From one perspective, the Budget unveiled today is a finely tuned machine designed to convey the three Government parties successfully through the general election. From another, it’s a luckybag of sweeteners for everyone in the audience that illustrates the failings of the Irish political system.
That is not the full story. Flush with cash from record corporate tax receipts, along with impending windfalls from the Apple case and the sale of bank shares, this Government is in the happy position of being able to make further significant provision for the future while also providing generously for the present. Minister for Finance Jack Chambers makes much of the commitment to scaled-up investment in housing, transport, water and energy infrastructure in the years ahead.
Some will rightly question the State’s capacity to deliver on those promises. Ministers have developed an unfortunate habit of announcing that funding has been secured for a project with a satisfaction that suggests they believe their work is done. However, completing projects on time and on budget does not appear to be among their core competencies. If the step change in infrastructure investment is to be achieved, something fundamental will have to change.
Elsewhere, adjustments to income tax bands, USC and social welfare take account of the recent period of inflation and wage growth. The same is true, some will argue, of the increase in thresholds for inheritance tax. Some will see these gains eaten away through the introduction of a new rate of stamp duty on high-value dwellings.
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Minister for Public Expenditure Paschal Donohoe is at pains to defend the further round of payments first introduced to mitigate financial pressures caused by soaring energy costs and cost-of-living increases in the wake of the pandemic and war in Ukraine. In their third year, these now amount to € 2.2billion – including tax measures – not much below last year despite a rapid falling off in the rate of inflation. Note that some payments will arrive before the election, whenever it takes place.
If there was an argument for continuing these payments, they should surely have been targeted more precisely at those who remain at risk of food or energy poverty. Instead, the Budget spreads much of the largesse, at considerable cost, across the entire population, including many who do not need it. A more focused approach could have resulted in a truly meaningful reduction in child poverty.
The Government parties’ calculation that voters will reward them for their generosity will be tested soon enough. But viewed through a wider lens, this Budget is, not for the first time, a wasted opportunity, at a moment of rude economic health, to present a convincing, coherent, strategic vision for the future.