Budget surplus is very good news but every silver lining has a cloud
MORE than a decade after the economic crash and a little over nine years since the Troika bailout that cost the country its economic sovereignty, there was some genuinely good news on the economic front this week. Taoiseach Leo Varadkar last Thursday was able to take a momentary break from Brexit issues when he took to the podium outside Government buildings to announce that there was a budget surplus last year and the state’s coffer are ahead by €100 million.
Now, to be fair, we have to point out that it isn’t the first surplus since the crash as in 2017 there was a surplus of €1.9 billion.
However, that included a massive cash windfall that came from the Government’s sale of around €3.4 billion worth of shares in AIB.
What is so significant about last week’s announcement is that the surplus – the first genuine one since 2007 – is based on state spending and tax income rather than any unusual injection of cash.
The Government had expected to return to surplus budgets next year, so the news that it has come a full year earlier than expected is to be welcomed.
Mr Varadkar, to his credit, did not try to spin the news as being a result of Fine Gael policy and acknowledged that the extra cash had come from a combination of €250 million saving on debt repayments and a surge in corporation tax receipts which came in over €1 billion ahead of what had been forecast.
In the greater context of State spending – the Government spends about €70 billion a year to keep the country functioning – the sum of €100 million is drop in the ocean but it is the symbolism of the event that is important.
After a lost decade, the country’s finances are back on a relatively even footing and, with Brexit looming on the horizon, Ireland is in a far better position to withstand another economic shock than we were just a few years ago.
Now, all that is very good news for the country but another set of figures emerged last week that took a little bit of the gloss off news of the surplus.
While the Government in general managed to “underspend” by €250 million, one Department in particular saw its expenditure skyrocket.
Back in 2016 when Enda Kenny was in charge, the Department of the Taoiseach spent a rather paltry €10,628 on advertising and marketing.
By contrast last year, according to figures released by the Government, Leo Varadkar’s department spent a whopping €1.3 million on marketing.
More than half of the money was spent on the launch of the Project Ireland 2040 campaign which set out the Government’s plans for the country in grandiose terms but which was widely slated by many as being little more than a very expensive Fine Gael election manifesto.
Perhaps if Mr Varadkar’s Department was a less flaithulach with the PR cash, that surplus could have been even bigger.