Wednesday 23 October 2019

Donal O'Donovan: 'Donohoe trying to have his cake and eat it by cultivating 'Big Government''


Straight face: Finance Minister Paschal Donohoe presents Budget 2020 at Government Buildings in Dublin. Photo: Lorraine O’Sullivan/Reuters
Straight face: Finance Minister Paschal Donohoe presents Budget 2020 at Government Buildings in Dublin. Photo: Lorraine O’Sullivan/Reuters
Donal O'Donovan

Donal O'Donovan

Once Paschal Donohoe had in effect congratulated the HSE for overspending by only €350m so far this year, the jig was up.

"My colleague the Health Minister, and the new leadership team in the HSE, have succeeded in containing the additional pressures in the health sector to less than half of the level of last year," Mr Donohoe said with an impressively straight face.

If that's success you'd hate to see failure.

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Far from a rebuke for flailing health managers, their health budget will be hiked yet again.

Overspending in health has been completely normalised.

The issues go way beyond the health services. There was no effort to set parameters that would force public administrators to take hard decisions - even with Brexit looming.

The Brexit package is rightly being lined up to be deployed if and when it is needed.

But, in a move that would make Brexiteers blush, Mr Donohoe announced the extra spending to cope with Brexit will be borrowed in addition to the Budget set out yesterday, rather than be carved out of the existing pie. The minister is having his Budget cake and eating it.

In his three years as finance minister, he has presided over increasingly free-spending, decreasingly disciplined Government departments.

And Mr Donohoe has been extraordinarily lucky with windfalls from corporation tax and the sale of State assets covering the cracks.

Magicking-up €500m of cash that was supposed to go into the rainy day fund for next year's spending is just the latest in a series of such wheezes.

A true Brexit shock could yet see that luck run out; equally, the minister's luck may hold.

Nama is due to fold its tent next year, and to return a surplus estimated at €4.5bn to the Exchequer.

Hard choices quickly become soft options with that kind of money floating around.

Meanwhile, with money apparently no object, the ascendancy of the public sector ran right through yesterday's speech.

Whatever crisis of confidence the upper echelons of the public sector might have suffered in the aftermath of the crash is well and truly over.

Ronald Reagan used to joke that the most frightening words in the English language were: "I'm from the government and I'm here to help."

Budget 2020 gave us the definitive proof the mandarins have wrestled control of the Exchequer from their political masters.

Indeed, it's hard to see what distinctive stamp, if any, Mr Donohoe or even Fine Gael has made on Budget 2020.

There isn't much here for the people who get up early, unless they're up to head to work in a Government department.

Income tax cuts are impossible for most workers, the minister explained, because they might undermine the sustainability of our public finances.

In contrast, the commitments to raise public-sector pay by 2pc next October will be met.

Apparently that's affordable regardless of that same danger.

That's on top of the 1.75pc pay increase last month.

Much of that represents restoration of real pay eroded during the financial crisis - but the 53pc marginal tax rate PAYE workers pay, and 55pc marginal rate for the self-employed, are equally legacies of the crash.

The private sector must wait.

As far as Budget 2020 is concerned, there are few questions to which the answer isn't more money and more government.

There's a lot of government in Budget 2020.

The Brexit response measures that will kick in in the event of a 'no deal' will rely heavily on hands-on public administration.

In tourism, supports will skew toward overseas advertising promotion work done by State tourism agencies, rather than company-level reliefs, when in reality hotels and other operators would have preferred an easing on their own bottom lines in areas like rates, insurance and employee costs.

Even the strikingly unambitious climate change measures managed to generate their very own quango.

The new Just Transition Commissioner for the midlands will be charged with helping the region cope with the ending of its subsided peat burning industry by doling out cash for local projects and filtering local concerns back to ministers in Dublin.

It's going to be a salaried job, and in time will doubtless require additional permanent and pensionable clerical and administrative support.

But what the midlands is going to transition to, and how, remains a mystery.

Presumably, though, as carbon taxes continue to increase over the next decade, other regions and sectors can expect their own versions of the Bountiful Bogman.

Housing policy again is becoming skewed toward an aggressive programme of State intervention.

A lot of that is necessary. Social housing should be part of the solution, but the continued support and expansion of housing assistance payments (HAP) is counterproductive - driving up private rents and rents paid from the public purse, and there was a dearth of any supply-side measures that could nudge the private sector into greater action.

Irish Independent

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