Budget 2018 proved to be a very underwhelming affair laced with ideology. With very limited scope for spending increases as a result of EU Fiscal rules, recent failures to hit tax revenue targets, and an ideological need in Fine Gael to balance the budget, scope for spending was limited. The main driver for spending increases came from a recognition that failing to fix our failing services would cost them too heavily during the next election and therefore was politically unacceptable. Another aspect of the budget that warrants discussion is its authors and the way the lead up was covered. Fine Gael and the Independents are the Government of the day with responsibility for bringing the budget forward, but it would naïve to say that they have full authority over the budget.
As a result of the confidence and supply agreement that Fine Gael and Fianna Fáil entered into after the 2016 general election, Fianna Fáil have significant sway in deciding budget priorities. This was very evident 2017 where they claimed the €5 per week increase for pensioners as their work. This year, the lines between Ireland’s two largest parties blurred even more than usual as they both argued for tax cuts for middle income earners, but couldn’t agree about how to implement such a cut. The media lapped up all discussion of the Fine Gael/ Fianna Fáil disagreement accepting as fact that tax cuts were the only way forward. This drowned out all other the other options put forward by the other parties in the Dáil and eliminated the chance for serious debate on economic policy in Ireland.
However, absence of coverage on whether or not tax cuts or spending increases were in fact the best way forward does not mean that the debate was not taking place in the opposition benches. In fact, amongst the true opposition parties in the Dáil, a serious debate was occurring about where best to increase expenditure so that the cost of living would be reduced, so that more money would be left in the pockets of the Irish people. Proposals were remarkably varied and well considered. Most impressive most of the parties in opposition strived to make their budgets balance and costed their proposals as fully as was possible to prove that their vision’s were not just aspirational, but feasible. All this makes it even more disappointing that the media remained focused on the narrow view that tax cuts were the only way forward.
The Labour party proposed a number of smaller measures to reduce the cost of living for the average family, such as funding for second level book rental schemes, and reducing the cost of college tuition by €1000 per year. Both of these would significantly reduce the cost of education for families, and cost less than the €335 million earmarked for tax cuts.
Along the same vein of thought, the Social Democrats proposed to increase expenditure on primary education, including a book rental scheme, free transport for those requiring it, and eliminating the need for people to hand over voluntary contributions to fund schools. They also proposed funding a mechanism to introduce better non-litigation methods for resolving claims as a means of reducing the cost of car insurance. These measures, when coupled with variations of Labour’s proposals to reduce third level fees, all still cost less than the €335 million, and save families more money than tax cuts would.
Sinn Féin, while also proposing to reduce third level fees, focused more on reducing the cost of childcare, a serious barrier to those aiming to return to employment. They also emphasised a commitment to bring post-2011 employees wages into line with their pre-crash co-workers, a measure that directly would put more money into the pockets of workers than slight tax cuts could. Finally, they committed to funding the HSE and restructure it to make it more effective at tackling the healthcare needs of Ireland, outside of the traditional hospital environment.
As is to be expected, the main focus of the Green Party was to address climate change and ensure a ‘just transition’ from our current carbon-based economy to a green economy. In and of itself this isn’t especially interesting except for the fact that Ireland is going to miss its EU mandated 2020 climate and renewable energy targets by such a margin that the country will be fined anywhere from €200 million to €600 million per annum.
As a point of reference, total spending increases and tax cuts in budget 2018 came to €1.2 billion and that is the amount of room we can expect to have for the next few years. Half of that could be wiped out by a failure to act on the part of the Government who have known about this risk for years. Short-sighted is an understatement.
This budget found a little for everyone, but it failed to address the fundamental problems underlying our economy, like the high cost of living and lack of housing supply. It was driven by the ideological desire to cut taxes, and the major media outlets facilitated this by refusing to challenge Fianna Fáil and Fine Gael as they pushed this narrative. If we want to avoid repeating the mistakes of the past we need to break away from economic ideology and move towards evidence based solutions, and we need to give real opposition to the economic policies proposed by to ensure that they are the best path forward.
Aaron Bowman – Politics Editor