There is a tendency to think that the Budget can be a panacea for everyone's problems. The tendency is encouraged, of course, when parties in a coalition government vie with each other to leak favourable aspects while rushing to take credit for them. The Budget issued by the Minister for Finance yesterday in the Dail is not in the panacea league no responsible Budget ever can be. As Mr Quinn himself said, you cannot please everyone and he didn't try to do that.
What is important is that budgets contain measures which move in the right direction. There are some justifiable quibbles about the pace spelled out in yesterday's Budget but Mr Quinn's overall approach is acceptable in most aspects. It is a Budget which minimises risk and emphasises caution a Maastricht convergence Budget which has "low inflation, hard currency" written right through it.
Such a Budget requires that changes be introduced only on the edges radical change runs the risk of going spectacularly wrong. The edges that Mr Quinn decided on were the unemployed and the low earners. The measures on medical cards, the £80 per week subsidy and the hike in the PRSI exemption will do much to improve job prospects for the unemployed while simultaneously making employment (even on low pay) a more attractive option for them. The PAYE sector in general will be little better off and such advantage as may be gained will be offset by reductions in mortgage and VHI tax relief. It is outrageous that taxes amounting to 57 per cent kick in on pay of just less than £13,000 a year, way below the average industrial wage.
But the Budget's benefits to the business community are marginal and somewhat disappointing. Mr Quinn and his colleagues seem unable to grasp the urgent need to reduce the costs imposed on business. Improving the attractiveness of work compared to staying on the dole will have only a limited impact on unemployment numbers if it remains punitively expensive for employers to hire more staff. Employers' PRSI contributions constitute an iniquitous burden on job creation. Reducing the standard rate by only one fifth of 1 per cent will make a difference that will be too meagre to measure. Similarly, the £4,000 a year cut in corporation tax will hardly have employers rushing to expand.
The competitiveness of industry is under attack like never before. The pound's value against sterling threatens jobs in almost every manufacturing sector. When export customers are lost, especially in the crucial food sector, they can prove impossible to recapture. What the Government can do is reduce the costs it imposes on industry to the level which pertains among our trading partners, especially the UK. The marginal reliefs announced yesterday should only be a first step.
Mr Charlie McCreevy and Mr Michael McDowell yesterday made spirited (and some valid) criticisms of Mr Quinn's package. One constant theme however was that the two smaller parties in the coalition got what they wanted while Fine Gael did not. This is not wholly accurate. Almost the entire of Mr Richard Bruton's wish list was included. It is a pity though that Mr Bruton does not give as much emphasis to enterprise as he does to employment one leads to the other. The Opposition parties also expressed indignation with Government members for their selective leaking and they are right. When he became Taoiseach Mr Bruton promised transparency and accountability and failed to deliver these from the outset. It is ironic that transparency manifests itself only on the Budget, on the item which should be the most confidential exercise in the Government's year.