Budget 2019: Time for a new deal

8 Oct 2018

© Petair/Stock.adobe.com

The short-term, nip-tuck nature of the annual Budget is a distraction from the need for sound strategies to fix the things that are broken in society, writes John Kennedy.

There could be no one in Ireland who didn’t experience a sharp intake of breath followed by feelings of sorrow at the news yesterday (7 October) of the passing of Emma Mhic Mhathúna.

Mhic Mhathúna, a 37-year-old mother of five from Kerry, was among 221 women affected by missed early warning signs in the CervicalCheck screening programme, which were revealed during a clinical audit. She was given a terminal diagnosis of cancer in May. Had she known in time there may have been a chance, she could have lived.

‘In Scandinavian and north European countries such as the Netherlands, people accept that they pay high taxes, but in return they get the best in terms of healthcare, education, housing, roads and other crucial services’

Future Human

In June, Mhic Mhathúna settled her case against the HSE and a US laboratory for €7.5m. However, no money in the world would ever be enough to compensate the loss to her young family. Mhic Mhathúna was just a mother like many others, but one who probably never thought she would be the public face of a scandal that rocked the health system. She just wanted to live.

On Friday morning (5 October), as I drove back from a meeting, I felt haunted by the voice on the radio of an 18-year-old girl who had been living in a hotel with her homeless family for the past two years. Amanda (not her real name) spoke on Morning Ireland on RTÉ Radio 1 about how she was worried she will not pass her Leaving Cert exams next year, how the situation has caused her mental health issues and how the lack of a postal address is preventing her from doing normal things, such as opening a bank account. She is a citizen of Ireland and cannot open a bank account – let that sink in. She shields the situation she is in from her school friends. No doubt about it, Amanda has been robbed of her childhood. Very likely, she is being robbed of a future life, too. She is one of almost 10,000 people, including many children, living in emergency accommodation as Ireland’s housing crisis grinds on.

Two women, two different situations. But equally victims of systems that are broken in a country that fought its way to developed-world status and yet cannot look after its most vulnerable people.

The news of Mhic Mhathúna’s death and Amanda’s plight mark as incongruous the focus of a country on Conor McGregor’s circus of a fight in the wee hours of Sunday morning or the queues of inconsiderate drivers honking their horns in the middle of the night last week as they queued for Krispy Kreme doughnuts.

You have to wonder at times if the moral compass of the country is broken.

Nip-tuck budgeting versus long-term policy-making

I was pondering the fate of both women and countless others let down by policy and system failures as I scanned the headlines about what is officially “not an election Budget”, but one that we can assume is an election Budget.

The health system – which we throw more tax money at than any other European country per capita – and the housing crisis are just two problems that exist in a range of unfixed issues and unfinished business.

These problems require strategy, zeal and vision to fix, but somehow we seem to follow this annual, nip-tuck Budget pattern that offers short-term fixes rather than solutions to long-term problems.

Boosted by an additional €1bn in corporation tax, the Budget that is “not an election Budget” is promising things such as mortgage interest relief that will benefit 400,000 homebuyers, self-employed people becoming eligible for benefits, a 20pc Capital Gains Tax (CGT) break for landlords and a reduction in the hated Universal Social Charge.

The annual performance that has entertained and infuriated generations of people has even coined its own lexicon, such as “giveaway Budget” for goodies released during during good times or the “old reliables” to denote increases in the price of alcohol, cigarettes and diesel.

From carers to entrepreneurs, employers and PAYE workers, the Budget affects everyone and there is something for everyone in the audience, but I wonder does it distract from creating a genuine culture of fixing the things that are broken on a long-term basis?

The Budget is a policy parade, no doubt about it. It’s a chance for the legions of unacknowledged civil servants to show they can get stuff done. But it doesn’t always work out that way.

Last year, the Government announced the Key Employment Engagement Programme (KEEP) as a way for businesses to reward long-serving employees with a stake in the business. However, according to the Irish ProShare Association (IPSA), not one company in Ireland has implemented KEEP since it was announced in the last Budget.

Likewise, technology entrepreneurs have been calling on the State to reform CGT, which continues to punish entrepreneurs who sell their businesses. In 2016, former Finance Minister Michael Noonan, TD, reduced the CGT rate from 20pc to 10pc, following on the previous year’s reduction from 30pc to 20pc. However, this affects only the first €1m of the sale of a business, and a rate of 31pc applies to the remaining amount. The scant changes were denounced by entrepreneurs and investors such as Brian Caulfield as proof that the Government and policymakers do not understand start-ups.

Will that change in this week’s Budget 2019?

Have we forgotten how to be the nation that cares?

Broken tax instruments pale beside the plight of a grieving family or a young woman living in a homeless shelter. But they all stem from the same thing: policy.

In Scandinavian and north European countries such as the Netherlands, people accept that they pay high taxes, but in return they get the best in terms of healthcare, education, housing, roads and other crucial services. It is a tacit understanding. A genuine contract, no argument. In Ireland, however, we are resigned to paying high taxes but get poor, underperforming services in return. Not good enough.

“Politicians are like buses – every few years a new lot rolls in, while another lot rolls off,” a Government press secretary once told me outside Leinster House. In reality, politicians bear the brunt of public anger, but are scapegoats for policy decisions made (or that were never made) before their time.

No one could have predicted the rise of the Airbnb economy, for example, but that is no defence for no homes being built. Much of the problems in housing stem from ineffectual rent control policy that hurts landlords and tenants alike.

The annual Budget parade of policy will never go away. But overarching policy vision that anticipates and prepares for problems from housing to healthcare, and that has the flexibility to respond with human decency, is crucial.

A new deal is needed.

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John Kennedy is a journalist who served as editor of Silicon Republic for 17 years