Budget one-offs are economically indefensible and politically smart

Name-tags affixed to uniforms, school shoes bought, bags packed with books and copies and pencil cases and (if they must) iPads: children across the country returned to their schools in recent days, their parents heaving a long and heartfelt sigh of relief after some of the longest school holidays in Europe.
Back to school time for politics, too. Politicians will say that they’ve been back at their desks for ages, and many have. But politics hasn’t returned to the centre of national affairs on a consistent basis yet. That will happen next week, when the Cabinet returns from the August break. And there’ll be no let-up then until the you-know-what.
As Jennifer Bray pointed out on the Inside Politics podcast this week, even though it has seemed to be a quiet summer politically, there has been a lot of activity below the radar.
Principally, it’s been election preparation – analysing local election results and figuring out what the candidate strategy should be in individual constituencies, as well as research on broader election strategy, messaging, manifesto preparation and so on.
There is endless speculation on the date of the election. All I can tell you with absolute certainty is that everyone (within Government and without) is preparing in the expectation of a November election. Last week Simon Harris told us that he had not had a further discussion yet with the Coalition party leaders since his commitment to go the full distance when he became Taoiseach. His account is confirmed by others in a position to know. My humble suggestion is that the three men might renew that discussion soon. Given the pressures on the relationship between the three parties, some frankness might be advisable.
Labour kicks off the think-in season next Thursday in Malahide, Co Dublin, wisely getting in ahead of its rivals before the traffic jam of events before the Dáil returns. The party faces the perennial struggle of small parties for relevance in the national debate and survival in the elections, where the difference between triumph and disaster will be no more than a few percentage points nationally. The polls tell us that Labour – and indeed, the other small parties – are hovering between those possibilities.
British prime minister Keir Starmer is over next weekend, a sign that there is more to the Anglo-Irish rapprochement than just glugging Guinness in Chequers with the Taoiseach (though let us never underestimate the importance of glugging Guinness in the nation’s diplomatic efforts). Rebuilding the close and multilayered relationship between Dublin and London – always an essential precursor to genuine progress in Northern Ireland – should be a priority for whoever forms the next government here. Starmer (whose back room is strongly Irish) seems to be up for that.
After that the rest of the think-in season arrives with a vengeance. Fine Gael will be in Tullamore for a couple of days midweek, while the following Monday 16th, the Social Democrats, the Greens and Sinn Féin all cram them in. Fianna Fáil’s two-day get-together also begins that day in Killiney in south Co Dublin and concludes on Tuesday. The Dáil returns the following day on Wednesday 18th. The budget is on October 1st.
As Harris indicated in his interview with The Irish Times last weekend, we can expect this year’s edition to largely resemble the last couple of budgets. There’ll be welfare increases and some tax cuts. Much of this is simply to keep pace with rising wages, but others – such as a possible cut in inheritance tax, if Fine Gael gets its way – are of a more sharply political character. There’ll be the by-now inevitable rise in spending on health, education and other services. Demographic costs account for much of this, but there is precious little sense that the way spending is organised (and the way it keeps rising) is being reformed. Maybe next time.
There will be two other elements to the budget, Harris indicated. There will be top-ups to capital spending on water, energy and housing, financed by the proceeds of the Government’s bank stakes. And there will be the by-now-customary “one-offs” – cash boosts in the form of extra welfare payments or energy credits or whatever – that will be paid this year. It’s hard to defend this from an economic point of view, and impossible to object to it from a political point of view. Even people at the heart of Government who believe it is the wrong thing to do concede it is inevitable and think it is defensible.
The budget process will be condensed and intense. The interest groups that play such a significant part in Irish politics and do not change from one Government to the next know that their leverage is at its zenith in the month before an election and they will seek to use it ruthlessly. Nothing wrong with that; they are simply doing what they are paid to do: advocate on behalf of their members for a greater share of the State’s resources.
But we should all recognise what is going on. Expect to see a lot of public sector unions, trade organisations, farmers, business groups and other special interests in the coming weeks. They’ll all be saying some version of this: “Things have never been so bad; only more money for us will solve the problem”. In some cases they may have a point; in all cases they will believe that they should be prioritised over everyone else.
Many will be offered an uncritical platform by the media to make their case. It has often been the way of Irish politics and public administration that those with the loudest voices, or with proximity to power, wheedle for themselves the greatest share of resources. Perhaps it is too much to hope that this might change before an election. But it should change sometime.