Friday 20 September 2019

Jody Corcoran: 'Leo gambles on hope over caution with tax cut pledge'

Fine Gael may misjudge the mood again by putting Tiger economics over public services, writes Jody Corcoran

Gang up: Taoiseach Leo Varadkar arrives at last week’s Future Jobs Summit, flanked by Minister for State for Trade, Employment and Business Pat Breen; Minister for Business, Enterprise and Employment Heather Humphreys; Minister of State for Higher Education Mary Mitchell O’Connor; and Minister for State for Food, Forestry and Agriculture Andrew Doyle. Photo: Tony Gavin
Gang up: Taoiseach Leo Varadkar arrives at last week’s Future Jobs Summit, flanked by Minister for State for Trade, Employment and Business Pat Breen; Minister for Business, Enterprise and Employment Heather Humphreys; Minister of State for Higher Education Mary Mitchell O’Connor; and Minister for State for Food, Forestry and Agriculture Andrew Doyle. Photo: Tony Gavin

In promising a tax cut that would, after five years, give 900,000 low to middle income earners an extra €60 a week, Leo Varadkar has set out his stall for the next general election.

On the face of it, this would appear to be a no-brainer, if also a somewhat one-dimensional electoral strategy - more money in your pocket. What's not to like about that?

However, Varadkar's income tax promise may also be a harbinger for Fine Gael to badly misjudge the complex mood of the country again come election time.

To understand why, we must stand back to attempt to divine that mood, real and underlying, as opposed to what the general political discourse, both positive and negative, informs us.

Notwithstanding positive economic analysis and projections, I would suggest that the mood, while willing to acknowledge the (unbalanced) progress that has been made since the great crash, still falls short of optimism.

In a few words: the mood seems to me to be hopeful rather than optimistic, but still anxious, if anything leaning more towards caution.

Leo Varadkar's income tax pledge is designed to tap into the hope in a way that he expects to benefit his party, and he may well be proven right; but it also plays with that mood of caution to a point that it may ultimately backfire on Fine Gael.

The tax pledge, specifically aimed at those earning up to €50,000 a year, or a couple earning up to €100,000, has the bang of Celtic Tiger economics of it, as though the wildly optimistic mood back then is some sort of benchmark against which everything must be measured.

Since the last election, the political discourse has centred on several issues, positive and negative, related to the great crash which still infuses the national psyche.

To the good, there has been robust economic growth, followed by virtual full employment, a large portion of it temporary in nature by the way, stronger consumer sentiment and what we might call a general healthier outlook and sense of well-being.

On the negative side, however, critical issues relating to housing and homelessness persist; the health service, at one level, remains unfit for purpose; there are concerns about the apparent urban-rural divide and more general concerns about inequality of opportunity and outcome.

And underlying all of this is a widespread anxiety about the stability of the current economic model, mostly to do with concerns over the country's reliance on corporation tax, and the eventual impact of Brexit.

These are among the touchstone issues which have been well aired in recent years, and about which we will hear a lot more during the white heat of a general election campaign.

In my view, however, there is another issue in the background which is fuelling a level of discontent that no amount of promised tax cuts over the next five years can allay. And that relates to access to public services hand-in-hand with value for taxpayers' money.

Indeed, this issue is now up front and centre is all aspects of our lives.

It is said that the great disruption, as a consequence of the digital revolution, has caused widespread anxiety.

And one of the main causes of this phenomenon has been, so far, the lack of real or tangible "value" in the digital economy.

In many ways, the internet is, of course, a force for the good. But the digital economy is also wreaking havoc in terms of the impact on traditional forms of employment, more so than in creating new forms of employment with proper job security and real prospects for career advancement. As a consequence, the digital economy is providing far less value in the day-to-day lives of people.

The explosion in temporary or relatively short-term contractual employment, for example, has its roots in the digital economy. In recent years, the increasingly rapid transfer from the traditional to a digital economy has, in fact, also imposed an added burden on people generally related to service.

As businesses large and small make the transfer, consider how easy it has become to relieve you of your money but how difficult it is to even make contact with your service providers, let alone to have any issues speedily or satisfactorily resolved.

These days, it is not uncommon for people to stress as much, if not more, about their online interactions with, say, household utilities, home entertainment companies, private health and household insurance providers, even the banks, and so on and so forth, as it is, or was, to interact with public services.

Indeed, in many instances it is now easier to get a response from the public sector, or at least to speak with somebody, than it is to interact with private companies who more often than not communicate through a @donotreply email.

For many people, this may seem relatively trivial, but it speaks to a wider issue, and I would wager that to the majority, it is a source of great annoyance and anxiety.

More to the point, it highlights a growing annoyance with the inadequacies of all service providers, state, semi-state and private sector, who take your money but then hide behind the anonymity of the internet.

So, as the confidence and supply talks continue between Fine Gael and Fianna Fail, there is genuine interest in how the "review" aspect of the negotiations progress.

This review of the past three years is dismissed by Fine Gael as some sort of ruse by Fianna Fail to drag the talks into an indeterminate time in the near future for some reason, of which I am not entirely sure.

But for many, there is real interest in analysing why it is that the Department of Housing has not delivered since the last election, or why the Department of Health and/or HSE are still not functioning as they should, particularly at access point, and why shortcomings still exist in so many other aspects of the State's services.

Since the last election, it seems to me that the debate has moved on from both Fine Gael's 'keep the recovery going' and Fianna Fail's 'fairness for all' to a middle ground which asks why the State is not providing better services for all of the taxpayers' money thrown at it.

Leo Varadkar's one-dimensional tax cut promise, even if it were to be taken at face value, is well and good, and may yet win the day for Fine Gael, but I suspect people will also be looking for something more sophisticated, and meaningful, from their politicians when the general election campaign finally gets under way.

Sunday Independent

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