Without a doubt, the forthcoming and repeatedly exposed budget has generated significant interest; this budget will be presented on Tuesday by Jack Chambers, the Minister for Finance, and Paschal Donohoe, the Minister for Public Expenditure. Two aspects are already quite apparent: both ministers are set to unveil a string of financial incentives, and this budget presentation will act as a precursor to the impending general elections, resembling an electoral prelude. Yet, the question remains whether the impact will reflect in an increase in your disposable income, if the primary focus is the forthcoming election and whether the strategy will actually prove effective.
Increasing Disposable Income
The vast majority can anticipate significant, tangible benefits from various budgetary provisions, which will amplify their financial gains by potentially hundreds or even thousands of euros. Chambers stated a fortnight ago that average workers are set to benefit approximately €1,000 each from this budget, with the likelihood that many may receive considerably more.
Alterations in tax slabs and the universal social charge rate, coupled with one-off payments (being repeated for the third fiscal year) due prior to Christmas, are set to augment the financial advantages of this budget beyond those of the previous year. Government figures last year found that middle-income families and voters were significantly impacted by the twice-given child benefit; such positive effects have led to the doubling of this double-payment, with the promise of another two before Christmas.
In the context of a three-child family, this equates nearly to a cash benefit close to €1,700. This does not account for the likely energy credits and tax alterations. Further benefits include free school books and the expansion of free public transport for children. It is expected that fixed-income pensioners and welfare recipients will see their weekly income rise by €12.
So, yes, the government is indeed planning to channel billions of euros into augmenting the populace’s earnings, and you will undoubtedly perceive its effects.
Is this a blatant attempt to sway my vote?
Unquestionably, yes. Amidst all the detailed dissection of the budget, it’s worth remembering two fundamental truths shaping this budget’s outlook: 1. The government currently holds a substantial surplus – meaning, plenty of expendable money, and 2. An election is imminent. The outcome couldn’t be more anticipated.
The economic strategy between the two budget Ministers and the Coalition leaders revealed itself over the weekend through vital discussions. Tonics from Chambers and Donohoe demanded that the Government shield its substantial surplus; the party heads were not opposing to this approach, yet when considering a surplus around €9 to €10 billion, they sought several hundred million for pre-election perks. As a result, the once-off expenditure package, formerly €1.2 billion, later €1.5 billion, expanded on Sunday to €2 billion.
Various Economists, incorporating members the Government’s Fiscal Advisory Council, have continually sounded an alarm concerning the peril of provoking inflation via utilising temporary revenues to incite lavish spending. Their caution is valid. However, budgets are not solely financial matters but deeply political ones as well. Retaining an expanding surplus as the citizens cope with the rising cost of living and public services struggle with an increasing population and surging demand is not sustainable.
Why then not offer a bigger windfall, if they are attempting to purchase my vote? They can certainly afford it. This question strikes the core not only of the budget’s political message, imitating the government parties’ re-election campaigns with “substantial achievements, more work to be done”, but also their collective self-perception. It is true, the Government parties aim to utilise the budget for political gain albeit in the most judicious way possible. They might desire to purchase your vote, however, they do not wish to pay above its worth.
Is this a viable strategy?
If there was a surefire method to secure electoral victory by harnessing a pre-election budget, very few governments would ever be ousted. Therefore, there is no definite answer. We can, however, conclude that governments which are obliged to introduce stringent, contractionary budgets are almost invariably disliked. The recent two budgets protected the Coalition from the escalating cost-of-living crisis that has plagued many other administrations. Hence, generous gifts are smart politics; provided, they are amalgamated with a compelling and consistent political narrative. The Coalition, however, has been perceived as inconsistent amid the parties vying for recognition for the impending perks over recent weeks.
Lastly, context is critical: how much money are we truly discussing here?
When it comes to budget day, it’s straightforward to lose track of the vast amounts involved. The overall impact of budget alterations on individual finances often leads to the millions and billions seeming distant and insignificant. Approximately €100 billion is required to manage the nation this year, with public wages and pensions taking up nearly €30 billion of that sum. Health services are allocated around €26 billion, and social welfare an additional €25 billion roughly. Education budgets are approaching €14 billion. While these figures are estimated values, they offer an impression of the costs involved in operating the country. Strikingly, it’s the disputes about the comparatively small sums of €10 million or €20 million that absorb our attention, despite these representing only a tiny fraction of the total state running costs.