Monday 24 October 2016

Fionnan Sheahan: If you've got it, spend it, was mantra of ministers

Published 02/03/2011 | 05:00

Bertie Ahern at his home on Griffith Avenue, Dublin, yesterday
Bertie Ahern at his home on Griffith Avenue, Dublin, yesterday

The mandarins in the Department of Finance felt vindicated yesterday by the publication of a report into the department's role in the Celtic Tiger boom to bust.

  • Go To

The report, by independent experts from Canada and Holland, says the department did warn about excessive spending and reliance on unsustainable taxes, but it also says the alarm bells weren't ringing loudly enough at times, particular in the latter stages.

Not an entirely clean bill of health, but enough to point the finger of blame elsewhere -- notably at the politicians.

Ministers received the warnings on an annual basis about the danger of unsustainable taxation and spending.

Bertie Ahern, Charlie McCreevy, Brian Cowen and their colleagues ignored these warnings.

The finance ministers during the term in question can claim they brought the cautions of the department to the table and they were was promptly ignored.

But that hardly excuses McCreevy and Cowen, as they clearly didn't shout 'stop' loudly enough. Indeed, McCreevy's mantra invariably appeared to be that if you've got it, you spend it.

By the time Cowen got to Merrion Street, the juggernaut was in top gear but he did little to halt the rise in spending. In fact, at times, he upped it another gear -- particularly in 2007, the year of the previous general election.

Fianna Fail's budgetary policy was simple: the money is flowing in, so spend it. Scant regard was taken of the erosion of the income tax base, which left longer-term revenues vulnerable.

The reality of politics is there will always be demands for higher levels of spending on social services.

Fine Gael's Richard Bruton, in particular, warned on an annual basis about the dangers of pro-cyclical budgets, where spending continued to rise dramatically and there was an over-reliance on taxes from the property market.

Bruton cried foul about the increase in wages and the failure to deliver value for money from the €1.1bn extra committed per year from benchmarking.

But even within Fine Gael, there were other party spokesmen calling for an increase in spending in their areas and whingeing whenever there was a cutback.

The new government says it will learn the lessons of the boom-to-bust cycle, but, unfortunately, they won't ever have the luxury during their term in office of containing expectations on tax cuts and spending increases.

The cycle is going entirely in the opposite direction.

Irish Independent

Read More