EDITORIAL: The election was budget priority

When it comes to framing an annual exchequer budget, being prudent and cautious comes a poor second to the major imperative of political life – to win reelection. And last week’s budget bonanza left no doubt as to what was uppermost in the eyes of the Government.
The ministers who jointly control the purse strings of the nation were, it must be said, in an extremely favoured position. Unlike their hapless counterparts in the UK and France, who are grappling with plunging deficits and whose only option are hairshirt budgets, Ministers Chambers and Donohoe were able to ride two horses at once. The first equine represented the need to disburse generous cash payments to the ordinary voter, and to disburse it now and not by way of promises of good times to come. The other was to take a prudent line and allocate funding to the rainy-day nest eggs that we have wisely decided to allow for in future national accounts.
Predictably enough, the fiscal-authority watchdog, the Irish Fiscal Advisory Council (IFAC), has given the Government a rap on the knuckles for failing to keep a tighter rein on consumer spending. It argues that pumping more money into an economy already running at full tilt risks pushing up inflation, a pathway that can only end in tears. The IFAC warns that the gigantic surpluses now being enjoyed by the Irish economy, unprecedented in our history, are being badly spent if they are merely being used to bolster extra spending money for individuals and families.
But then, as more-seasoned politicians keep reminding us, the IFAC experts don’t have to seek reelection every four years or so, and sometimes more often.
One of the major criticisms levelled at what can best be described as a Santa Claus budget is that many of the measures are unfocused, in that the cash is being dispensed to rich and poor alike. Much of the largesse in the cost-of-living element of the budget is given out in two universal payments – energy credits and child benefits – which means that the benefits fall equally for those who are in deep need, and those who by any measure do not really need a windfall.
In that regard, it would have made more sense to target the money at those lower earners for whom day-to-day living presents a permanent challenge, and in spite of all our perceived affluence, there are many who fall into that category. It appears that the idea of advancing a subsidiary tier of child benefit to lower income families had been considered initially, but then abandoned.
The €2 billion cost-of-living package has also set a high bar for governments of the future. Households have become accustomed to those so-called ‘one off’ payments to the extent that, this time next year, whoever decides the spending budget will find it hard to resist demands for similar pre-Christmas gifts. And while there is as yet no sign of the tap of massive revenue receipts being turned off, the sunshine is not going to last forever, and at some stage, global events may well move in an adverse direction.
This year’s budget was remarkable for its emphasis on, in the words of Mr Harris, giving citizens some of their own money back. But it was very short on what, given our bountiful tax receipts, should have been plans to invest the wealth into longer-term infrastructure like housing, transport and energy.
But politics, by its nature, is all about governance and power. Gifting families and individuals with ready cash is far more certain to win the public’s favour than promises of sunny uplands in some distant future.