Jack Chambers is the third Minister for Finance of this Coalition, following Paschal Donohoe and his party colleague Michael McGrath, who is now in the Brussels anteroom as he awaits appointment to the next European Commission. With an election due in months, Chambers will surely be the last.
But if the personnel turnover has been brisker than usual in his office – as the portraits on the walls of the department attest, the Minister for Finance is a big political beast in any Cabinet, not usually or easily moved – the policy approach has remained consistent. So it will be with Chambers in the role.
The October 1st budget from Chambers, a Fianna Fáil TD for Dublin West who was appointed Minister for Finance only in June, will follow the template of his two predecessors. He will unveil it with Donohoe, his upstairs neighbour in the Department of Public Expenditure (“an excellent colleague”).
Public spending will continue to grow at a fast clip, fuelled by huge corporation tax receipts, though not fast enough for the liking of most Ministers. A chunk of those receipts will be diverted into the State’s long-term savings funds. There will be a package of tax cuts and of welfare increases; there will be another round of one-off giveaways, for the third year in a row. And there will be a boost to capital spending, funded by the proceeds of the State’s bank shareholdings.
This was flagged by the Taoiseach a few weeks ago. Chambers, the man in charge of it, has firm numbers.
“What I propose to advance is a €3 billion infrastructure injection to capitalise key strategic priorities, which is housing, energy and water in particular,” he tells The Irish Times in an interview in his Merrion Street office.
“So really underpinning that future productive capacity of their economy, in housing, in water, in energy, is, I think, an important signal to the investment community.”
This is not, he stresses, the Apple money – the €13 billion that Europe’s top court last week ordered the US tech giant to pay the Irish State after the European Commission successfully argued that Ireland had given Apple illegal tax advantages.
What happens that money will be the subject of a separate process, presumably by the next government. He is adamant, though, that it should not be used to fund feckless election promises.
“I mean, the most reckless thing to do with the Apple money would be to distribute it for day-to-day spending or to mismanage it [by] not having strategic focus for the long-term economic position of the State,” he says.
The important thing, Chambers says, is to protect the economic and taxation model that has produced the huge corporation tax surpluses every year – and not just on a once-off basis, which he likens to a “small Apple every year”.
“The wider reaction on how a one-off payment can solve every problem presents economic risk. And if you look at how Ireland has a current surplus, and indeed, we expect to have significant additional surpluses in the years to come, the measure of fiscal responsibility and economic management will be how we manage that,” he says.
“Like, there’s a small Apple every year now in surpluses in the Irish economy.”
The coming weeks will be dominated by the budget. He summarises what will be in that package quickly: €1.4 billion in the tax package; new spending of €1.8 billion to €1.9 billion; half of that to go to the social welfare package
What of the fallout from the European Court of Justice judgment?
He has come, he says, from a meeting with some “global tax leaders, who are Irish based and are working within the multinational sector”. They spoke about “how Ireland has changed out the corporate tax regime in the last decade”. Successive governments have vigorously pooh-poohed the notion that Ireland was some sort of international tax bandit. But they also point out how much Ireland has changed the practices of the 1990s and 2000s.
Will the European Commission now go back and check the Revenue’s homework from that period in the wake of the Apple case?
“There’s no live or active case that we’re aware of from the European Commission, and obviously we’ll monitor that,” Chambers says.
And at what stage would the Government become aware of such a case?
“Well, that’s a matter for the European Commission, but very much, Apple was a specific case with a specific operation and an assessment around state aid relevant to our legislation at that time, which went back decades,” he says.
It was, he says, “very specific to Apple”, though he concedes that the Government has insisted that although it was only Apple, it was not a sweetheart deal for Apple.
“We’re not aware of any wider implications at this point,” he says.
There’s the inevitable, drive-by pop at Sinn Féin, the main Opposition party to the Government.
“I think there’s a core recklessness, particularly to how Sinn Féin have responded with raw populism. First of all, in saying that they would abandon our industrial and enterprise model and also abandon the necessity for Ireland to defend our position on tax policy and tax legislation,” he says.
Later, he returns to the theme, asserting that Sinn Féin “would spend the benefits of our economic model” while simultaneously blowing it up. “They would raid Ireland’s future,” he says.
That’s the choice, he asserts, at the next election – between Sinn Féin’s “populism” and the “strong centre” of Fine Gael and Fianna Fáil. He plays down the recent scratchiness in relations within Government.
The coming weeks will be dominated by the budget. He summarises what will be in that package quickly: €1.4 billion in the tax package – “very limited scope”; new spending of €1.8 billion to €1.9 billion – “very limited rooms for Ministers”; half of that to go to the social welfare package.
Once-off giveaways, he says, will be ‘not on the scale of last year’. He returns again and again to the need to invest in infrastructure
It’s the eternal refrain of the Department of Finance seeking to downplay the spending demands around the Cabinet table. Once-off giveaways, he says, will be “not on the scale of last year”. He returns again and again to the need to invest in infrastructure.
The Coalition’s third minister for finance will be the third to smash its own fiscal rule of increasing spending by only 5 per cent a year, ignoring warnings from the State’s budgetary watchdog, the Irish Fiscal Advisory Council.
Chambers argues that the spending rule has been “an important anchor of fiscal discipline, despite the 5 per cent not being achieved”.
But surely then the real rule is not 5 per cent, it’s 6 and a bit per cent, or it’s as close to 5 per cent as you can manage.
“There’s an important context to that. We have had to respond to significant cost-of-living pressures that families, citizens and businesses faced and we have responded to an unprecedented cost of migration in our society. If we were to simply uphold the 5 per cent rule, we wouldn’t be able to invest in any public services,” he says.
This is not unfair. Upholding the rule – effectively holding expenditure right down while running large surpluses – would probably not have been politically possible in the circumstances.
But is it not really a rule if you break it all the time?
The spending growth that builds a bigger State, he says, “as an end in itself isn’t what citizens want; they want better delivery of services”.
Reforming public services is something we shouldn’t talk about only in times of recession and pressure on the public finances “which is the historic norm in our country”.
“Part of the future will be, how do we examine our agencies, our systems that are getting expanded, bigger budgets, but we need to make sure, how are they connected so they deliver better for our citizens?” he says.
“Because when you take, for example, a lot of the agencies that were established 20 to 30 years ago, their structures can be adjusted in the context of a different economy.”
This sounds like he has an example on his mind. After some prompting, he cites the recent decision by the Commission for Regulation of Utilities to allow energy prices to rise by €100 a year, while the Government is preparing to pay out energy credits to citizens. This is, he says, a “contradiction”.
“The CRU are obviously operating within the framework that was set for them in a different regulatory era, which was very different in the context of renewable energy,” he says.
The question is “how do we best reposition the various areas of our regulatory models, so that they obviously protect citizens, but secondly, that there isn’t that contradiction when it comes to public spending?”
Colleagues say Chambers, at 33, the youngest Minister for Finance since Michael Collins, is bright, focused, courteous – and still learning how to do the job.
He acknowledges that he came in “into the business end of the cycle”, but says “no role has ever phased me in politics or in life. I embrace it, always up for the challenge.”
A keen runner, he is suffering from a stress fracture in his back. “It’s given me a little bit of pain over the summer.”
He will have bigger pains before the autumn is out.
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