Wednesday 16 October 2019

Richard Curran: 'It is time to axe the dated annual Budget day pantomime'

‘No surprises’: Finance Minister Paschal Donohoe delivered his Budget on Tuesday
‘No surprises’: Finance Minister Paschal Donohoe delivered his Budget on Tuesday
Richard Curran

Richard Curran

'Absolutely no surprises" is how Paschal Donohoe previewed his own Budget on Tuesday morning. It was clear from the minister that EU fiscal rules and Brexit risks had reduced the scope to do anything particularly different.

Meanwhile, multiple highly accurate leaks in the run-up to the Budget had taken away any conceivable element of surprise.

The political pageant that marks Budget day in Ireland had finally been laid totally bare. When a minister says there will be no surprises on Budget day, he is confirming that the leaks were right and the need for secrecy, mystery and producing rabbits out of hats is really just a long-played-out political pantomime.

There is no longer a single good reason to keep doing the Budget process, the build-up and Budget day itself the same way. Tradition and habit are all that is left of the Budget hype.

This week was my 27th Budget as a financial journalist. That isn't really that many compared with some, but it is enough to realise there should be a better way.

Here are a few areas where the arithmetic of the pros and cons on Budget day just doesn't add up any more.

EU rules: Because we now have EU budget stability rules, thankfully it isn't possible for the Finance Minister to just expand the numbers beyond prescribed boundaries. Detailed Exchequer figures published every month provide everyone with the parameters in which the Government must operate. So we know the size of the Budget (more or less) well in advance. We just don't know the specific measures.

The ECB: One reason given for Budget secrecy up to the last minute was that the speech announcements could be price-sensitive to the Irish currency, and even the cost of Irish Government bonds on the debt markets.

We no longer have a currency of our own and the price of Government bonds is not going to fluctuate significantly in a prescribed budgetary framework.

The Rainbow Coalition came to power in the mid-1990s after the collapse of Albert Reynolds' Fianna Fáil coalition government.

The 'rainbow' consisted of Fine Gael, Labour and Democratic Left.

Irish Government bonds began to fall a little when a trader in London asked who Democratic Left were.

He was told by somebody that they were a breakaway from a political party, which in turn had split from a political party that had links to the Official IRA. Some sense prevailed pretty quickly and the bonds went back up.

Effective lobbying: It used to be the case that Irish finance ministers spent hours per week in the run-up to Budget day meeting interest groups face-to-face to discuss their submissions.

Ruairi Quinn in the mid-1990s was the first finance minister to put a stop to that monumental waste of time, which was based on tradition anyway. He made sure his department read and engaged with various interest groups, but simply no longer met everybody.

There are ample opportunities for many interest groups to get access to Government in a way that is just as effective but doesn't dominate the minister's time.

Budget submissions are part of the problem. At times, interest groups use them to generate publicity and seek measures they know the minister has no intention of implementing. It is part of the annual Budget circus.

Leaks: Traditionally, the Budget process was made up of kites and leaks. These days, there are few kites and numerous leaks.

The most famous was when Junior Finance Minister Phil Hogan had to resign because someone in his department had faxed the Budget to the 'Evening Herald'.

Blabbing a few details down a phone line was part of the game played between politicians and journalists, but faxing it was a step too far.

If you wanted to know what was going to be in the Budget just ahead of it being read in the Dáil, you just had to listen to RTÉ journalist Brian Dowling on News at One on Radio One. He always delivered a large chunk of it and was never wrong. Yet the civil servants would go to enormous lengths to 'safeguard' the contents of the Budget day speech.

I remember covering the Budget in 1999 as RTÉ business correspondent. A troupe of civil servants arrived into the TV building and were given a room to work from just off the newsroom. The turnaround time was extremely tight for putting a TV package together. The civil servants had instructions to only hand over the physical copy of the Budget after the minister had finished speaking.

Back in 2009, I remember being part of the Budget day television studio discussion. We previewed what might come up on air.

As the minister took to his feet, and between having our noses powdered by the make-up team, civil servants would hand us a copy of each individual page as the minister finished reading it. At no time could we have a page in front of us which he had not yet read out.

Precisely what we were going to do with this information while sitting in a TV studio was not clear.

With the advent of 'new politics', the leaks are on a Titanic scale.

The Government has to run the Budget by more politicians from different political parties.

It makes for crystal-clear, detailed advance information from barely disguised sources, who are sometimes quoted directly in the same story or even photographed as part of it.

And why not, except it makes the pretend secrecy around Budget day all the more ridiculous.

New politics: This type of politics, in the form of the confidence-and-supply agreement with Fianna Fáil, has strained the credulity of Budget day Dáil performances to new levels.

The party's finance spokesman must criticise the Government, yet he cannot launch a broadside on the Budget, because the party has agreed to vote for it.

Meanwhile, the finance spokespeople from other parties produce as much raw anger as possible across the Dáil chamber, as TDs head for the exit doors because the main event is over.

Each party spokesman knows they will be good for a soundbite on the nine o'clock news, so they give it socks. The whole pageant is getting more ridiculous and unnecessary.

It is an important day for people who want to know if they may be better or worse off next year when it comes to taxation.

In recent years, we had Michael Noonan take to his feet and deliver, for example in 2015, 13 different income tax and PRSI measures, with a combined cost to the Exchequer of just €109m.

These were the fiver-in-your-pocket Budgets, with dozens of new measures that didn't really change an awful lot.

The other great myth is the election Budget. Budgets delivered prior to elections which contain large giveaways have rarely worked in ensuring the same party gets back in.

Real measures with implications for the tax treatment of businesses or investors are often flagged on Budget day, but handled at a later date in the Finance Bill.

This provides the Government with time to discuss them in detail with vested interest groups, before committing to how they will be implemented.

This week's Budget was interesting in that several measures were introduced from midnight on Tuesday.

It suggests there may be some merit in keeping the Budget secret up to the big reveal.

Yet, these will not have come as a great surprise to those most affected and will have been discussed in advance as part of an information gathering and lobbying exercise.

The other great trick is to announce something in the Budget that has very little to do with the Budget.

Charlie McCreevy did this in 2003. His ad-hoc and costly decentralisation measure dominated the headlines the next day. In fact, that day, McCreevy had not adjusted income tax bands for inflation and everybody was slightly worse off. But few noticed.

This week saw a decentralisation reheat, but described as a review of 'future workforce and office requirements' for civil servants. Only this time, they might actually want to move.

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