Tuesday, 7 December 2010

A budget that does not add up

Slí eile: The annual pantomime known as the Budget is an annual fixture. Since the onset of recession in 2008 it has assumed the proportion of an annual (and sometimes twice a year) catharsis. It is carefully planned and delivered through a series of planted leaks, suggestions, threats, ameliorations, political trading and spin. This year, the atmosphere has been characterised by:
1 recession weariness (in some peoples people have been used to a certain level of shock, awe and fear)
2 the publication of a 'four year plan' to resolve the fiscal impasse
3 a sense that control has passed more than before, to some extent, to forces outside Ireland.

On a first reading and hearing of this year's budget the following is apparent:
the poor, the unemployed, families with children, the sick, the young will take the brunt of the adjustment
public services will be further undermined in a country where the public domain was inadequate
taxes will serve to lower living standards across the board but in a way that will impact in absolute terms very severely on those already struggling on low income
key changes in regard to capital, corporate and consumption taxes were either avoided, postponed or introduced in a very limited way.
as in previous years, the amount and quality of information provided leaves much to be desired -
simple to use and transparent data sheets are not available
the full policy and programme implications of reductions Department by Department and vote sub-head by sub-head remain to be spelt out
the macro-economic impact of these adjustments are not presented (e.g. the deflationary impact on tax flows is not shown or explicitly factored in)
the combined impact on household income for different groups (e.g. by decile) has not been shown
the extent of reparations in the form of capital transactions is difficult to isolate out in the data shown in the background material - this needs to be more clearly shown and set against the cut backs to public services and living standards - the price of reparations for the benefit of unknown investors, bondholders and other creditors.
There is a sense from the opposition benches that in the coming months some aspects of the bigger 'plan' can be revisited and even re-negotiated (with respect to composition, timing and interest payments). The speeches from that side of the house were populist but not indicative of how exactly an alternative economic strategy would work and deliver. The most credible, worked-out and progressive alternative package I have seen to date is that provided by UNITE.

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