Five weeks to budget day. Minister for Public Expenditure Brendan Howlin is soon to embark on crunch talks with Cabinet colleagues but the central thrust of the plan is clear. After €30 billion in spending cutbacks and tax hikes since the crash, the end of a painful road is finally in sight.
Although a €2.1 billion adjustment was threatened as recently as April, the buzzword now is that a “neutral” budget is in prospect. This essentially means the Government would neither increase the overall tax burden nor erode total expenditure, the idea being that the faster growth will ensure the deficit target is met next year.
“Where we need to have additional expenditure in any area, that will have to be funded by additional expenditure cuts; and where we need to have easement of tax, where there’s an agreement, that will have to be funded by additional taxes somewhere else,” said Mr Howlin.
It’s a far cry from the massive retrenchment undertaken at the height of the crisis, although Mr Howlin readily conceded that the Coalition is still not in a position to start unpicking some of the harsher measures. “That will not be possible and nobody would believe it could be possible in a single year or in a multiplicity of years,” he said.
Still, there has been no shortage of corridor talk about an income tax concession next month. Mr Howlin would not say whether he favoured a swipe at the universal social charge or higher income tax bands next month. To those who would argue that it’s still too early for such talk, the Minister pointed out that every budget in the last six years was very difficult.
“This will be the first which anyone could characterise as being neutral in any context. So I understand people clamouring for more money, for some relief, but I’m saying that the main thing is that we will ensure that the terrible and hard decisions made and sacrifices made by people are permanently bedding down in the sense that we’re not going back to boom and bust.”
He said there would be provisions for a social housing programme to be developed in coming years in a capital plan to be unveiled on budget day but would not say exactly how many houses he had in mind. “I’m not going to share it just yet.”
Growing pains
As for the uptick in the property market, Mr Howlin appeared unfazed by talk of a new bubble and a return to bad practices. “As we change from an economy in freefall to an economy that’s growing again, there are growing pains,” he said. “There’s always endless conversation about property.”
Mr Howlin has already signalled that he will invite public sector unions to pay talks next year. With the general election due by spring 2016 , he dismissed claims of electioneering. The aim, he insisted, is to ensure the orderly wind-down of emergency legislation that empowered the Government to cut public pay and pensions.
“We can’t simply sail over that cliff without preparation and it is my intention to open a dialogue with public sector unions next year,” he said.
But what of private sector workers? Mr Howlin pointed to the Government’s commitmen to establish a commisison on low pay, a key element of the plan advanced by Joan Burton when she took over as Tánaiste: “I think we have to determine what is a liveable wage and ensure that work pays. That’s, I think, a challenge for us.”
The Minister is not entirely closed to the notion of a return to social partnership, which brought the private sector into the ambit of pay talks, but said the Government had not discussed it. Experience showed that people with the sharpest elbows and loudest voices got the lion’s share, he says. “I think that a lot of people have a very negative view, so the type of ‘Bertie’ model, that in many ways excluded the democratic process, was very behind closed doors. Whether an alternative model could be developed, I certainly would have an open mind,” he said.
Mr Howlin argued that all of these were “recovery agenda” items, excluded from debate when the crisis was at its worst: “One of our problems for the last 3½ years was that the truth was so unpalatable people didn’t want to hear it often, and they wanted to hear fanciful stories from the Opposition that there was some miracle solution,” he said.
“I think if you are honest with the people and tell them honestly, people will have faith in you. But it’s a very hard and difficult time to be in political leadership.”
