One for the polling stations, rather than the history books

The Budget is the most important scheduled political event that takes place each year. It is an inherently political affair, and the Budget determines who contributes to the public purse, how much is contributed and also who will benefit from spending in the year ahead.

Budget 2019 is the third from this minority Government and the last in the agreed programme of support between Fine Gael and Fianna Fáil.

It comes at an uncertain time in politics, with Brexit looming over all decisions, but also with the possibility that an election may lie in the near future.

That governments timetable their use of economic powers with the election cycle to curry favour with voters is a well-established idea. William D Nordhaus, who won the Nobel Prize in Economics earlier this week, was publishing research on this as far back as the 1970s.

The received wisdom is that governments distribute largesse at budget time. Better-off voters are supposed to be happier voters and ultimately more likely to reward the government by voting for it at the next election.

The theory is named pocket-book voting after the common American name for a purse or wallet.

Two questions arise from these ideas in relation to Budget 2019: is it an election budget and will it work?

Generally, an election budget is one that decreases taxes that fall on individual voters, such as income tax, the USC and VAT, so that they are better off at the end of each week.

Increases in public spending are also important as they can affect specific groups of voters.

Higher pensions improve the weekly incomes of older citizens, who are among those most likely to vote. Increasing public sector pay can affect positively another large group of likely voters.

In many ways, Paschal Donohoe’s Budget for 2019 works well as an election budget. There was a little something for everyone.

The big question is if an election happens in 2019, will voters be bought off with their own money?

The evidence from the past is a bit mixed on this. Internationally, there is limited research showing that voters link their own personal circumstances to their voting preferences. However, research by Michael Marsh (TCD) on the 2016 General Election published last week suggests that in 2016 voters did not feel the economic recovery was benefiting them directly and this was a small factor in their decision to abandon Fine Gael and Labour at that election.

If voters are influenced by the Budget, it will also be interesting to see who they choose to reward (or punish) for the decisions. Fine Gael has been doing very well in opinion polls and this suggests it is in pole position to benefit from any reward.

It is the largest party in Government and holds the finance and public expenditure ministries. The Independent Alliance made a big play for older voters in the run-up to the Budget, there were suggestions of a ‘granny grant’ for childcare and grants for developing ‘granny flats’. None of these materialised and it is likely that all parties will claim credit for the pension increase.

Finally, a last word on the legacy of this Budget. It may work OK as an election budget but it is unlikely to make the history books. There was nothing new, nothing creative. Spending on health grew once more with no measures to address performance or service delivery. Health spending will cannibalise the State if it is not managed.

And the Government dodged its climate change obligations. A day after the UN published another damning report on the future of the planet, no measures of substance were introduced to address this global challenge. It was a Budget for today but not tomorrow.

Using economic powers to curry favour with voters is a wellestablished idea

Dr Theresa Reidy is a political scientist at University College Cork.