How to spin the budget – a difficult political problem

The government has announced that the upcoming budget will see €2.5 billion taken out of the economy rather that the €3.1 billion that was originally targeted. They say the difference will be made up by resurgence in the Irish economy. That should sound like good news to us all.

For many weeks the figure mentioned around Leinster house was 2.8 billion so the extra reduction might signal some kind of victory for those proposing a somewhat easier budget. It allows a good news story today but it has some problems beneath the surface.

Firstly, the figure of €2.5 billion is certainly as low as the government can go without getting the troika and markets completely spooked. This means that the government is taking a bit of a political gamble. They had some options here. It could be argued that they should either cut or raise that little bit extra in order to give them a cushion in next year’s figures. It is very important that the budget figures do not go off track in the coming year and fail to meet targets as happened the last time we were in the markets. If this happens our so called return to the markets may be a short lived one.

Ireland is undoubtedly at the very limit of the austerity it can take and the government seems to have decided that it must ease this as much as it can right now and it could not afford banking anything for next year. It does mean that there is no wriggle room in these figures. Everything has to work out exactly as we predict. Unfortunately fate has not always been kind in that regard. Ireland is still at the mercy of the world economy. If things pick up there then Ireland can accelerate quickly, however if they don’t or if the world situation dips, Ireland suffers more than most.

So, a political decision has been taken and it may represent the government efforts to restore its image. Surely this is also good news for Labour? On the surface it is. There is another problem though. €2.5 billion still represents a lot of harsh cuts and taxes. The €600 million difference can look paltry by comparison. Then there is the problem of presentation. Today, labour and others can praise the fact that they eased the austerity. However, we don’t know what that easing represents. It is impossible to state now what cuts are off the table as a result of this change.

Once the budget is delivered people will be annoyed at how it affects them. Telling them it could have been even worse will not really appease that. Without being able to put extra services on, or reinstate services, then this €600 million becomes nothing more than an illusion to the voter. How does a government make a good news story on budget day? Picture the quote being ‘Yes we cut the number of teachers and will close some hospital services, but on the upside we could have been closing entire hospitals’. Doesn’t really work does it? In fact it makes you feel even worse and probably angrier.

Now the government has one short term advantage. In the modern age, Budget day itself is never as bad as we expect. We live in terror of it then we hear the headline figures and it doesn’t seem too bad. The implementation of those figures and the detail behind them only becomes apparent as the year progresses so we don’t feel the pain or anger until the budget is long over and we then start paying the price. This gives some breathing room to a government. Their main task must be to avoid a big ‘headline’ issue. Like the medical cards were for FF in the past. It must stop any single cut or tax raise causing consternation on the day. That is achieved by keeping them all a bit vague or else highly complex.

The problem with the upcoming budget is that Ireland is at its limit and the difference between €2.5 billion and €3.1 billion will be lost on many that the budget affects. The economy has been cut to the bone, services are threadbare, those on welfare are in danger of going under completely, those with mortgages are just hanging in there, those on low to middle income jobs have been squeezed so much they are ready to pop. Any move, however slight is going to hurt deep now. It wont be forgotten either.

The government will gamble that it can do this budget and the next 12 months will see a significant change in the economy and a glorious return to the markets. If it works then they can be well pleased. However, since this crisis began, every government decision has been hoping for a change in the next year. A few more stable figures and markets making demands, as opposed to the troika, might sound good to the politicians but it won’t make a jot of difference to the people. Unless it’s going to put money in their pocket they will find this hard to accept and it’s difficult to see any money arriving in pockets anytime soon.

In 1989 FF faced the country having spent the previous 2 years stabilising the economy. That government was widely regarded as having done a good job with a little help from FG in opposition. The figures were improving. FF however, lost seats, not many, but it still hurt. Despite their work, nobody cared because people were still suffering the pain. In 1992 the outgoing government was pointing to a big improvement in figures and economic growth. That election was decided by the question of trust, ethics, honesty and a desire for change. The slowly improving economy was still not putting enough money in pockets for people to forgive the government the things they held against them. In 1997, the outgoing government faced the people with the economy improving steadily, complete budgetary stability, ongoing improving growth and increased spending. They too were pushed aside as the debate raged about tax decreases and how to spend money now. In fact the only government to benefit from an economic boost was in 2002 and this was because it came at the very height of the boom when pain was a distant memory and good times were rolling. We are a long way from that point.

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Irish Politics, It’s like booking a holiday…

Ah yes, its summer. That time of year when we all start to head off on a holiday somewhere nice and sunny. Ireland is a country that’s badly in need of a holiday but if our political parties are the tour operators then that is where we start to have a problem.

You see we used to go on holiday with one tour operator for many years. This operator, Fianna Fail, gave us some very good holidays. They also gave us some bad experiences but in the main we were feeling ok, especially in recent times when we went to some lovely destinations. They normally partnered with a smaller local operator for tours and they often had to change these and told us that any problems were down to them. These smaller local operators (PDs and Greens) did not fill us with confidence but we went along with them as part of the package.

It was all fine until a few holidays ago. We wanted a real break and felt we deserved it. We decided to treat ourselves and go to Barbados. It wasn’t cheap but Fianna Fail told us it was well within our reach so what the hell? We work hard, now it was time to relax and enjoy it. The problem was when we got off the plane we were not in Barbados we were in….Bratislava. We quickly mentioned that there must be a mistake, but to our surprise, instead of sorting it out and finding us another flight out, the tour reps smiled and shrugged saying ‘We are where we are, you might as well try to enjoy it’. Well, we now felt like right tools walking around in our floral shirts and Bermuda shorts in Bratislava. There wasn’t even a pool. When we asked the local operator, the Greens, if there was anything for us to do or see here, they looked at us blankly and said ‘We never intended to end up here either’. It was the most miserable holiday of our lives and we swore never, ever again. Fianna Fail had broken our trust and no matter what went before, this was a disaster too far. On the flight home, FF ditched the guys who sold us the holiday and put up an ‘under new management’ sign, but it was too little too late. We marched into them and told them we were taking our business away for good. That felt great at the time, but it’s almost a little scary that as we plan this year’s holiday we are starting to feel like we may have no option but to go back to them. Why? Oh well that’s because of last years holiday.

You see we decided to get away from FF and went to another company we had holidayed with the odd time FG/Labour. Now we had some bad experiences with them 30 years ago but it was all changed now, they had proven themselves fairly solid. We also remembered the some good holidays we had spent in their company. At least they never had the utter disaster we experienced with the whole Bratislava business. FG/Labour were very eager for our business. That felt good too. They had special health insurance, a 5 point plan for a good holiday, handy checklists, and they told us we could start paying into a holiday fund month by month and then choose our destination when the time came. It was perfect. If we saved hard we could be on our way to Barbados soon. Finally after much saving in the holiday fund, they sent out the brochure with this years options. It was a rather flimsy affair. We had saved all our money with them and now they tell us there is only one destination this year…..Bratislava. We were very angry. We went into the office and demanded an explanation as to why they had told us so much was possible. They just smiled broadly and said ‘Oh but it is, its all still possible…just not yet….new destinations will be coming on stream in the next 5 to 10 years just stick with us’. We tried pointing out that they didn’t tell us this at the time but it was no use. We ask if at least the new health insurance is on offer……they smile ‘Oh it will be..it will be…eventually’. We point out that everything in the Bratislava holiday is exactly what FF had given us the last time but the soothe us as they walk us dejectedly out of the office by saying ‘Ah but yes, the difference is this time you are not travelling with FF, the last time you thought you were going to Barbados, at least this time we told you before you got on the plane? Isn’t that so much better?’

Perhaps we were being harsh. Maybe Bratislava would be fun. But it wasn’t, it was the same old thing as the year before and we felt even more cheated. We went to the local operator, Labour, to see if they had at least got some exciting day trips, only they told us no, apparently FG had not accounted for any of their things in the price and that they were not allowed bring us anywhere, it was a matter to take up with FG. Bloody marvellous. The only difference this year was we had a jumper on and that was about as much comfort as we could take. We began to idly wonder if FF had learned a lesson, but we seriously doubted it.

So where to next? Well there’s a few people endlessly talking about setting up a new tour operator but they just don’t seem to be able to organise themselves. There is another sizeable company Sinn Fein. The problem with these guys is that they do the extreme holidays. They are the company we went with when we finished the Leaving Cert or after first year exams in college. They are great for the under 25s. They do all the radical stuff. The problem is we don’t really want that kind of holiday anymore. Sure it was all great fun at the time but now we like something a bit more relaxed and stable. We didn’t care at 18 but now we have bills and responsibilities and we were never quite convinced that the Insurance policy SF offered, should something go wrong, was really adequate. There were stories from years ago about people that never came back but at least they appeared to have sorted all that out now. Still though, we are a bit long in the tooth to going extreme snowboarding in Tibet. Now maybe if SF partnered with FG or FF and we got a more normal destinations and a bit more relaxing but with better service then we might consider it. However SF told us they don’t do partnerships so it’s off the agenda for now.

We had friends who went with some independent operators. These were fairly ok but the problem is it’s a lot of work. Its like booking from Dublin to London with one operator, then he gives you a number of a fella to ring when you get there and he can get you from London to Paris, then he has a number for a guy that might put you up for a few nights before another guy can get you a connecting flight to somewhere else. Its all a bit disorganised and you don’t really get looked after the way we want. It’s a bit like backpacking around the world on your own steam. Its grand and you manage it and end up with great stories to tell, but in reality at this stage of life we don’t have time for that craic and have long thrown out our rucksacks.

So maybe we should forget holidays and just stay at home until the operators sort themselves out. Maybe we should return to FF crossing our fingers that they have learned and are not going to laugh heartily as the drop us in outer Mongolia, maybe we should stick with the guys we have now, FG/Lab, see if they come good on their word eventually? Even if they are about as much excitement as a sleepover at Danas house. Or maybe we cud risk the SF or Independent route and relive our youth? Ah who are we kidding? They all have the same governing body, the troika, and their idea of a holiday for us is a two night midweek in Tubbercurry.

Why the ECB letter should be published and the ECB put in its place

In the Irish Independent on line, I am making the argument that the Irish government should publish the correspondence from the ECB that held an implicit threat about funding. It is part of a wider bullying strategy by the ECB and it is time this was faced up to

http://www.independent.ie/national-news/jonathan-fallon-why-michael-noonan-should-publish-that-bullying-letter-from-the-ecb-and-put-it-in-its-place-3213810.html