A budget to secure economic recovery has been promised by Taoiseach Enda Kenny while Tánaiste Joan Burton has produced a wish-list of Labour Party demands for the occasion. Meanwhile, Minister for Health Leo Varadkar has undertaken to open an additional 300 hospital beds by the end of the year. They form part of a pre-election strategy that has been under way for months as Fine Gael and the Labour Party seek political traction from a rapidly growing economy. Leaks on budget goodies have been out earlier than ever.
The outline of the budget, involving tax cuts and spending increases of up to €1.5 billion, was sketched by Michael Noonan and Brendan Howlin some time ago and drew immediate criticism for being "too ambitious" from the Fiscal Advisory Council and the EU Commission.
Since then, however, growth rates and taxation revenues have exceeded all expectations and pressure has grown within both parties to engage in full-blooded auction politics. In light of recent experiences, that would be a serious mistake. The Government’s claim to being a prudent, cautious manager of the State’s finances would be shot to pieces.
A relapse into the old, discredited ways of doing things is seductively attractive and has marked some of the Government’s recent actions. Commitments made in opposition have been forgotten. Despite that, progress has been made.
Welfare benefits were largely protected during the worst of the recession while efforts to create jobs and grow the economy have exceeded the wildest expectations. Two years ago, a final “austerity” budget anticipated a growth rate of 2.5 per cent in 2016. This year, it may reach 6 per cent.
Having languished in the opinion polls, buffeted by water charges and some poor decision-making, opinion polls suggest the tide may be flowing in favour of the Government parties. The weekend also brought a plethora of reports setting out what Fine Gael and Labour Party TDs would like to see in the budget. As might be expected, Fine Gael concentrated on tax cuts and business incentives while the Labour Party looked to welfare increases, social housing and rolling back public pay cuts. Reducing USC was a common objective.
With an election due within six months, political parties and “Others” are polishing their electoral offerings. Constrained by EU financial rules, the Government still intends to add fuel to a booming economy. Opposition parties promise to abolish water charges, reduce taxes and improve public services in a “whatever you’re having yourself sir” approach. The economic crash might never have happened. Our economy is in a better place but the over shadow of uncertainty overhangs the global outlook. The electorate should proceed with caution. If it looks too good to be true, it certainly is.