A lot of stuff in budget speeches doesn’t make the headlines. There was a section about an hour ago in Paschal Donohoe’s speech that won’t get much coverage today, but was nevertheless very instructive: He first announced changes to research and development tax credits for corporations. He followed that up with changes to the tax treatment of interest on large deposits. He finished off by announcing an increase in tax credits to Ireland’s film-making and computer games sectors. Later on the league of Ireland got three million euros for new academies. The artists got some free money.
Little nuggets. Little goodies. Buried in a long speech where the headlines focus on the big changes, but where the triumphant lobbyists sitting at their desks in their lobbying firms send off emails to their clients about succeeding in their mission to tweak tax limits here and there for the benefit of their own sectors. A lot of lobbyists earned their money today with small changes here or there to the benefit of their own clients.
This was, in short, a lobbyists budget. Even the single biggest headline measure – the VAT reduction for hospitality – came after a long campaign of lobbying by the hospitality sector.
I often think it a pity that the general public cannot employ lobbyists on their behalf. In theory, of course, they do: The local TD is your lobbyist. In practice, there are a parade of former politicians and former advisors and former journalists all now employed by lobbying firms who have far more reliable access to the department of finance than most Government backbench TDs do.
Donohoe said yesterday in his speech that a budget cannot solve every problem. This is correct. But the problem is that in Irish politics, budgets don’t solve any problem.
Going into this morning, the Government allocated itself about nine billion euros to play with. It also projects a five billion euro surplus for next year, meaning that it essentially had fourteen billion euro in cash to fish from. This afternoon, we sit up with nine billion euro spent, and no clear answer to the question “what will be better in Ireland as a result of this budget?”
To some extent this is the problem with living in a representative democracy with a PRSTV electoral system: The emphasis politically for those who wish to retain power is always going to be on keeping the broadest swathe of people and interest groups happy, rather than on solving big problems that the country has. You will never see the full resources of the state deployed in a single year to fix the problems in the health system, for example, because that would annoy more people than it would please.
Instead we get this aimless drift whereby Irish politicians allow the total spend of the state to passively increase year on year without any real need for results to match the spending. One hundred and sixteen billion euros, the state will spend next year, including the biggest ever budget for housing at over eleven billion euros. The unemployed and pensioners will get a double payment of social welfare at Christmas (the rest of us who actually pay the taxes will not get a corresponding income tax holiday).
This is sold to us as step one of a five year plan or a “series of budgets”, but those next budgets are not certain because the economic horizon is not certain. What the budget actually is, and has become, is an annual doling out of strategically meaningless goodies to well-represented interest groups without any coherent plan to measure the results of that spending.
Take the housing allocation: The government plans to deliver a certain number of homes for the money it spends – but everyone from the public to the developers to the auctioneers knows that failure to deliver on this year’s budgetary promises in terms of homes built will not deter that spending from happening again or actually being increased next year. Much of that spending will be eaten up by the construction firms and the providers of materials and the lawyers and the planning consultants, and the state will almost certainly miss its housing targets – but that won’t stop the money coming next year, will it?
Total Government spending has more than doubled over the past decade. And for that massive increase in annual outlay, what problems have been solved? What issue in Ireland that was a major problem ten years ago is only a minor problem today, as a result of budgetary strategy? What do the politicians feel like they have accomplished beyond spending that money?
This is the central problem with budget day and the Irish political culture generally: You are judged as a politician by how much you spend and on what “priorities” you spend it – but you are not judged by what problems you actually solve.
We wake up, this morning, the day after, with a few of us a tenner a week better off here and there, a few of us worse off, and the central problems facing the country likely to persist indefinitely.
There will come a day when Governments do not have fourteen billion euros to play with. And when that day comes, we will realise just how badly we have spent our cash during this extended period of budgetary good health. Will we learn any lessons from it? No. No we will not. The lobby groups lead this Government around by the nose, largely because this is a Government with no ideas of its own to speak of.