Pat Leahy: A giveaway pre-election budget is inevitable – the only question is just how generous will it be?
When all the excitement of the elections passes there will remain one major act of governing to be completed before the general election: the Coalition’s final budget. This week saw the opening of public preparations for that when the Government hosted the National Economic Dialogue at Dublin Castle, a sort of giant round-table event for what used to be known as the social partners in which everyone gets to tell the Government what they should spend the public’s money on. It is fair to say that the NED (as it is unaffectionately known among the officials) participants are rarely short of ideas on this score.
Social Justice Ireland had a lengthy list of asks, including “a minimum increase of €25 in all core social welfare rates and a commitment to benchmark social welfare rates to average earnings”. The National Women’s Council wants a public childcare service. “Budget 2025 must prioritise the needs of disabled people who experience deprivation and poverty,” said the Disability Federation of Ireland. “Fully funded marine protected areas” was the demand from a coalition of environmental NGOs, though they were also free to pursue their own individual agendas; Friends of the Earth wants new Government programmes to “make retrofitting easier and cheaper, and to reduce energy poverty”.
And so on, and so on, and so on. There were 100 organisations attending, from the Children’s Rights Alliance to Age Action Ireland, from the Irish Cattle and Sheep Farmers Association to the Killybegs Fisherman’s Organisation to Protestant Aid and all points in between. All had their own proposals, requests, suggestions and demands. No doubt some lowly Department of Finance official, laboring anonymously in the bowels of Merrion Street, has been given the job of totting up the total aggregate cost of all the requests made at the NED. It would not be a small number.
It’s hard to know what to make of the NED. Many officials regard it as a tedious pain in the rear; but most acknowledge that there is a value in inviting in stakeholders and other participants in public debate to have their say and be listened to. And there are many advantages to a broadly consensualist model of policymaking – as long as government keeps a tight hold of the purse strings.
In any event the NED is not really a debate about the budget. That takes place within Government. It is normally a highly secretive process. But not this year, it seems. There are two sides to the argument in Government – the one voiced by the Taoiseach and the one voiced by the two budget Ministers, Paschal Donohoe and Michael McGrath. This is admittedly unusual, but I, for one, commend its spirit of openness.
So what were they saying? Taoiseach first. The Government knows, he said, that “a strong economy has to translate into tangible benefits for our people . . . Right now I know people are still hurting.” And: “Cost-of-living increases have left them feeling their personal finances are insecure and might not withstand any further shocks. We need to give them a sense of security that the Government get this.” And: “The cost of living must once again be a focus for Budget 2025, building on the cost-of-living measures in the previous two years.”
So you wouldn’t need to be the most perspicacious observer of politics to know what this means: a big giveaway budget is on the way, with a focus on helping people with the cost of living. In the past two budgets, this is has meant substantial one-off giveaways, such as double welfare payments and energy credits.
If all this was greeted by a cheer from Government candidates all over the country the reaction from McGrath and Donohoe was rather different. Leave aside McGrath’s insistence that the general election “won’t have an influence” on the budget – which he managed to deliver with a straight face – the message from the two budget boyos was that with inflation under control there was little justification for another glut of one-off giveaways. “Overall the emphasis should be on permanent measures and permanent changes to our expenditure and taxation framework rather than a large series of one-off measures,” McGrath said.
Donohoe has made clear his position is the same. It is quite a different message from the one espoused by his party leader and Taoiseach. Of Harris’s interventions, one Department of Finance mandarin gasped, “Jesus, he’s worse than Leo.” Expressing concern for the department’s chief economist and prominent fiscal hawk John McCarthy, the mandarin observed, “the smelling salts will have to be administered to poor John Mac”.
Here then is the eternal dilemma of a government approaching an election: how to be prudent, but not too prudent. How to buy the election but not too expensively. The reality is that another big giveaway budget is inevitable. Donohoe and McGrath have already managed to get their ministerial colleagues to impose some restraints on themselves by setting up the sovereign wealth funds for future investment, effectively taking €6 billion off the table.
That was an achievement of good government which has been underappreciated. One of its consequences is there will be an irresistible push from around the Cabinet table and the wider Government parties to spend in advance of the general election. You got your prudence, they’ll say. Now hand over the cash. The buoyant economy means that both are just about possible. “We do need to be careful not to overdo it,” says one person who will be closely involved in the process. “You can do too much.”
This is true. It’s important for the Government to maintain economic credibility in the election debates to come. But you can be sure they won’t do too little.