Heather Humphreys is the last real Fine Gael Minister. 2024 may be her final year as Minister for Social Protection, but she leaves behind a future-focused agenda.
Introducing pay-related unemployment benefit as distinct from a flat rate, increasing PRSI contributions to the social insurance fund and starting auto-enrolment for pensions will be a considerable legacy.
It leads us towards a European style insurance-based welfare model and bears the mark of political leadership, something that was otherwise largely lacking on budget day.
In the context of a budget that imprudently overspent and lacked focus, Humphreys’s initiative stood out.
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So too did Eamon Ryan’s €3.15 billion climate and nature plan to be spent by 2030 on critical projects around district heating, decarbonising public buildings and industry.
The weather on budget day was balmy, hardly surprising in a year that is shaping up to being the warmest ever recorded. Paradoxically climate is waning as a political issue. But the legacy of nearly five years of the Greens in Government will be transformational in untethering our economy from carbon. It is an example of good policy being prioritised over short-term politics.
Still this decisive change in our economic model and public policy is not reflected in public priority or official concern. Ryan’s reference to it being difficult to get this fund over the line is true and troubling.
The recent past – when climate was the responsibility of one department, and little was expected of others besides platitudes – mostly remains the status quo. The apparatus of government is stuck in an era when climate was a niche issue. The super tanker is only beginning to turn around.
Ryan’s climate fund is a subset of one of two funds announced on budget day by Finance Minister Michael McGrath. In total it is a €14 billion infrastructure fund to be put aside by 2030 to allow for sustained levels of investment. The more significant is a sovereign wealth fund with a potential to grow to over €100 billion by the middle of the next decade. It is forward-thinking investment of windfall corporation tax and is welcome.
If it is leadership, it is also too little in terms of planned contributions. That was the view of the Irish Fiscal Advisory Council. Fifty nine per cent of windfall corporation taxes will go into these funds in the next few years. That means in a country where we plan to spend over €96 billion next year, €6.8 billion will come from a windfall tax that has more than doubled in three years. Three corporates account for one-third of all corporation tax; and the top 10 make up 60 per cent. This is why levels of public spending really matter, and saving does too.
But spending, not saving, was the theme of the budget. The scale of the largesse is extraordinary and builds on years of rapidly increased spending. Excluding revenues raised in tax increases, the budget package had a net cost of €12.3 billion. That is three times more than the last pre-Covid budget in 2020. The emergency is over, but the habits acquired are engrained.
Something else has emerged too. Minister for Health Stephen Donnelly admitted that the additional €800 million allocated for core health spending in 2024 is inadequate and a further deficit will arise in 2024, even as a deficit of €1.1 billion remains to be factored in for this year.
It is a matter for the Oireachtas committee on health to scrutinise those estimates before the Dáil approves them. As it stands, the 2024 estimate is fiction and passing it makes a mockery of the Dáil’s constitutional responsibility. That responsibility is stated in Article 28:4:4 of the Constitution which requires the government to prepare estimates of the receipts and estimates of the expenditure of the State.
Article 17:2 enables the Dáil to appropriate public money only provided it has “been recommended to Dáil Éireann by a message from the Government signed by the Taoiseach”. To refuse to pass the estimate would be an issue of confidence in the Government. To pass it would make the accounts of RTÉ seem gold standard. It could not be more serious if only it were taken seriously.
However, an election looms and that skewers everything. Perhaps a vast scattering of public money will pay back politically. The pity is that there were flashes of real leadership on budget day.
We will pay more PRSI to continue to have the luxury to continue to retire at age 66, which is a rare reality check. In future, more will be paid out in unemployment benefit to those who paid in more in social insurance.
That major shift in policy opens the possibility of pay-related payments in other areas including maternity and paternity. Auto-enrolment for pensions inculcates the connection between paying-in and drawing down.
We are moving away from a British model of the welfare state that protects people from poverty to a European model where you insure to protect your living standards. That is classic European Christian Democrat policy as is self-sufficiency, economic prudence, and credibility. Budget day was a good day for Humphreys, but she is now an outlier in Government.