Thursday 22 February 2018

Liz O’Donnell: We may pine for the pre-austerity days, but this Budget had to be brutally realistic

When the Finance Minister rose to speak, a hush would fall on the packed chamber, and even the gardai on duty would drift into the visitors' gallery, caps tilted back, to witness the unfolding drama.

Copies of the speech, hot off the presses and actually warm to the touch, would be circulated one to each deputy by ushers, only after the minister commenced speaking. Deputies would eagerly skip ahead, scanning the pages in advance of the minister's pace.

There was always a "pantomime" atmosphere, particularly in the good-old days of rate cuts on income tax, rises in old-age pensions and child benefit and other treats. After those bits in the speech, a cheer would go up from the serried ranks on the government side, while the opposition benches searched for the odd landmine that might be bad news.

All the while, the main opposition finance spokesperson faced the unenviable task of return of service. There was only so much he or she could have prepared in advance. So being good on your feet was the big challenge. Overall it was an exciting and celebratory day.

Later, with plenty of boozy banter in the bar and dining room; you would meet fellows pretending they knew stuff with nods and winks and back slapping. Ard Fheis carry-on. It was the sort of night you would meet characters roaming red-faced along corridors with ties flung over their shoulders. There were votes late into the night.

Those 'halcyon' days are no more. This year's Budget was a doom-laden affair; people awaited it as though expecting the landfall of a hurricane. Looking down at the chamber, it looked dreary, grey and very male. The mood was serious.

People respect Michael Noonan and there was no playacting during his contribution, or cheers after it. The heckling by the "comedians" was saved for Brendan Howlin later as he broke the bad news on welfare and spending cuts.

This is the sixth in a line of austerity budgets over five years and was well flagged, more by the maths than by leaks. The reality is the Government has very little wiggle room. A property tax, painful as it is for the person writing the cheque, is a demand of the troika and is widely seen a sensible way of balancing the tax base away from income.

Tax on income is already dangerously high, particularly when the USC and other levies are factored in. Any higher and we will be back to the bad old days of penal rates of tax acting as a disincentive to job creation. Tax avoidance and a rampant black economy will also resurface. But most politicians find it easier to hike up taxes than introduce cuts on spending.

Normally Budgets are about political choices and reflect the ideology of the government party or parties in this case. Pre-budget discussions are usually trade-offs. But given the dictates of the troika these days, there is little room for ideology. As Ruairi Quinn conceded this week, this is essentially a national government to steer us out of economic penury.

Michael Noonan was convincing; reassuring us that we would come through the "catastrophic shock" that had befallen us. There was a welcome focus on job creation and SMEs. It was a pro-business speech playing well to the Fine Gael base.

It's a tough station for Labour deputies, in the chamber and on the streets, with ferocious competition from Sinn Fein and the Loony Left. Street activism is a forte of Sinn Fein; they will be banging dustbin lids next outside Leinster House.

Smaller parties always fare badly in coalitions – not in policy implement-ation, but in electoral outcome, as demonstrated by the demise of the Pds and the Greens. So, Labour ministers are playing a risky patriotic game. They can afford to be brave and take unpopular decisions as many are close to retirement age.

Who would have imagined it would fall to a Labour minister, Brendan Howlin, to tangle with the public-sector unions on productivity and cost "extractions" with a view to a massive reduction in the public service wage bill? Or for Joan Burton to take a tenner off child benefit and the rest?

But four Labour deputies have already jumped ship on what they saw as unacceptable deviation from Labour party policy and ethos. How many more can Labour afford to lose in the national interest?

Irish Independent Supplement

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