Thursday 27 July 2017

We'll put up with anything, but Budget had better be bungle-free

Finance Minister Michael Noonan presenting Budget 2013 last year
Finance Minister Michael Noonan presenting Budget 2013 last year
Stephen Kinsella

Stephen Kinsella

The Budget will show us who we really are as a society. October 15 is going to be a big day. We will learn how much austerity the country will have to endure, based on the projections from September's tax and expenditure data. As you read these words, the Departments of Finance and Expenditure and Reform are poring over those numbers to gauge exactly how much pain the economy can take.

How much can you withdraw from the economy in government expenditure and increased taxes and still have a prayer of growing the economy enough to pay down the debt run up over the past five years? The Government has, in fairness, been careful to understand the distributional consequences of cuts on every level of society. It will be important that in this latest round of cuts we see exactly who is affected, and by how much.

Recent work by Tim Callan of the ESRI has shown the overall reduction in income in Ireland was greatest for the top income groups over Budgets 2009 to 2013, so the collapse and recovery of the economy has been managed in a relatively fair way. The ESRI also found that losses for the bottom income groups were greater than they previously estimated. Everyone has borne some pain.

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