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Friday 29 August 2014

Martina Devlin: Good cop, bad cop act can't mask Budget pain

Martina Devlin

Published 07/12/2011 | 05:00

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Delivering the Budget, Brendan Howlin looked almost apologetic but Michael Noonan appeared relaxed, even when being heckled

'A RUINED village was left here . . . occupied by unemployed and angry people who were tormented by a prosperous past and the bitterness of an overwhelming and static present,' reads Gabriel Garcia Marquez's 'Leaf Storm'.

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It sums up Ireland today.

Ruined prospects and an unemployed people trapped in an immobile present. And many of our people will continue to be jobless, that most hope-sapping of conditions, judging by yesterday's Budget.

Michael Noonan comes across as a wily old bird -- he conveys the impression of a wartime finance minister -- but he must know a jobless recovery is impossible. No employment creation measures, no revival of our fortunes; simple as that.

So his Budget, with its lack of any real economic stimulus, reinforces the status quo. We remain a country in stagnation.

We heard no end of talk about getting people back to work, but that's all it was. Talk. There was no evidence in this Budget of any meaningful measures to take people off the dole. High unemployment levels seem to be accepted at Government level.

"The primary purpose of this Budget is to support the creation of jobs in the short term, the medium term and the long term," said the minister. If that's the case, his Budget failed to live up to its goals.

As for those still fortunate enough to be receiving pay cheques, while he made a point of promising incomes would remain the same, the reality is that money will buy less. Nearly everything is going to cost more thanks to that 2pc VAT increase. Those upwards only utility bills are becoming less and less affordable

Consumer confidence is meant to be boosted by pay cheques unchanged by leaving income tax alone. But consumer confidence is so far under water, a free submarine ride for everyone in the audience couldn't bring it back above the surface.

Back in June, when Mr Noonan suggested it was our patriotic duty to get spending, nobody paid a blind bit of attention. Once Christmas is over, hands will stay in pockets and shopping centres will resemble ghost estates.

Where shopping needs to be done, that VAT increase will send people over the Border, despite Mr Noonan's assertion to the contrary. I'm in the North every other weekend, and each time I set foot in a shop I hear accents from other parts of the country because prices are keener. A 2pc VAT rise will only speed up the flow of traffic.

It's such a blunt approach to raising money. Surely it would have made more sense from the perspective of fairness -- which he referenced -- to identify areas where a higher VAT rate might be appropriate? For example, luxury goods such as jewellery, sports cars and yachts.

Even more disconcertingly, the VAT increase may not generate as much as the Government is banking on -- expected to be €670m in a year. If that's the case, we may brace ourselves for another mini-budget halfway through next year.

At a presentation on the future of the euro last week, Bloxham Stockbrokers' chief economist Alan McQuaid said he believed the Government was overconfident in its VAT predictions. However, he added that some may feel if it's a choice between a VAT or an income tax hike, then VAT is the lesser of two evils. And he may be right. Revenue generation is always painful one way or another.

Mr Noonan's style is magisterial -- listening to him deliver a Budget is a little like a pep talk from a head teacher: "Pull your socks up, Donnelly, start applying yourself and you might not do too badly in the Leaving." This is hardly surprising, since he used to be a teacher.

Still, there is an unflappability about him which is somehow reassuring, even if the nuts and bolts of his Budget were less so. And when you listen to him long enough, the Finance Minister has some distracting speech tics. His 2013 sounds like the speaking clock or an Iarnrod Eireann announcer: it took me some time to figure out "two-thirteen" was the year after next and not the next train to Limerick Junction.

Brendan Howlin looked apologetic at times on Monday, but Mr Noonan's default expression is matter-of-fact. He was relaxed, even during consistent heckling, but after 30 years as a TD it's not surprising he should be so comfortable on his feet in the chamber. Mr Howlin was less at ease, but perhaps he felt less resigned to the cuts he was announcing.

By comparison, Mr Noonan even allowed himself a few smiles and some levity, as when he suggested some of the non-puritan members of the opposition might be interested in his plans to tax remote betting.

As he said it, I found myself thinking how all those people who bought houses at the peak might just as well have detoured to Paddy Power or Ladbrokes with their mortgage money and had a series of flutters instead. They might be better off today.

Were there any teachable moments in that speech? I notice the political class and its adherents seem to be relatively recession-proof, even as the rest of us winced at the details of how we will pay for the biggest bailout of the banking and corporate classes ever.

Fundamentally this two-part Budget amounts to quite a lot of pain for some, and considerably less disposable income for all: empty compartments in wallets where cash used to nestle.

What makes it particularly difficult, however, is that it is our first Budget in almost a century to be overseen by a set of foreign political masters. Just like the olden days.

There was something else that reminded me of days gone by, too. Shortly before the Finance Minister stood up to speak, news emerged about the death of a homeless man sleeping under cardboard in Dublin city centre. He died overnight on Monday in bitter weather conditions.

Welcome to Ireland 2011. Smacks too much of Ireland 1811 for my liking.

Irish Independent

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