I DON’T know about you, but early on Wednesday morning I assumed the worst.
The moment I got into work I sat down at my desk, crouched forward, put my head between my knees and assumed crash position.
That guy Cowen, I reasoned. He didn’t know what the hell he was talking about. Do you remember when he was going on about a soft landing in the property market last year?
A soft landing? Viewing the ruins of the property market this winter was like looking at London after the German bombing campaign of 1941.
Cowen had taken a chomp out of a reality sandwich since then. In the run-up to the budget he painted a picture of the economic landscape that reminded me of another time and place. Let’s go for a nostalgic trip down memory lane. Let me bring you back to the early 1980s when teenagers sported mullets and flecked trousers and they all bought one-way tickets on the Supabus to London or on Ryanair to Germany.
The buzz phrase that has defined the past decade has been the ridiculous Celtic Tiger. Well the one that defined the early 1980s was less ridiculous but boy was it grim. And if I’m not mistaken the words first formed on the lips of Charles J Haughey. It was: “doom and gloom”.
For weeks and weeks before the budget, Cowen was incapable of uttering anything that didn’t smack of doom and gloom. Granted, he wasn’t quite phrasing it in such desperate language. But the message was clear. After years of quaffing champagne with Charlie we’d have to slum it by drinking Dutch Gold with Cowen.
But then an amazing thing happened. As we absorbed the hour-long speech on Wednesday, we searched in vain for pain. There was little to be found. Sure if you were a chain-smoking Porsche driver who happened to purchase an expensive house a month ago, you were on a loser. But the rest of us walked away from what we thought was a crash without even a scratch. Tactically, Cowen was clever in the run-up to his fourth budget. He dampened expectations, accentuated the negative, reminded all and sundry that the property market was contracting; that growth had slowed; that the public service was in bad need of reform; and that the days of double-digit increases in current spending had come to an end.
Fianna Fáil had also learned from the dog’s dinner it made of the 2002 election promises. This time around, Fianna Fáil had promised dozens of goodies. But at the end of each press conference during the election campaign, Cowen would remind people that terms and conditions applied. Everything was predicated on growth rates of 4.5% or more. When that didn’t happen, Cowen was able to go to fallback position without sounding like a hypocrite. He could deny tax cuts, PRSI cuts, extra teachers and extra guards because they would only be granted if the boom had continued. His default commitments were to the National Development Plan and to health and education. Still, if money was too tight to mention, why did we get no pain in the budget? Well there were a few stealth taxes here and there (motor tax and medical charges).
It was all made possible by two cavalier decisions by Cowen that reminded you of the swagger of the Charlie McCreevy era. One was his U-turn on stamp duty. He came up with one of the ugliest phrases I have ever heard to explain why he did this. It was, he said, a “countercyclical measure”. In ordinary parlance, that’s a 180-degree turn. But he will get away with it because people’s cynicism over FF completely changing its mind on stamp duty in six months will be trumped by the positive vibes it will have for home owners.
The other bold gamble Cowen took was to borrow heavily for the first time in a decade. Fine Gael rightly pointed out the €5 billion of borrowing next year represents a whopping €7.2bn turnaround in fortunes between 2006 and 2008. The Tánaiste described it as “modest” but it is more than that. The national debt will increase 50% over the next three years. It may just pay off, though the creep in the unemployment figures and the fall-off in job creation are both worrying. But if both gambles fail, we will all too soon find ourselves crash landing back into the 1980s landscape of “doom and gloom” quicker than we can say “countercyclical measure”.
This is my column from today's Irish Examiner
Showing posts with label stamp duty. Show all posts
Showing posts with label stamp duty. Show all posts
Saturday, December 08, 2007
Wednesday, December 05, 2007
INSIDE POLITICS - BUDGET 2
Well, he moved big on stamp duty. A huge overhaul to tackle a market in which he said the "dynamics had changed" (the opposition translated that as a 'slump'.
Senator Eoghan Harris sitting in the senators' section at the top of the chamber looked like the cat that got the cream - expect a big dose of triumphalism in the Sunday Indo next weekend.
Elsewhere there were few surprises. Anything that could have been a surprise (motor tax and VRT) were already flagged. Most of the stuff that was eye-catching (reduction on duties on credit and debit cards at the expense of the banks; 30c increase on cigarettes; tripling of the income threshold for medical cards where there is a child under 18 with intellectual disabilities) will not cost a huge amount either way; and were gestural rather than substantial.
The macro picture was as he predicted. Overall there will be an increase of 8.6% in spending (8.2% in current spending; 12% in capital spending)mistake in l. He has prioritised the NDP, the health services, education (especially to cater for the 13,000 new schoolchildren coming on stream this year) and R and D.
Cowen's priorities have always been tilted more to the lower paid (more than his predecessor that is). And so the increases in tax credits; widening of bands, and above-inflation increases in social welfare.
As for the Green Budget, it just didn't have the impact it should have had. A couple of colleagues felt that the Greens didn't get as much as they should have and that stamp duty eclipsed. My own belief is that a huge mistake was made when somebody in Government leaked the Vehicle Registration Tax (VRT) details to two Sunday newspapers a fortnight ago. That completely removed the element of surprise from the Carbon Budget, rendering it a bit of an anti-climax.
Senator Eoghan Harris sitting in the senators' section at the top of the chamber looked like the cat that got the cream - expect a big dose of triumphalism in the Sunday Indo next weekend.
Elsewhere there were few surprises. Anything that could have been a surprise (motor tax and VRT) were already flagged. Most of the stuff that was eye-catching (reduction on duties on credit and debit cards at the expense of the banks; 30c increase on cigarettes; tripling of the income threshold for medical cards where there is a child under 18 with intellectual disabilities) will not cost a huge amount either way; and were gestural rather than substantial.
The macro picture was as he predicted. Overall there will be an increase of 8.6% in spending (8.2% in current spending; 12% in capital spending)mistake in l. He has prioritised the NDP, the health services, education (especially to cater for the 13,000 new schoolchildren coming on stream this year) and R and D.
Cowen's priorities have always been tilted more to the lower paid (more than his predecessor that is). And so the increases in tax credits; widening of bands, and above-inflation increases in social welfare.
As for the Green Budget, it just didn't have the impact it should have had. A couple of colleagues felt that the Greens didn't get as much as they should have and that stamp duty eclipsed. My own belief is that a huge mistake was made when somebody in Government leaked the Vehicle Registration Tax (VRT) details to two Sunday newspapers a fortnight ago. That completely removed the element of surprise from the Carbon Budget, rendering it a bit of an anti-climax.
Saturday, October 13, 2007
INSIDE POLITICS - TIME IS RUNNING OUT FOR THIS GOVERNMENT
THERE are four years, eight months and six days left until the next general election.
That means only one thing — the Government has left it too late to save their skins. They are toast already.
Ah yes, you say. A resurgent Fine Gael will become even more resurgent and will wipe the floor with them. Ermmm, no.
By the way they are shaping up so far, Fine Gael look like they will be merely spectators to the Government’s demise. I was speaking to a senior Fine Gael backroom person during the week and asked him about the state of play of its strategic planning for the next five years.
The answer I got was that there isn’t a strategy, not yet. The reasons?
It’s only a couple of months since a tough election. The new front bench needs to bed itself in. Give it a bit of time.
It was — and I didn’t quibble — a reasonable explanation. But it was also wrong.
Just as a week can be a long time in politics, a five-year term can be a short time in politics. And we have seen a couple of examples in the past week of Fine Gael spokespeopleopposing just for the sake of opposing and offering no cohesive or original proposals of its own (and before you correct me, the otherwise smart Charlie Flanagan’s suggestion to call in the army was not original).
And so in the new Dáil term, we have seen FG take up where it left off before the election. We don’t know if it’s still relying on the three pillars on which it fought the election campaign — health, crime and value for money — but it seems to be. And that’s a mistake.
There’s a school of thought within FG that if it ain’t broke don’t fix it — continue with the strategy that won it 20 seats and sure, won’t it yield even more?
A couple of weeks ago, FG’s young blade Leo Varadkar wrote in a posh newspaper arguing that far from trumpeting its success, FG should be flagellating itself for failing to win the election.
The campaign (ie the superficial razzmatazz) was professional, but wasn’t enough. “We did not win the policy debates. We showed an unwillingness to take clear positions. We did not demonstrate competence to run the economy.”
As an example, he said, the party, by concentrating on the narrow issue of stamp duty (pandering to a skewed and perverse Sunday Independent campaign), abandoned imaginative plans for a 30% income tax for middle earners. To that end, they could learn from the flair that Tory shadow chancellor George Osborne has shown in terms of policy and presentation.
Mr Varadkar’s argument that Fine Gael “will have to look like modern Ireland” sounds like it comes straight out of David Cameron’s rulebook.
FG needs to do all of those things. But already, it’s beginning to look like it might not need to bother. The PDs already look like goners. There’s no dynamic for change within FF, which means that Brian Cowen and others will bide their time even if Bertie Ahern stays on until 2011.
If that happens, whoever succeeds him will be leading Fianna Fáil into opposition.
And the Green Party? The incinerator debate this week underlined the innate weakness of its position in Government. The media and opposition honed in not on John Gormley’s argument that Ireland will need two rather than eight incinerators, but on his tacit acceptance that incinerators will be needed in the first place. That’s a big concession.
Its biggest enemy will be time. In the Programme for Government, the Greens got a commitment to an international review of national waste policy. And it’s been agreed. That’s fine. But it won’t be completed until 2009. And by the time they’ve gone through the hoops of approval, procurement and delivery, it will be — well, way beyond 2012.
And with an economy beginning to feel the squeeze, its own big flagship issues — the annual 3% reduction in carbon emissions; the big push towards renewable and alternative forms of energy — will encounter resistance from FF ministers.
The Greens know that FF has red lines and is not prepared to cross them. So many of what the Greens want is predicated on reviews, reports, promises and vague aspirations (stuff that can be kicked into the blue yonder). Green ministers and their advisers are still talking naively about how nice FF ministers have been to them. But in technical terms that’s called a honeymoon period.
If they don’t start picking a couple of fights with the Big Beasts of FF soon, they’ll find themselves with nothing tangible to show. There are four years, eight months and five days left. But if they don’t start moving, it will be too late.
That means only one thing — the Government has left it too late to save their skins. They are toast already.
Ah yes, you say. A resurgent Fine Gael will become even more resurgent and will wipe the floor with them. Ermmm, no.
By the way they are shaping up so far, Fine Gael look like they will be merely spectators to the Government’s demise. I was speaking to a senior Fine Gael backroom person during the week and asked him about the state of play of its strategic planning for the next five years.
The answer I got was that there isn’t a strategy, not yet. The reasons?
It’s only a couple of months since a tough election. The new front bench needs to bed itself in. Give it a bit of time.
It was — and I didn’t quibble — a reasonable explanation. But it was also wrong.
Just as a week can be a long time in politics, a five-year term can be a short time in politics. And we have seen a couple of examples in the past week of Fine Gael spokespeopleopposing just for the sake of opposing and offering no cohesive or original proposals of its own (and before you correct me, the otherwise smart Charlie Flanagan’s suggestion to call in the army was not original).
And so in the new Dáil term, we have seen FG take up where it left off before the election. We don’t know if it’s still relying on the three pillars on which it fought the election campaign — health, crime and value for money — but it seems to be. And that’s a mistake.
There’s a school of thought within FG that if it ain’t broke don’t fix it — continue with the strategy that won it 20 seats and sure, won’t it yield even more?
A couple of weeks ago, FG’s young blade Leo Varadkar wrote in a posh newspaper arguing that far from trumpeting its success, FG should be flagellating itself for failing to win the election.
The campaign (ie the superficial razzmatazz) was professional, but wasn’t enough. “We did not win the policy debates. We showed an unwillingness to take clear positions. We did not demonstrate competence to run the economy.”
As an example, he said, the party, by concentrating on the narrow issue of stamp duty (pandering to a skewed and perverse Sunday Independent campaign), abandoned imaginative plans for a 30% income tax for middle earners. To that end, they could learn from the flair that Tory shadow chancellor George Osborne has shown in terms of policy and presentation.
Mr Varadkar’s argument that Fine Gael “will have to look like modern Ireland” sounds like it comes straight out of David Cameron’s rulebook.
FG needs to do all of those things. But already, it’s beginning to look like it might not need to bother. The PDs already look like goners. There’s no dynamic for change within FF, which means that Brian Cowen and others will bide their time even if Bertie Ahern stays on until 2011.
If that happens, whoever succeeds him will be leading Fianna Fáil into opposition.
And the Green Party? The incinerator debate this week underlined the innate weakness of its position in Government. The media and opposition honed in not on John Gormley’s argument that Ireland will need two rather than eight incinerators, but on his tacit acceptance that incinerators will be needed in the first place. That’s a big concession.
Its biggest enemy will be time. In the Programme for Government, the Greens got a commitment to an international review of national waste policy. And it’s been agreed. That’s fine. But it won’t be completed until 2009. And by the time they’ve gone through the hoops of approval, procurement and delivery, it will be — well, way beyond 2012.
And with an economy beginning to feel the squeeze, its own big flagship issues — the annual 3% reduction in carbon emissions; the big push towards renewable and alternative forms of energy — will encounter resistance from FF ministers.
The Greens know that FF has red lines and is not prepared to cross them. So many of what the Greens want is predicated on reviews, reports, promises and vague aspirations (stuff that can be kicked into the blue yonder). Green ministers and their advisers are still talking naively about how nice FF ministers have been to them. But in technical terms that’s called a honeymoon period.
If they don’t start picking a couple of fights with the Big Beasts of FF soon, they’ll find themselves with nothing tangible to show. There are four years, eight months and five days left. But if they don’t start moving, it will be too late.
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