Friday 20 September 2019

Philip Ryan: 'Health is the big dilemma for Prudent Paschal's plan'

The finance minister must decide how many Budget wins he can afford to give his rival, writes Philip Ryan

Finance minister Paschal Donohoe. Photo: Jonathan Brady/PA Wire
Finance minister Paschal Donohoe. Photo: Jonathan Brady/PA Wire
Philip Ryan

Philip Ryan

The perennial row over the Department of Health's budget is well under way. The robust email exchanges have started. Civil servants are gearing up for the return of their political masters as the countdown to Budget 2020 begins. Politically and economically, this is the most important Budget of the last four years.

We have had four years of so-called ''giveaway Budgets''. Many people might say they haven't given much, but there has been a steady stream of tax cuts and social welfare increases since October 2015.

Ahead of every Budget, it is the job of the Finance Minister, in this case Paschal Donohoe, to dampen the expectations of ministers. This year, however, he is faced with a tricky conundrum when it comes to his Budget, as there are several variables at play.

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Health is one of these variables. A very big variable, at that. Health Minister Simon Harris has announced some very bold and politically savvy spending proposals this year. Harris wants to extend free GP care to all children under eight, introduce free dental care for all children under 10 and make contraception free for women. But all this costs money - a lot of money.

These measures would of course look great for Fine Gael ahead of next year's general election. The party's election manifesto could feature glossy photographs of Donohoe, Harris and Varadkar smiling beside a list of all they have done for middle-income families.

An electioneering Harris could tell anyone who would listen how he convinced Donohoe to fund all his proposals. But at present, the money isn't there to fund these luxury pre-election initiatives.

A senior Department of Finance source said: "He can announce whatever he wants, he still has to be able to pay for things. Any new policy initiatives are clearly threatened by his failure to get to grips with his budget."

Harris will still pursue his spending plans and is examining ways of finding the funding for his announcements. He will seek money from Social Protection Minister Regina Doherty to pay for the free dental plan, and the extension of the free GP care scheme might be announced in the Budget - but it will be available to parents only at the end of next year, possibly after the election.

It's an old trick and there is an argument that voters are more supportive of government based on expectation over delivery. Election pledges rarely live up to their billing.

Donohoe is a politician and would like nothing more than to announce a raft of new spending measures and tax cuts ahead of the election. Who would want to be a Finance Minister announcing a regressive Budget with a booming economy a few months out from an election?

From a personal point of view, this would not be a great move for Donohoe. Protest as he may at any suggestion that he may harbour leadership ambitions, Donohoe would not want to make any decisions which would damage his standing within Fine Gael.

It would be very easy to blame a Finance Minister who refused to spend months out from an election if Fine Gael does not do well at the polls. Harris, on the other hand, is very forthcoming about his leadership ambitions and views his current portfolio as merely a stepping stone to great things. For this reason, he wants to leave the Department of Health with a CV filled with voter-friendly policies which he personally initiated.

He gets kudos in some sections of Fine Gael for his work on the abortion referendum but obviously loses points for the horrendous CervicalCheck scandal. Some of his colleagues would also like him to spend less time taking on the Church and more time finding solutions to the overcrowding crisis in the country's emergency departments.

Supporters of Harris like to draw comparisons between him and Donohoe as two potential future leadership contenders. One supporter recently noted that Donohoe has never had to oversee a "difficult department" and said Harris's three years in health should be an advantage in a leadership contest.

The two ministers are far from bitter rivals. They get on well and regularly come together to smooth things over when their officials clash. For instance, last week they signed off on a €2.1bn HSE capital spending plan without any public spats.

Meanwhile, Donohoe's supporters are anxious that the minister's reputation as a steady hand is maintained in the aftermath of the overspend controversies that have blighted the Department of Finance in the past year. At present, he will find it hard to play the financially prudent card when he has to debate Fianna Fail's finance spokesperson Michael McGrath during the election.

And this brings us to the other budget quandary Donohoe faces. Brexit has presented the minister with the perfect opportunity to claw back his 'Prudent Paschal' reputation. He began this process in July when he indicated that he may need to draft two Budgets owing to the threat of Brexit.

One would be based on Britain leaving the EU seamlessly with a trade deal. This would essentially be a pre-election giveaway Budget. The second option would be a no-deal Brexit scenario. The no-deal Budget will obviously be more restrictive - fewer tax cuts, if any, and very little spending. It will most likely be the announcement of a series of bail-out funds for various sectors hit hardest by Brexit.

Donohoe will recommend the no-deal Budget scenario to Cabinet in two weeks' time. He would have done it this Tuesday, but decided to hold off pending the outcome of last week's antics in the UK.

Implementing a more cautious Brexit budget ahead of the election may restore voter confidence in Fine Gael and specifically Donohoe's ability to control the public finances, but it could also backfire.

The other budgetary issue to the fore of Donohoe's mind is public confidence in the economy. Brexit scaremongering has seeped into every aspect of our lives and Britain hasn't even left the EU yet.

The Government's financial projections do not forecast another recession on the back of a no-deal Brexit but the doom and gloom they preach every day has convinced voters that is exactly what we are facing.

In the coming weeks, Donohoe will seek to find a way of restoring voter confidence in his own abilities to run the Exchequer while also trying to reassure the public that the economy is not about to once more implode. So before Budget day, he will try to find money for a few measures which will convince the public we are not facing into an economic abyss.

Harris's proposals on free GP and dental care may just be the family-friendly measures to square this circle for Donohoe, but then again he may not want to give his future leadership rival too many Budget wins.

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