Wednesday 12 December 2018

TDs in scramble for small victories before the big day

Fine Gael must share the spoils but in reality, most of the demands it faced were always going to be introduced without too much pressure

'Negotiations with the group of Independent ministers have been especially difficult this year.' Stock picture
'Negotiations with the group of Independent ministers have been especially difficult this year.' Stock picture
Philip Ryan

Philip Ryan

At this point in Budget negotiations, it is all about claiming small victories before Paschal 'Prudent' Donohoe sets out the Government's spending plans for next year.

Fianna Fail, the Independent Alliance and various other TDs who back the Government are all trying to put their own stamp on the budget.

Last Friday, in a boardroom with sweeping views of Dublin city centre, Fianna Fail negotiators Barry Cowen and Michael McGrath set out the party's Budget priorities.

They call them priorities but in reality, it is a list of measures they managed to secure during weeks of negotiations with Paschal Donohoe.

Top of the list is an affordable housing scheme which will be operated by local authorities. The detail is still being hammered out but it is hoped a couple living in Dublin will be able to buy a home for around €240,000. The scheme will see local authorities contribute up to €50,000 towards the cost of building affordable homes on state-owned land.

Most, if not all, of the Government's attempts to provide affordable homes have been unsuccessful to date. Fianna Fail has pinned its reputation on the new scheme it agreed with Fine Gael. If, like all the other housing plans, it doesn't work out, does Fianna Fail share the blame? Probably not.

The party is also calling for a €5-a-week increase in the state pension, the disability and carers allowance, and the blind and invalidity pension. But no mention of a €5 increase for unemployed people on jobseeker's payments.

Over in the Department of Social Protection, Regina Doherty is tinkering around with her finances to ensure every weekly welfare payment is increased by €5, including the dole. The minister also wants to introduce more targeted measures aimed at reducing child poverty. Extra money has been found in the department and it is almost certain Doherty will get her social welfare package. Fianna Fail, especially Willie O'Dea, will lay claim to the cash boost for pensioners but again, the reality is Fine Gael was probably going to do it anyway. Fianna Fail also called for PRSI relief for the self-employed. Doherty is understood to be extending the jobseeker's scheme to the self-employed should their businesses go bust. It won't happen this year but consideration is also being given to extending illness benefits to the self-employed.

Fianna Fail's "priorities" on tax are not ambitious. The party has sought a reduction of 0.25pc in the 4.75pc USC tax rate. This amounts to around €1.50 a week to a person earning €50,000 a year. However, this will be supplemented by an increase in the entry point for the top rate of tax.

All in all, most people will probably see less than €5 a week in their pocket, which has been the norm in recent budgets. Not exactly a 'giveaway' budget but a few extra quid nonetheless.

Fianna Fail has been going out of its way to point out how modest any tax cuts will be and leaving Fine Gael to unveil its plans for widening the tax bands.

Generally speaking, Fine Gael and Fianna Fail's budget negotiations have gone smoothly. There has been little strategic leaking by either party ahead of Tuesday's big reveal. Talks have been kept tight with neither side wanting to be seen to derail the process. Mostly over fears of causing an unnecessary election before the money can be spent.

Then there's the Independent Alliance. Negotiations with the group of Independent ministers have been especially difficult this year. Like previous budgets under the current political arrangement, the Alliance ministers feel they are being treated like second-class citizens compared to Fianna Fail. They argue Fine Gael should show them more respect since they took the responsibility of propping up the Government from within.

After meeting with Paschal Donohoe last week, the Alliance claimed it secured the full restoration of the Christmas bonus for welfare recipients, a 50¢ reduction in prescription charges for over-70s and changes to the drug payment scheme threshold.

Again, Fine Gael always planned to introduce these spending initiatives. Donohoe let the Alliance claim credit to get it off his back.

The 'granny grant' has been ditched but it looks like some form of payment for renovating the homes of older people into two separate living areas is on the table. There is a growing weariness among Fine Gael ministers with the Alliance.

"They spend more time looking for spending in other departments than their own," a Cabinet minister said. The four Alliance ministers - Shane Ross, Finian McGrath, John Halligan and Kevin Boxer Moran - have made life difficult for Paschal Donohoe over his plans to increase the 9pc VAT rate on the tourism industry and other sectors, such as newspapers and hairdressers.

The group was told VAT would have to go up or taxes on petrol and diesel would be increased by 5pc. Donohoe was noticeably tired from the negotiations at a press briefing yesterday and his Fine Gael ministerial colleagues say the entire budget process was farcical this year.

Senior figures in Fianna Fail and Fine Gael are beginning to see the Alliance as the perfect fall guys for a snap election.

It would suit the two parties who have worked well together during budget talks, and it would make you wonder if they haven't also reached an agreement on how to cut and run without being blamed for the election.

Sunday Independent

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