Tuesday’s budget was a blast from the past for me. Not because of anything particularly nostalgic about the process, nor the fact that proceedings were back in Leinster House after the Covid enforced trip to the Convention Centre last year.
No, this year it was my approach to the budget, or more accurately the run up to it, that made it more reminiscent of the pre-social media age for me. In the weeks preceding Paschal Donohoe and Michael McGrath presenting their suite of measures before the Dáil, I decided that I was going to avoid all leaks, all the kite flying and all the speculation in the press and online. Not an easy thing to do in this day and age. It was akin to a Netflix series that everyone else had already watched through, but I was waiting until the day, trying to avoid any spoilers along the way. Despite the temptation, and via the blocking of tweets with certain terms temporarily, I managed to get to Tuesday with not a clue as to what exactly would be announced, in a bid to take it all in and judge the whole package in one chunk at the same time.
By Tuesday afternoon, my feelings were decidedly underwhelmed on a personal level. Like everyone else, rising prices have been biting, especially due to the gas heating in my house. Inflation has taken a hard toll on any disposable income I used to have so it came as great disappointment when I weighed up the sum total of the packages being proposed by Government to deduce, via a helpful online calculator, that the entirety of the Finance Minister’s measures would leave me in the region of just €415 better off for 2022. However, with the bills rising, plus the added carbon taxes and other levies announced, this figure will be burned out not long into 2022 as it stands. As Tánaiste Leo Varadkar said later in the day, he admitted that the tax cuts for workers would likely not cover inflation alone.
On reflection on the wider picture, it proved a relatively good budget for young people, parents and social protection recipients. For parents, there is an increase in the back-to-school allowance and eligibility, school transport, extra teachers to bring down the pupil ratio and 1,165 extra SNA posts as well as a whopping €716mn investment in childcare which was badly overdue. On social welfare, the combined increase for the year ahead for someone in receipt of a state support is in the region of €400 to €560 on average, depending on one’s individual circumstances and entitlements. The social welfare budget is to increase by €558mn, the largest increase since the halcyon days of the Celtic Tiger and Bertie-nomics. Political Economics Professor Aidan Regan of UCD calculated that the bottom 20% of earners fared best from the budget between the social welfare increased, as well as the rise in the minimum wage.
Yet, this is still far from a ‘giveaway’ budget as much pundits attempted to describe it. The measures were curtailed with half price public transport and free contraception for women capped to those in their late teens and early 20’s and just a one-year increase in free GP care. It’s clear the rising national debt and future bill for emergency Covid supports spending (roughly equivalent to that of the bank bailout ten years ago) has weighed on the mind of Paschal Donohoe.
Nevertheless, housing remained a glaring omission from the headline budget measures. The Government will argue that the ‘Housing for All’ plan is the suite of measures that is designed to deal with the housing crisis and that these measures have already been announced and budgeted for. That said, the main measure in the budget, the vacant site levy being reformed into the zoned site tax, was very disappointing. Although the measure is, on the face of it, an improvement as it will be more targeted with fewer exemptions, the rate is to drop from 7% to 3% and therefore below current site price inflation. Although still a disincentive to land hoarding, it is a missed opportunity to light a fire under landowners to developed zoned and serviced sites around the country. The flip side to this being, there simply is not enough labour nor building materials in the country to build on all these sites should they all go for construction. This is another issue in the provision of housing the Government and Opposition alike still have no ideas or answers when questioned how they might address this shortfall.
So, a mixed budget with some sweeteners for many, but in the cold light of day, these increases will likely be eaten up with rampant inflation. It will keep the Government treading water as we continue to rebuild post-pandemic.