Cliff Taylor: There is going to be trouble come Budget time

Are we the electorate that wants to have it every way? We say we want politicians to act in the national interest, but expect them to “look after” the constituency. We want better public services, but simultaneously call for tax cuts. We demand that banks cut mortgage interest rates but simultaneously want extensive measures to protect those in arrears. We want to protect the environment, but still want turf-cutters to be allowed to cut turf. And the new Government has responded by promising to give us all we want, and more.

It is easy to be sceptical about the new government programme. At a rough count, it includes well over 100 commitments to new spending, some tiny, some very significant, and another couple of dozen proposed or suggested tax measures. There is precious little in terms of where savings might be found or new taxes raised, bar some nods to efficiency, a few tax clawbacks from high earners and a new sugar tax.

There is no sense in the plans of any trade-offs, no setting of priorities in the blizzard of promises, no doubts expressed that it might not be affordable, or that the whole thing might collapse as the scores of promises collide with budget-time reality. We will, it suggests, be able to have our cake and eat it.

Our system involves national parties trying to “deliver” to groups they perceive to be their supporters and local independents trying to win things for their own patch. That is the political reading of what we, as voters, demand. Post-crisis, we have reverted to type and are demanding that things go back to where they were. Public pay and pensions are to be restored – the only question is when. The plan to abolish the USC – the key emergency revenue-raising measure – remains. There is more than a touch of back to the future.

Stack this up against all the spending commitments in a range of departments and the likely amount of money available at budget time and it won't add up. It is impossible to put figures on this – the document does not include costings. But such is the extent of the spending promises that there is going to be trouble come budget time. The agreement was made to get over the fence of government formation and to get Enda Kenny re-elected as Taoiseach. Budget day is thus going to leave a lot of people disappointed.

Certainly the €3 billion in additional spending pledged over the next few years will be spent a few times over to deliver on the plan, particularly when you consider pledges to restore public sector pay and pensions and the year-on-year extra costs from an ageing and growing population.

Contradictions

The internal contradictions go beyond the figures. Take banking, for example. The plan promises to do everything possible to protect mortgage holders, to keep people in their homes and to introduce a new court that can impose solutions on banks in the case of a borrower in trouble. Simultaneously, we are told, that everything possible will be done to get banks to cut standard variable mortgage rates.

Both of these are laudable objectives, but achieving them both at the same time suggests that banks can be persuaded to cut mortgage rates, while at the same time foreclosing on a borrower in arrears becomes even harder and they are pushed to offer what will in effect be long-term relief to those in arrears. At the same time the Government will also want to get the best price for the sale of a 25 per cent stake in AIB, while also hedging its bets on whether eventually it will sell any more.

Nowhere in the programme is a nettle grasped. Take one example. Public sector pensions are a huge potential long-term problem for the Government, with the gross annual cost already heading towards €3 billion. There have been reductions in pension entitlements for newer public servants, but more established employees still have very generous provisions, unheard of in the private sector except for the privileged few at the top of the executive tree.

Pension levy

The pension levy imposed during the crisis at least saw some more realistic level of contribution made towards this massive perk. Yet the document says baldly, “we will reverse the public service pension reductions introduced during the crisis by 2021, prioritising in the early years those in receipt of low pensions.”

Nothing is said about seeking pension reform in return or trying to put the whole thing on a more sustainable footing.

There is little mention anywhere of pursuing value for money, or of examining the costs and benefits of the additional projects and plans being put forward. Few would argue, for example, that there is not a need for State intervention to provide broadband to rural areas, as a key way to promote economic development. But do we really need to allocate €100 million to the Wild Atlantic Way and Greenways? It may be a good investment, but I doubt anyone has done the sums. It was another item to be added to the shopping list. In a time of scarce investment resources, setting priorities is simply essential.

By giving something to just about everyone and making no choices, the programme for government is a wish list, not a plan. The economic signs are not too bad. But being in government is about making choices. By promising so much to parliamentarians and their constituents, this programme for government is storing up a whole lot of political trouble for the near future.