spin and counter-spinning from both parties in the lead-up to Budget day as summing up the Government's appro-ach, I would suggest this is merely the tip of the iceberg.

The Social Protection Minister creeping into a Dail committee on the morning of the Budget to blithely tell us that there is an overrun in her budget of nearly €700m tells us even more about how purposeless this crowd are.

If Reilly's €300m Health overrun is rightly described as a "crisis" what do we call this? The terms gross mismanagement and incompetence spring to mind, though these do not convey the deep political cynicism of admitting such a colossal overrun on a day when they hope the focus will be elsewhere.

If this is what Labour's new, open, clean and transparent politics looks like, then no wonder its own members are in the political doldrums.

But what does this minister's inability to manage the social welfare budget mean for people facing reduced payments, such as 19 per cent cuts in respite care?

Is it any wonder that that Fine Gael sources were saying that Joan Burton had to be talked out of cuts to things like bereavement grants.

The one small ray of light in the Budget was their decision to eventually take on board the idea I floated here of allowing business owners to temporarily tap in to their personal pension funds to source much needed working capital.

While this is progress and is to be welcomed, on the downside I first advocated this proposal in the Sunday Independent in April 2010. Almost three years ago.

Can we really afford this rate of progress?

Willie O'Dea is the Fianna Fail TD for Limerick city.

Sunday Independent

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