Donohoe will hope a little more for social welfare and a nod to green issues will keep voters onside
ONE of the most widely accepted notions in politics is that governments like to cut taxes and increase public spending before an election in a bid to buy voters with their own money.
This makes Budget 2020 an unusual political creature: a pre-election budget without the give-aways.
With Brexit looming over the economy, the Government played it reasonably safe with the national finances.
The Taoiseach’s promises of tax cuts and increased spending faded away as projections on the serious negative economic impact of Brexit moved centre stage.
The Budget raised extra revenues through increases in capital gains tax, a move to tax some international funds buying property in Ireland, and increases on cigarettes and imported diesel and petrol cars.
This gave Paschal Donohoe space to deliver some heavily targeted resources in the direction of the fuel allowance for pensioners and some of the most financially vulnerable citizens. But many citizens will see little effect from the Budget and some will be marginally worse off.
Confidence and Supply balancing act: Fine Gael will be hoping its cautious approach to the finances in the face of a crash-out Brexit will help to re-establish its credentials as a party of fiscal rectitude.
Massive overspending on the children’s hospital, broadband, and uncertainty about the impact of these projects on future capital spending have all eroded Fine Gael’s reputation as a party of careful economic management.
Despite a booming economy and record employment, Fine Gael has seen its ratings in opinion polls slide in the last year. Parties in power often face a ‘governing penalty’; they have to take decisions that will not be popular with everyone. The focus on preparing for Brexit and specifically making plans for the tourism and agriculture sectors are vital if Fine Gael is to be seen as a party that can be trusted to manage the economy during uncertain times.
With his combination of very modest social welfare benefits, moves in the direction of a green agenda and some very marginal tax changes, Donohoe will be hoping he will keep middleclass voters on side as the party faces into a difficult election.
Fianna Fáil is also ploughing a delicate furrow. Micheál Martin has won plaudits for his party with his commitment to the confidence and supply agreement.
The party has been rewarded with improving poll numbers but it also faces potential banana skins. It has made a virtue of increasing the old-age pension every year, often without reference to whether these increases were sustainable or whether they might be better used elsewhere.
Ireland has one of the lowest rates of pensioner poverty in the world. There was no increase this year and pensioner angst may be targeted at Fianna Fáil as much as Fine Gael for not coming up with an extra fiver.
The carbon tax will also be very unpopular and Fianna Fáil will have to tread carefully with their strong rural base on this.
Independents: Independent members of the Government have sometimes struggled to be seen but there are plenty signs of them in the Budget.
An honourable mention must go to ‘Boxer’ Moran and what will undoubtedly be seen as his €30m fund for the midlands. This is a substantial sum of money and coupled with the plan to investigate options for civil servants to work outside Dublin it marks an important effort to address the urban-rural divide. ‘Boxer’ had a good Budget.
Going Green: For a party nowhere near government, the Greens did well. It will criticise Budget 2020 for its half-hearted attempts to deal with climate change but no other party had its central platform so embedded in the Budget.
Carbon tax increases, disincentives on petrol and diesel cars, retrofitting of council housing stock, investment in greenways and cycling infrastructure are all green policies which have been adopted by the Government.
With Extinction Rebellion protests all week in Dublin, the Government won’t have needed any further reminding that climate change is the single biggest issue of the century.
Research shows Green parties are the biggest winners when green policies are prioritised. Electorally, they benefit from all of the focus on their core issue and other parties find it very difficult to ‘out-green’ them.
Brexit and climate change were the clear themes of the Budget with mitigating imminent disaster the core objective. But after four years in power, this minority Government need something more than moderating economic crisis in their sales pitch come polling day.