Budget 2018- nothing learned on high spending and squeezed middle betrayed again

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By Eamon Delaney

Well, we can’t say we weren’t warned. The budget was so flagged in advance that we knew the gist of what was coming. We knew it was going to be tight and there would be no big surprises.

We also knew that the budget was going to reflect the more cautious Leo who emerged (or re-emerged) as soon as he got elected Taoiseach, the Leo who presided over a timid cabinet reshuffle and who held fast to his determination to keep blithely raising spending on welfare and health, without any apparent demands on reform or outcome. Or, in the case of the HSE, actual efficiencies.

But on the one thing that really energised so many people – support for the taxpayers who are out there actually working hard to keep the lights on – we expected some real delivery, something substantial and tangible to match the language Varadkar used so forcefully during his Fine Gael leadership campaign. But there was very little.

Yes, there was support for childcare and but the key issue for working families, and those who ‘get up early in the morning’, as Leo put it, was a lifting of the punitive marginal rate of 50% tax on anyone earning over 34,000 per annum. But the only change here was to widen the band by – wait for it – 750 euros !

This is derisory, and makes a mockery of the promises made by Varadkar. Bear in mind, this is a country where the 50% of families who earn over 34,000 pay 97% of the income tax take. The lower paid pay virtually no tax at all, thanks to the unfair tax shifting by Fine Gael, and more especially by Fianna Fail. The squeezed middle gets really squeezed.

Of course, Varadkar’s hands are tied in terms of the confidence and supply agreement with Fianna Fail. Fine Gael wanted to do more for middle earners but was prevented by FF which actually takes pride in this. Darragh O’Brien TD, FF’s Foreign Affairs spokesman, actually boasted in interviews that they had ‘stopped Fine Gael from making tax cuts all over the place’.

Imagine taking pride in continuing to force people earning over 34,000 a year pay tax rates (with PRSI) of up to 50%. Totally bizarre, and cruel. It was crippling income tax rates like this which took people onto the streets in the PAYE marches of the 1970s, before these wrongs were righted, including by Fianna Fail governments.

But that was a very different FF to the one now, which has been pulled to the left by quangos and Sinn Fein, and is addicted to high spending. They have apparently learned nothing from the boom to austerity years. Why would they be, given that they are led by a man who was in Cabinet when the economy went over a cliff in 2010 – and for the same reasons.

Indeed, it must have been galling for Fine Gael to have its budget cleared by Michael Martin, the man whose previous cabinet led us into our whole recession. Almost as galling as it was for FF TDs to have to polish up Fine Gael’s homework for delivery. What is the point of these two parties existing (or existing apart) if they are just in competition to spend public money and make the taxpayer pick up the bill?

But the buck stops with the Taoiseach and the suspicion here is that all ‘squeezed middle’ talk may have been just that: talk. The suspicion is that next year, with more exchequer income to play with, the higher rate of tax, still starting at about 34,000 will be widened again, by maybe another 750 or even a grand.

Just so that Leo and FG can say they did give something back to the early risers. And meanwhile the State coffers will be rummaged for yet more spending on welfare, questionable infrastructure, and the unending black hole of the health budget.

One hopes that this is not the case, and that there is a real radical commitment ahead to support working families, and enterprise and innovation and all the things that make our country great. But the suspicion is that Leo is in fact, the new Bertie, the generalist, the crowd-pleasing high-spending Leader who has ‘one for everyone in the audience’.

Certainly, his comments on budget day – about the ‘big community of Ireland, and how everyone has to get something’ – was a complete backslide on his specific promise during the FG leadership campaign.

After all, if everyone gets something then there’s less for those who deserve it more. And even less for those actually work hard to create all this ‘something’ – the taxpayers of Ireland. Have our politicians forgotten them?

Meanwhile, jobseekers allowance is raised at a time when we can’t get enough people to work in our recovered economy. And all welfare rates are raised. You are almost better off not working than working in this country. Pensioners get another raise, for example, which they didn’t loudly seek, or expect, and which few economists think justifiable.

As for moving to a new model of budget making, we still seem to be stuck in the whole tax/spending basis of old. We appear to have learned nothing from the boom to crash period when we ramped up pubic spending without regard for efficiencies and sustainability. And yet how quiescent our economists are on this. Stamp Duty and vacant site levies will be used to fund more spending everywhere.

As for the health service, the last thing our broken system needs is yet more money – its is 30% above the OECD average – but another huge sum is to be poured in without any plan for making it accountable and efficient, or for confronting the unions which control work practises. No politician has the backbone, or the interest, in doing this. They just want to get elected, stay in power and move on, and throw money at everything – our money.

One wants to be positive but it is all rather depressing. If you did a household budget, you’d see what you could save and get more value and durability from. But when our Irish Government does it, it’s all about how much money can be given out, and how many benefits can be given to different groups, who seem to have little regard for each other, or for the overall bottom line. Little has been learned and if it wasn’t for the restraint of the EU fiscal rules, God knows what we’d do. And all of this is before we’ve factored in the public sector pay rises which have already been conceded to, at huge future cost to the exchequer.

And Fine Gael and Fianna Fail reward this sector because the public unions are strong, and it is the easy thing to do and crucially, the politicians are themselves the public sector. The question now is whether either of these parties can reach out and assist the rest of us who are slogging away in the working economy and paying for it all.

This would not only be the correct and moral thing to do, it would also surely be a vote winner. Supporting the early risers, of all classes, would be valid reason for Leo and FG – or for FF – to break from the prop-me-up ‘new politics arrangement’ and go before the people. Now that would be a Republic of Opportunity.  

This article appeared in the Irish Independent, 14 October 2017.

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