The post-election fervour will lead to a critical piece of governance ahead of the general election, namely the final budget by the Coalition. This week marked the start of the Government’s public procedures towards this when it organized the National Economic Dialogue at Dublin Castle. This expansive discussion forum enables various social sectors to present their views regarding public expenditure. Despite the tepid reception by officials, it is not uncommon for the NED participants to be brimming with suggestions.
An array of requests were made including an appeal from Social Justice Ireland for an increase in basic social welfare rates along with a proposal to benchmark these to average incomes. The National Women’s Council called for a public childcare service. The Disability Federation of Ireland stressed that Budget 2025 should centre around the necessities of disabled people, especially those encountering poverty.
Environmental non-profit organisations argued for the need of “fully funded marine protected areas”. The Earth’s allies also sought better Government initiatives to simplify retrofitting and alleviate energy poverty. Along with them, 100 groups marked their attendance, ranging from the Children’s Rights Alliance to Age Action Ireland, and from the Irish Cattle and Sheep Farmers Association to the Killybegs Fisherman’s Organisation and Protestant Aid.
All the organisations brought their own unique proposals, wishes and requirements. Probably, some unsung employee from the Department of Finance, based on Merrion Street, is assessing the total combined cost of all requests made at the NED, undeniably a cumbersome task.
The NED event draws mixed feelings. While many bureaucrats consider it tiresome, others recognize its value in creating dialogue with stakeholders and other public participants. A consensus-driven model of policy-making undoubtedly has numerous merits, provided the government manages the finances strictly.
Contrary to popular belief, the NED isn’t actually a forum for discussion about the budget, as that happens internally within the government. Typically, this process is kept under wraps, however, this year seems to be an exception. The dispute within the government is between two portions, one spoken for by the Taoiseach, and the other represented by budget ministers Paschal Donohoe and Michael McGrath. This is a rather unusual affair, but I laud its transparent facet.
Let’s delve into the Taoiseach’s standpoint. He said the government recognises that a robust economy should yield measurable advantages for citizens. He acknowledged the ongoing financial strain people are experiencing. The rising cost of living has left many feeling financially unstable and fearful for the future. We must assure them that the government understands their plight. He emphasised a renewed focus on the cost of living for Budget 2025, building on the previous two years’ initiatives.
This clearly indicates the arrival of a generous budget focused on alleviating the cost of living. Past budgets have included significant, temporary benefits such as doubling welfare payments and introducing energy credits.
However, the response from Donohoe and McGrath was markedly diverse. Ignoring McGrath’s staunch denial of the upcoming general election impacting the budget – something he kept an impressively straight face for – the budget duo’s message was that there was minimal justification for another surge of temporary concessions under the current controlled inflation. According to McGrath, the priority should instead be long-term changes to spending and taxation rather than a string of temporary measures.
Donohoe agrees with this stance, sharply contrasting with his party leader and Taoiseach. The reality is so stark that one Ministry of Finance official exclaimed about Rockett’s interventions, “Bless me, he’s even worse than Leo,” suggesting it was a heavy blow for the department’s head economist and renowned fiscal hawk, John McCarthy. He wittily added that smelling salts will likely be required to revive poor McCarthy.
The perpetual predicament for a government on the cusp of election: how to be cautious, yet not overly so. How to influence the election, but without a hefty price tag.
The truth of the matter is that another sizeable allocation of the budget is unavoidable. Donohoe and McGrath have already succeeded in persuading their ministerial counterparts to practise some form of self-restraint, through the establishment of sovereign wealth funds for future investments. This essentially removed €6 billion from consideration.
This achievement, indicative of sound governance, has largely gone unnoticed. A result of this is a compelling drive from Cabinet members and allied Government factions to initiate spending before the impending general election. They’ll argue, you’ve exerted your caution, now it’s time to distribute the funds. The economic growth signifies that both actions could be feasible.
“There is need to tread carefully so as not to overdo it,” asserts one insider involved meticulously in the process. “It is possible to overextend.”
This holds true. It’s crucial that the Government secures economic trust during the forthcoming election dialogues. However, we can be confident that they will not underperform.