Sunday 26 May 2019

No one knows how the money flows

It's magic money and it comes and goes, like our commitment to fixing global warming

Illustration by Tom Halliday
Illustration by Tom Halliday
Gene Kerrigan

Gene Kerrigan

Money is appearing, as if by magic - billions of euros. The people who govern us aren't sure where it's coming from, or who's responsible. And they don't seem terribly curious. They hope it continues, but - to quote one of their leading experts - they're "flying blind".

I repeat: the people in charge of the economy are by their own admission "flying blind".

On the other hand, money is disappearing, as if by magic - millions of euros. The people who govern us aren't sure where it's going, or who's responsible. And they don't seem terribly curious. They hope it doesn't continue, but, of course, they're "flying blind".

We're used to slagging off our politicians for their bad politics and their inefficiency, and they give us plenty of reasons. But recent appearances by a puzzled Michael Noonan and a cheerful Enda Kenny are beyond slagging off. They're quite alarming.

Let's start with the magical billions.

As the year went on, it began to dawn on our leaders that money was flowing into their coffers at an unanticipated rate. Mostly corporation tax.

By November, total tax receipts were €2.9bn beyond expectations. Instead of €39bn, Revenue had taken in €41.9bn. That 7pc jump is pretty startling.

What's happening? asked the politicians.

"It's something of a puzzle, I have to admit," John McCarthy, Finance's chief economist, told an Oireachtas committee in October.

"I was puzzled too," said Michael Noonan last week.

It's almost like being baffled is now considered a necessary qualification for economic expertise.

When the Secretary General of the Department of Finance, Derek Moran, appeared before the Oireachtas Public Accounts Committee they asked him to explain the magic money. He conceded that "the Department is flying blind on that one".

Meanwhile, Michael Noonan, the Minister for Being Not Quite Sure What's Happening to the Economy, spent some time trying to convince the Revenue Commissioners to write a letter to his department.

He wanted something on paper. Will the magic money come back next year? And the year after? Is it a once-off windfall, or is it something we can rely on?

No one knows.

But, it was important to Michael to get something on paper. There's an election coming. Michael needed to spread some money around, to dazzle the voters. And to convince them there's plenty more where that came from, as long as they vote Fine Gael.

But, what if he commits the State to spend money through next year and into the future - and the magical billions don't come back next year and the year after, like the swallows returning from Capistrano?

That would shred Fine Gael's carefully contrived image. Their election strategy depends on maintaining the image of "prudence". They offer "stability", while their enemies offer only chaos.

A bit difficult to keep that up when you're puzzled and baffled about the economy, but you're determined to splash the cash at the voters.

Michael needed something on paper that would cover his ass. If it all went pear-shaped he could wave his piece of paper and say, "Not my fault, look - the experts told me it was okay to do what I did".

So, over the summer Michael met the Revenue Commissioners several times and tried to get them to write a letter. This went on into the autumn. I wonder if it took so long because Revenue was less than eager to do what Michael wanted?

Eventually, on 20 November, Michael got his ass covered. He got a letter from Niall Cody, Chairman of the Revenue Commissioners. As Michael put it last week in an interview with Brian Dobson: "finally I got them to commit by way of a letter".

It's an extremely detailed and carefully written letter. There's a line that Michael can take as an alibi, when splashing the cash. "We expect," wrote Mr Cody, "that much of this surplus will reoccur next year."

Not exactly enthusiastic. And Mr Cody was careful to insert the line, "tax forecasting is not a scientific discipline". Thus, Revenue's ass is covered.

You can just see this being argued out at some future Oireachtas inquiry, right?

"They told me it was okay!"

"We told him tax forecasting isn't a scientific discipline."

Didn't matter what exactly the letter said, as long as there's a few words Michael can hide behind if things go wrong.

And thus the way was cleared for the Government to bribe the people with their own money.

Meanwhile, in the business pages there's discussion suggesting the magic money comes mostly from Apple and other mega corporations. They're adjusting their tax arrangements, as their home governments manoeuvre to fight the tax avoidance schemes that make our economy a plaything of those corporations.

The Government's ignorance about the magic money is matched by the government's deliberately cultivated ignorance about the Nama scandal - millions of euros falling off the back of a lorry when Nama sold major loans to an American outfit.

If it wasn't for Mick Wallace, we would be entirely ignorant about the disturbing developments. Once Wallace alerted them to the fact that there was something wrong, the Government had a responsibility to examine the matter. Ignorance - especially when it's a contrived ignorance - is no excuse.

But, sure, it's not like anyone is held to account for anything, in Irish politics.

Last week, Enda Kenny went to Paris to tell everyone how important it is that we deal with the fact that the planet is overheating.

Writing in the Irish Times, Enda told us he was gathering with "other world leaders" to sort out climate change because "the stakes could not be higher". His urgency was unmistakable: "act now or it will be too late."

In Paris he made it plain that he wouldn't stand for shilly-shallying by less committed world leaders. "I hope that we are serious," he told the conference. Enda won't tolerate unserious people around him when dealing with such a crucial matter as the future of the planet.

"This requires action by everybody - big and small. Ireland is determined to play its part."

Wow, the man's as green as Kermit.

Then, off stage, Enda told the media he's buggered if he's going to have Irish agriculture hamstrung by bloody emission regulations, losing markets to other countries where they produce cheaper food by not giving a damn about climate change. Unrealistic, he said it was, to expect Ireland to meet emission targets.

"What we have to have here is plenty of ambition, but one tempered with reality."

For a certain kind of politician, everything comes down to the votes, the seats, the badges of office. No need to get hot under the collar about global warming. Deliver a stirring speech for the "other world leaders", then have a quiet word with local media, to shore up the farming vote. The message is, don't mind me, sure, I'm only spoofing.

Polar bears are cute, but they don't have votes in Mayo West.

The thing that's impressive about all this is the barefaced nature of it. We can see Noonan's mind at work, as he secures the letter that covers his ass. There isn't a hint of a blush in the Taoiseach telling the "other world leaders" they have to get serious, while quite openly making it clear that no one should pay the slightest attention to anything he says about climate change.

Sure, he's as serious about climate change as Mick Noonan is about the magic money.

Sunday Independent

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