As Ministers Paschal Donohoe and Jack Chambers prepare to stand up and tell us solemnly in their budget speeches about the economic challenges ahead and why taxpayers need to lower their expectations of personal gain, there is one order of business they could usefully turn their hands to – losing the “reform” tag on the office they have both shared in recent years.
Because if there is one thing that has been quite clear over recent years – and will be highlighted again by the budget numbers – it is that there is precious little going on in the way of reform of our public finances.
Donohoe, in particular, makes great play of his “prudent” management of exchequer resources but, with Chambers, he stands charged by the State’s budgetary watchdog of procyclical policies that will limit our ability to respond to future financial crises while adding to domestic price pressures.
In their most recent summer economic statement, the Government set out €3.3 billion in additional spending increases, a figure notable in part because it was higher than the total package of spending increases originally set out in Budget 2025.
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Worse, in the view of the Irish Fiscal Advisory Council (Ifac), is that overruns in day-to-day spending are likely to top €2.5 billion by year’s end. Government spending, Ifac chairman Seamus Coffey said bluntly, is accelerating at an “unsustainable rate”. It now appears that the promised €9.4 billion budget package on Tuesday will be inflated by a significant additional sum to allow for that overspending.
And all this while we are spending a larger share of what are accepted to be windfall corporation tax receipts each year just to make the figures add up.
But what about the funds, I hear you say? What indeed?
Should we put more money into Irish soccer?
That the State is putting billions of euros into the Future Ireland Fund and the Infrastructure, Climate and Nature Fund to deal with likely future demands on our finances, such as spending on infrastructure, climate action and pensions, is indeed creditable.
But this is hardly the first time that the current Coalition’s parties have promised to set aside substantial funds for future years, only to have to tap them well in advance of the intended time to manage a more immediate crisis
It is almost as though, in the Republic, such funds are a safety net put in place as an alternative to prudent management of the State’s finances.
That is not to say that either Minister is necessarily wrong in their approach. Notwithstanding all the advice from pretty much every reputable economist in the State, a still relatively buoyant economy and political necessity may well determine that the fiscal reins cannot be held too tightly. Just don’t call it reform.
