independent

Sunday 20 April 2014

John Drennan: Dumb austerity will strangle State

Noonan and Howlin's Budget just proved the fiscal illiteracy of the mandarins in Finance, writes John Drennan

DOCTORS OF DOOM: Finance Minister Michael Noonan, left, and Public Expenditure Minister Brendan Howlin risk depressing the economy with their Budget. Photo: Tom Burke

The first Budget to be delivered by a Fine Gael minister in a quarter of a century was an eerie affair. One might have expected that after such a lacuna, the boutiques of rural Ireland would have been cleared of stock as the celebratory tribe prepared for their moment of triumph.

Instead, within the Dail the deserted car parks and empty bars bore a closer resemblance to the Marie Celeste. It was the same for Brendan Howlin too, for in as fine a piece of pathetic fiscal fallacy as we have ever seen, during his address, the nation was as spectral and as still as the Ancient Mariner's 'painted ship upon a painted ocean'.

As isolated TDs flitted through deserted corridors it was clear bankruptcy is, even on Budget day, an orphan.

The mood was unsurprising, for when a State has been gagged and tied to the train tracks by its lenders of last resort there is generally little to celebrate and a great deal to be evaded on Budget day.

And despite all his wit and natural intelligence, it swiftly became clear Michael Noonan was a man spending as long as he could saying nothing, so it would not become apparent just how little he had to say.

Paradoxically the emphasis on farming that was such a 'back to the Fifties'-style feature of Michael Noonan's Budget did provide us with the key to his broader strategy.

By the time his cautious collation had concluded, Noonan, with his emphasis on what the world thought of us, resembled the sort of farmer who spends more time looking at his neighbour's estate than his own weed-strewn fields.

In fairness, when it comes to Noonan's 'careful now, down with that sort of thing' script the minister's caution was understandable.

But, while mice should never do anything dangerous like leaving their burrows, or striking out on an independent fiscal road, when elephants are fighting on the plains, none of the minister's clever fiscal shimmies could disguise the fact that this was still a scarecrow of a Budget.

Brian Lenihan's Budgets were disastrous, but, they were also, by the standards of the time, a little brave. In contrast, despite Noonan's attempt to drape some sort of strategy across the skeletal form, this was an anti-Budget, which, as it turned with every breeze and bowed to every zephyr, brought us precisely nowhere.

This Budget may have been fiscally cute but merely hiding in the foxhole is not, when it comes to the current battle, a viable long-term strategy.

The most damning feature of the Budget was its status as a half-dying testament to the ongoing fiscal illiteracy of the mandarins in the Department of Finance.

After a decade of dumb spending -- that was in fairness agreed by all parties, the best response to our current crisis that the finest minds in the civil service can come up with is a decade, if not more, of dumb austerity.

It is as though, having poisoned a river with oil, our elite have decided the best response to this disaster is to purge it with salt in the hope that this will bring the shrivelled ecosystem back to life.

Though it is never pleasant we are not opposed to austerity for, like the first infectious rat that scurried off that 13th century ship, banking and sovereign debt is the carrier which has unleashed all our woes. And austerity with a purpose, such as that provided by Ray MacSharry, can re-invigorate a state by inculcating a sense of purpose and a clear direction.

The problem for this Government is that here, and across Europe, what we are getting is dumb austerity. And like bad medicine, dumb austerity is always more likely to kill than to cure the patient.

By the close of last week the focus may have been on Michael Noonan but we should not ignore the key role played by the rear of the Coalition pantomime horse in the new politics of austerity. Far from actually reforming anything, student charges, child benefit cuts, health insurance increases, household charges and school transport fees, which Mr Howlin so carefully induced into the fiscal bloodstream, will depress social and fiscal life across society.

Unfortunately, when it comes to this particular fiscal tandem Mr Howlin is not alone, for the economic Mad Hatter's rules of dumb austerity mean that even as the high street collapses we are draining fiscal liquidity from the domestic economy via VAT as well as Mr Howlin's thousand and one cuts.

Under dumb austerity, capital spending that creates real jobs for troubled mortgage holders is also, of course, being slashed to pay the lump sum retirement payments to already over-paid teachers.

It is difficult to see how turning this State into a variant of one of those Florida retirement towns where all economic activity is centred on fulfilling the needs of retired civil servants will restore Ireland's lost entrepreneurial spirit.

But apparently under dumb austerity all illogical things are possible as a country that is constantly being told we need to be smart to survive sees every gain in education since the Fifties, right down to the free school buses of Sean Lemass, being reversed.

Last week's fine arguments about our clever minister's espousal of Colbert's view that the art of taxation consists of plucking the maximum amount of feathers from the goose with the minimum of hissing, could not disguise the fundamental Achille's heel of the Howlin/Noonan strategy.

Outside of the obvious fact that the Irish goose is getting pretty bare, all this Budget offers is depression, deflation and an ongoing degradation of the State's infrastructure.

Dumb austerity is the economics of trench warfare where Mr Noonan plays the role of the cheerful general, who in 1918 tells the troops that if they gather for the final big push somewhere around 1922 or 1923, they will be eating sauerkraut and sausages in the Kaiser's palace in Berlin.

Like the stupid generals of the First World War it is the creature of a fatal lack of imagination which can see no better strategy beyond the creation of a permanent economic no man's land of desultory warfare where gains are measured in yards.

As we enter a world of misery where, like in Orwell's 1984, Europe and the banks will, with the acquiescence of puppet governments, evolve into a boot stamping eternally on the faces of the people, it is also a policy which is destroying the nation's morale.

Of course our Troika 'partners' will not be at all distressed by that side-effect for the serious 'inter-governmental' business of creating a referendum-free Europe of 'slave states' can only be facilitated by the choking of the national psyche.

Our future is being laid out in tablets of stone carved by the Troika. And the more this Government is praised by our 'partners' the more nervous the rest of us should become.

The reason our EU friends are happy is that the Howlin/Noonan Budget was, to borrow a phrase from Mr Noonan in 2010, the creation of a 'puppet' regime which willingly ticks the boxes that are placed in front of it.

In a State organised on the old imperial principles of

divide and conquer, our EU 'partners' are confident, after some initial embarrassments about burning bondholders, that just like its inglorious predecessor, this newest Potemkin parliament will look after enough pets from the social partnership class to keep the show on the road.

All that is left now, as our Finance Minister directs us towards the bucolic delights of the frugal farmer's life, is to see if our new German masters have their way on corporation tax.

Should that occur, then the only future that will be left for our humbled agrarian state is to become the breadbasket of Europe and a pleasant, though slightly damp (and low-cost of course!), tourist destination for German pensioners.

Sunday Independent

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