Who is Jack Chambers? The answer is nobody knows. That’s a political analysis, not a personal comment. His CV is known but not much of what he thinks about anything. That will change from next week when he publishes the Summer Economic Statement. In what will be a short stint as Minister for Finance, it is the first of three instalments he must deliver on. The others are a budget and a Finance Bill. That budget is the runway for the Government’s landing and take-off as it completes this current term and seeks another.
Michael Noonan in 2016 and Paschal Donohoe in 2020 made a hames of those general election campaigns. In 2016, Noonan was trapped in a black hole of an argument about the size of the so-called fiscal space or the money the government would have to spend over the following five years. A reputation for fiscal prudence drained away in a shouting match about whether an extra few billion had been magicked up in the Fine Gael plan.
In 2020 a cannier minister might have pushed a long-standing plan to increase the age of eligibility for an old-age pension to 67 down the road. I would be the first to admit that was foresight nobody had at the time. But having foresight nobody else has is what a successful finance minister must have. Donohoe’s real failing in 2020 was that having split the difference, he ended up with the worst of both worlds. He spent too much to be credible as a prudent steward of the economy but got no electoral benefits from a scale of overspending that was insufficient to appease voters.
The effect politically of those two elections was to shrink the centre of Irish politics and move it sharply leftward economically. It reduced government to dependence on a single solution for all problems, which was to spend more. The impetus for reform disappeared.
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To survive, Chambers now must attempt an interconnected series of balances and avoid several potholes. There is the maintenance of the Government’s inherited reputation for prudence, which it hasn’t practised for years. There is public expectation of largesse in a country seemingly awash with money. There is the need to manage this budget for one financial year and simultaneously set out a future-facing vision of what he would do if he or his party were given another five years. He must face down intense pressure from his own colleagues, and perhaps his own leader, but keep them on board. It is an unparalleled test of intellect, character and guile.
Then there is the base fact of money. If he keeps within the Government’s own repeatedly broken fiscal rule, intended to tie expenditure growth at 5 per cent to the sustainable growth rate of the economy, he would have about €6 billion, net of tax, to spend on budget day. If he raises more tax, he can spend more. This won’t come close to satisfying demands. Every inch further he goes across the 5 per cent, he looks less in control. As Donohoe discovered, you can’t balance a little fiscal recklessness with a little political largesse without failing at both.
In a pre-election budget for which next weeks’ statement is the outlying architecture, there are two requirements. One is to avoid mistakes, and to set out a credible future vision to launch your election campaign. The future is something to be concerned about. The real costs of an ageing population to be borne by proportionately fewer younger, working people is arriving. The costs of decarbonisation are mounting while the dividends are further away. Corporation tax, the Irish gold, is up a further 15 per cent in the first half of this year, but it is certain that in the swirling world of digital technology, the top five companies today will not be the top five in five years’ time.
Ireland’s offering is no longer as compelling as it was. The United States is now in the business of subsidising investment at home. Here we have an underfunded education system and water and electricity infrastructure that is a decade behind where it should be. We do not have the houses for workers to build the infrastructure and services we want. The larger State that is arriving happenstance is undermined by the lack of capacity of the administrative state to manage and service it.
Paradoxically every challenge is an opportunity for a new finance minister with one budget on the eve of an election. Only four ministers have managed Ireland’s economy since 2011, Michael Noonan, Brendan Howlin, Paschal Donohoe and Michael McGrath. McGrath was opposition spokesman on Finance for nearly all that time, and in the confidence and supply arrangement of 2016-2020 was a clubhouse member of the government’s economic team. Amid political churn, that is considerable continuity. Chambers’s choice is whether to be a continuity minister or an innovator.
The budget has been brought forward to October 1st, better enabling an autumn election. The failure of Fine Gael’s election campaign in 2016 and 2020 and Fianna Fáil’s in 2020 was to break free of the present. Successful politics is about hope and is in the future tense. Chambers’s opportunity is to talk up our challenges, sell his budget and outline what the country would look like if he gets the chance to deliver five more.