Tuesday 25 October 2016

A missed opportunity for FG to make a difference

Budget 2017 was a test of competence for the Government, but it failed to get many pass marks

Eoin O'Malley

Published 16/10/2016 | 02:30

Michael Noonan's Budget 2017 only helps FTBs acquiring new homes, preventing second-hand starter home owners from moving on
Michael Noonan's Budget 2017 only helps FTBs acquiring new homes, preventing second-hand starter home owners from moving on

Election campaigns start the day a new government is formed. That might seem a little early, but the negotiations of the programme for government and a Taoiseach's cabinet selection must have an eye to the future. They set out what the parties in government are going to do. They set out what they stand for. Given this Government's life expectancy, the election campaign had to start on May 6.

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The programme for government was high in aspiration and low in detail, and since then much of the running in the new Dail has been taken by Fianna Fail. So the 2017 Budget was a real opportunity to address the issues that the party floundered on in the election campaign, and to set itself out as a party deserving of support. It was Fine Gael's test of competence. It could have made a case for it to be the party of government - the default option in the way that Fianna Fail was for so long. It failed that test.

This is a strange set-up. Being in a minority and dependent on Fianna Fail and independents, the Fine Gael Government thought it didn't have a lot of room for manoeuvre.

Each of these groups had their own issues they wanted to highlight.

The resulting Budget was intensely political, but it was low politics, with short-term political survival - Enda Kenny's and the Government's - to the fore. It was a Budget that appeared to be written by a committee informed by a focus group.

Everywhere you look you can see other groups' fingerprints. Five euros for the old, for the unemployed, and a bit extra for sheep farmers. There was a tiny rise in the minimum wage, help for first-time buyers and working parents with young children. Kenny and his Cabinet will be pleased. They'll get a Budget passed. But it wasn't their Budget.

All sides in keeping the Government afloat can point to their little victories. This Budget is just a signalling exercise. They want to be able to say to their voters or the lobby groups 'we delivered this for you', even if the measure won't have any real impact. It is the equivalent of wearing a campaign badge or a twibbon on Twitter. It says to others that you care even if there is no positive practical benefit of doing so.

And it didn't even seem to work. Most of the (admittedly unrepresentative) vox pops on radio and TV showed people were ungrateful for what they were being given. The decision to release so many of the details in advance probably didn't help the Government's messaging. There were no pleasant surprises.

But maybe it was because most people noticed the changes were insignificant. One journalist tweeted that he will be a double whiskey and Coke a month better off. It doesn't seem like much.

Or it might be because they regard it as their own money anyway. Getting an extra few euro back is dwarfed by the average €14,000 each person pays in taxes each year.

The underwhelming reaction to the Budget reveals an asymmetry in how we perceive budgetary changes. Small changes that make us worse off are much more important than changes that make us a small bit better off. The €5 increase for the unemployed and for OAPs is scoffed at, yet the €3 that people would have to pay in water charges was seen as a threat to their survival.

But by trying to satisfy everyone, the Government has spread its money too thinly to have any policy impact. Five euro may not be enough for the elderly poor, and won't have any impact on the elderly rich. In any case, the elderly might prefer a better health service or home help to a cash transfer.

The Government may have felt it had few choices, but if Fine Gael were bold it could have tried something different. It knows that Fianna Fail was under pressure to support the first Budget at least. If Fine Gael had any self-confidence it could have taken to the Dail a Budget it believed in, not one that satisfied the lowest common denominator.

That Budget might have identified a number of policy areas that are politically important and concentrate resources on these. Instead of small welfare increases it could have targeted carers, a group that saves the State vast sums. It would have been hard for Fianna Fail to argue that middle class OAPs need the money more than carers.

It could have taken the housing crisis seriously by announcing that it would build, or facilitate the building of thousands of new homes in new towns or by clearing areas with poor housing stock to enable large-scale high density development. The Docklands is a success story. Something similar could be done in other inner city areas to provide housing. State action is needed to deliver the number of houses required - even if it is private developers doing the actually building.

Instead the Government went ahead with the bizarre first-time buyers' grant even though past experience and everyone who knows about the policy could tell the Government it would only have the effect of increasing house prices. Already there are reports that developers are increasing prices.

The election identified areas that the public wanted action on. Big policy interventions can make a difference, and politically they are hard to oppose. Instead an anaemic government went with small-scale signalling, serving nothing but its own survival.

Dr Eoin O'Malley is senior lecturer in political science and director of Dublin City University's MSc in Public Policy.

Sunday Independent

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