Subscriber OnlyInside Politics Newsletter

Feast of public finances increases pressure on Government to spend

Inside Politics: Dowdall questions will keep coming for Sinn Féin; Greens take soft approach to reducing private car usage

Minister for Public Expenditure and Reform Michael McGrath and Minister for Finance Paschal Donohoe. Photographer: Tom Honan/Freelance

Pat Leahy's face
Pat Leahy
Wed Apr 19 2023 - 07:41

When it comes to Ireland’s public finances, it’s either a feast or a famine. During the 1980s, Ireland struggled with high debt and low growth; the sick man of Europe. A long period of what we now call austerity, and was then called “tightening our belts”, ensued. That period was followed by the incredible economic boom of the 1990s and 2000s. The rollercoaster ride did not end well in 2008, and there were several years of tight budgets which raised taxes and cut many spending budgets. But economic growth, and prosperity, returned. During Covid, the State spent massively to prop up a frozen economy, which enabled growth to return quickly when the pandemic receded. And now the public finances are humming again.

Actually, they are more than humming – they are roaring ahead. Figures released yesterday show that a surplus of some €10 billion is expected this year, rising to €16 billion next year. By 2026, if no policy changes are made, the surplus will be €20 billion. It’s frankly astounding.

Of course, policy changes will be made; the Government will be spending money in the budget. It will probably spend a lot of it, as it did last year, when between conventional spending increases in the annual spending budgets, and the once-off measures to combat cost of living pressures, the total budget package topped €11 billion. Whatever decisions are made this year, the Government has the resources to do something similar again. Whether a spending splurge would be the sensible thing, or the prudent thing, is another matter. But it is almost certainly what an under-pressure Government facing a general election in the middle distance – and facing demand from everywhere for more spending – is likely to do.

You can read our lead story on the likelihood of a ‘giveaway’ budget here.

READ MORE

Meanwhile, in Eoin Burke-Kennedy’s analysis, he writes that ‘just as the conversation back in the heady Celtic Tiger days switched from one of whether the government finances were performing to what should we do with our budgetary largesse, the same is happening now.’

In this morning’s editorial, The Irish Times view is that the Government has room for manoeuvre but it must be used wisely.

Dowdall questions will keep coming for Sinn Féin

The fallout from the Gerard Hutch acquittal in the Special Criminal Court continued, spilling over into politics with the focus on the relationship between State witness Jonathan Dowdall – whose evidence, incidentally, was in parts widely disbelieved by the judges – and Sinn Féin, for which party he was an elected representative.

If only we had known he was a gangland hood, says Sinn Féin, we’d never have left him in. But he was. And they did. And not only was he in, he was a representative in Mary Lou McDonald’s home patch. The questions are likely to continue. Not least because the party’s opponents will keep asking them. Cormac McQuinn reports.

Meanwhile, in our lead story this morning, Conor Gallagher and Conor Lally report that Dowdall has been formally accepted into the witness protection programme.

And Conor Lally asks: did Patsy Hutch – currently living under garda protection – plan the Regency hit?

Greens’ take soft approach to reducing private car usage

Meanwhile, Jennifer Bray reports that the Government’s – okay, the Green Party’s – plans to reduce private car use in cities in order to cut emissions will be gently done. The concern, it seems, is not to alienate the public by heavy-handed measures such as congestion charges, which would slap a charge on motorists driving into the city centre. On the one hand, it would definitely reduce trips; on the other it would quite annoy rather a lot of people. Instead, the hope is to eventually ask people to reduce their car trips by one a week. Not exactly a climate revolution.

Elsewhere, pressure from the environmental NGO sector on Eamon Ryan to hold the line on a LNG terminal is growing.

Best reads

Arthur Beesley writes that PWC paid out €53 million to settle a claim over its auditing of Quinn Insurance.

Michael McDowell has questions about the Hutch case.

Conor Gallagher, Alison O’Riordan and Eoin Reynolds have more detail on what exactly faces Jonathan Dowdall as he is accepted into the Witness Security Programme.

Miriam Lord from the Dáil on a subdued Mary Lou McDonald.

Professor Gregory Provan raises more questions about AI.

Playbook

A short day in the Dáil, where a Social Democrats motion on a vacant homes tax takes up much of the morning. Leaders questions at noon, Government business later in the day and an early adjournment at 6.30pm, with no weekly votes. Apparently lots of people are in Belfast for the Good Friday Agreement conference. The Taoiseach will speak at it and will also meet British Prime Minister Rishi Sunak on the margins.

President of the European Commission Ursula van der Leyen, President of the European Council Charles Michel and, of course, Bill Clinton will also speak. There’s an official function at Hillsborough Castle in the evening.

Highlight in the Seanad is the first debate on the legislation for the Mother and Babby Homes redress scheme at 2.30pm. Well, that and the statements on the sheep sector. That’s at 12.45pm, if you want to tune in. By the way, you can tune into any Dáil, Seanad or Committee debate on oireachtas.ie

There’ll be lots of attention on Robert Watt’s appearance at the committee that shadows the Departments of Finance, Public Expenditure and the Taoiseach – Jack Horgan Jones sets the scene here – but it’s a busy day elsewhere, too. Minister for Health Stephen Donnelly is in at the Health Committee to answer questions about his Department’s spending, while RTÉ chairperson Siún Ní Raghallaigh is in at the media committee where she is likely to be asked about the shenanigans over the appointment of a new director general at the broadcaster. Kevin Bakhurst’s appointment was ratified by Government yesterday. Details of the other committee meetings are here.