James Lawless – View from the Tracks

It’s interesting how different people can have different triggers to events. I listened to the emergency budget via newstalk from work on Tuesday and was relatively sanguine about the effect on my own household (We take a hefty hit as as SITCOMs – “single income two kids outstanding mortgage”!) but in general I was quite pleased overall at a competent government performance, a good delivery by the Minister and an overall progressive and fair package of measures to address the widening gap in the national finances.

“Hookie”’s commentary I find hot and cold at times, (he must be adamantly anti-FF going by his new years eve outburst), was talking in the aftermath about people banging the steering wheels as they caught the drivetime details on the way home.

I wasn’t banging any steering wheels on Tuesday, as I said I remain personally sanguine about these things, in the national interest and all the rest, but I was certainly banging the steering wheel and profaning wildly in the car the following morning. The reason for this was not not the previous days medicine but rather the virtual two fingers given to Ireland Inc by ratings agency Moodys literally the day after the budget when they downgraded Irish soverign credit on the money markets. We went from AAA to AA+ which may add up a billion extra to our borrowing costs which will in turn strain the national finances and potentially lead to more taxation etc etc in a vicious circle. Just how a body of unelected unaccountable financial analysts can wield such power over soverign nations is almost immoral. The rating could not have taken into account the budget details as it was anounced as the markets opened and just as Irish bank shares had begun to rise they turned again thanks to our friends in the ratings game. Completely inappropriate release date and potentially damning for a sovereign nation.

The budget itself was tough as expected but very much progressive. “From each according to his means, to each according to his need”. The government had 4 possible options – 1) Cut welfare 2) Cut public sector pay (again) 3) Borrow More 4) Tax more and spend less… It went for 4. Politicians own pay was one of the first items to be addressed with a range of allowances and pensions scrapped instantly, several remaining capital loopholes were closed, efficiency reviews and early retirement scheme was introduced in the public sector whilst the welfare bill will be audited for abuse cases but largely remains static with payments remaining at current levels (which include a 3% increase in October and a 4% rise in purchasing power since equating to a 7% rise overall).

Lots more including the ‘bad bank’ idea, an exports fund, flagging of possible future measures and more. If things do turn around some of these future steps may not be necessary. There weren’t too many surprises pretty much everything had been flagged in advance and detailed in media, and could have been a lot worse.

The opposition are of course making some noise so far do not appear to have any substantative complaints. They were invited to make submissions and of an approximate 6.5BN hole to be plugged the FG proposal would have salvaged 4 whilst Labour appeared to scrape together a measly 1.5 savings plan. So their numbers don’t appear to work but that’s the beauty of opposition they don’t have to.

Lastly on a practical note, here’s a handy tool to work out how it affects you.

Tags: Budget, economy, Fianna Fáil