#GE16: Phony fiscal space arguments and Sinn Fein’s centerist tack towards ‘sound money’ policies

On Friday the radio decibels were ringing with the idea that somehow Fine Gael, Labour and Fianna Fail were ‘cooking the books’, as Sinn Fein finance spokesperson Pearse Doherty put it. What a coup for the party long dismissed as economic illiterates?

The Journal declared Sinn Fein the unequivocal winner after the party showed them what appeared to be an endorsement of its view of how big the, erm Fiscal Space actually is. However, the truth as Sean Whelan of RTE later clarified was that:

There is no double counting. There is no mystery. It’s really simple. The net fiscal space is €8.6 billion.

This figure has not changed since last October, when it was published as part of the Budget. Nobody has obtained special information from the Department of Finance to suggest otherwise. Nobody has discovered anything new.

Perhaps SF didn’t understand what the figures meant. Or it was another wee opportunistic trick of the light to tease out some nice headlines?

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So, anyhoo.  What’s this fiscal space, I hear you all cry?

Well, apart from what Sean Whelan has to say, pragmatically it’s a way for Michael Noonan to explain just how he might spend a whole heap of money he didn’t have, and didn’t spend which because of a hefty windfall or two he might now have or may have over the next five years.

The politics of using it as a frame for the election is that you force your opponents in the Opposition to confine their arguments to the same fiscal constraints that the Department of Finance think you will have to over the next five years (if the new government lives that long).

As recently as last Autumn Sinn Fein were refusing to fall for it. Now it’s being presented as something akin to holy writ.

According to Whelan Sinn Fein and Fianna Fail are using the same figures well defined on the Department of Finance since the October budget last year. Fianna Fail appears to be saying that it won’t spend any of the extra capacity to spend if and when it comes

Fianna Fáil has said if it is in government it would retain the existing Medium Term Objective of a zero balance budget in structural terms. In other words, it would not use the additional fiscal space allowed under the rules for spending or tax cuts, but would use it to reduce debt. This would leave the party with a Net Fiscal Space of €8.6 billion.

Sinn Féin is also using the Department of Finance estimate of Net Fiscal Space of €8.6 billion. It has attacked other parties for having figures that do not add up – but it is using exactly the same figures, and is arriving at exactly the same number for Net Fiscal Space – €8.6 billion.

This number was calculated by the Department of Finance last October, and the calculations included in the published budget documentation that has been available to everyone since October 14 2015.

It is still on the Department of Finance website, if you really must….

Whelan adds the critical context here:

This means that all the parties are playing in the same ballpark. And they are playing on a pitch that has been marked out in the same way. How the space is used by the parties in pursuit of their goal (power) is the business of politics.

But the fact that they are playing on the same pitch, in the same ballpark, means the debate about the concept of Fiscal Space is starting to have an effect on the way politics is conducted.

It is now no longer good enough for parties to reel off a long list of plans to spend more and cut taxes without showing what they add up to, and how they might relate to the existing budget commitments.[emphasis added]

[Anti austerity, how are ya? – Ed] Well, maybe.  Sinn Fein’s new programme of a fair recovery is certainly beginning to look remarkably like Fianna Fail’s, even down to trimming (rather than abolishing) USC, re-opening new Guard stations, and employing new Guards.

If you are going to try to steal a man’s lunch first make yourself look like him. Although probably more to the point it indicates that the economic illiteracy tag was really starting to hurt them…

As Mr Adams famously said last year, Sinn Fein “are not Syriza and this is not Greece. There is a better way of sorting out our problems.” As Newt might say, “well done Gerry”?

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  • Arthur Renfrew

    FG/FF/ Lab all got their sums wrong , Mick. At least Lab and FF admitted it. Noonan is still digging with a €12 billion shovel. It took you all of 3/4 days to come up with this spin. SF understood how to read the budget estimates while FF just followed FG’s spoofery. It really pains you personally to admit that , I see. This time , contrary to what you claim, SF understood very well what the other parties were up to and there was no trick of light, whatever that’s meant to mean. FF and Lab had all the time in the world to set the agenda , as far as the economy is concerned, and with one swipe, SF floored them and they’re still staggering around the ring , with their coaches in the corner shouting nonsense at them. Not only that, every time that the establishment media has a go about voodoo economics/ economic illiterates, all SF has to do is bring this up again.

  • mickfealty

    No Arthur, I would dearly love to hear exactly what the mistake is/was?

  • Hugh O’Connell

    Mick, your piece doesn’t acknowledge the fact that both Noonan and Howlin said the fiscal space was €12 billion at their respective party conferences and gave the clear impression that this was money available to spend between 2017 and 2021.

  • Arthur Renfrew

    Hugh just gave it to you. Noonan claimed there was €12 billion to play with, instead of the €8.6. There would be €10.1 billion given a fair wind but it’s not money in the bank. Take your head out of INM and the Irish Times for 5 minutes. I know they did their best to cover for them and their efforts are as poor as yours. FG / FF/ Lab were caught with their pants down. Don’t worry , I’m sure Adams will make plenty of minor errors, and probably some major ones too, which you’ll be able to jump on from your shine box.

  • mickfealty

    Fair point Hugh.

    I guess what’s really bugging me is that these figures are getting touted as if they’re based on some class of hard economic science. They’re modelled predictions over a five year period in a time of unparalleled volatility.

    As late as last September this was one reason SF refused to play this game. At best conjuring such figures might be thought of as an art. But as I argue they’re mostly a trick to nail the opposition’s spending plans to the floor.

  • mickfealty

    And as I’ve just said to Hugh it’s all mostly ballocks.

  • Arthur Renfrew

    If you want to look at it in terms of talking ballocks, fair enough but SF were talking a lot less ballocks than the other three parties , and their media cronies.

  • mickfealty

    I do. And I’d almost agree with you but for the cooking the books nonsense… After nearly 14 years of writing on Slugger I’ve got very BS intolerant. 😉

  • Ciarán

    Mick you went to town on SF (as usual) when they raised the petition of concern at Stormont over the Stormont House Agreement. In that instance, the DUP deliberately withheld key data preventing SF from modelling outcomes but even still, at the time you said about SF…

    “If you cannot read numbers you didn’t ought to be in politics.”

    Now in this case, everyone is working on the same base and yet… FG, Labour and FF all get their numbers wrong. A little consistency wouldn’t go a miss.

  • mickfealty

    Really?

  • mickfealty

    I hear you. And again, I do get the gist of your point. I see that FG and Labour have been more than a tad disingenuous (it was their ‘narrative trap’ after all). I only ask that you allow me a modicum of room for some proper scepticism.

  • mickfealty

    I’m not.

  • mickfealty

    You underestimate the stubborn resistance of an obstinately thran Ulsterman, just like the Jackeen you really are… 😉

  • Robin Keogh

    So many factual innacuracies its quite difficult to know where to start. Yes the dept of Finance allowed a budget of 8.6bn. However, Fine Gael, Labour AND Fianna were talking of monies available between 10.1bn and 12.6bn. Micheal Martin speaking to RTE at the time of their conference spoke of having 10.1 billion available to spend. On foot of the fantasy figures announced, SF wrote to the chief economist in the dept of finance for clarity and he confirmed that SFs budget within the 8.6 bn was in fact correct. It has been incredibly difficult for some people within the traditional party establishment and elsewhere to accept the Shinners got it right and they got it wrong. Well it happenned, lets deal with it and move on.

    SF have been talking about budgeting within the contraints of the fiscal compact rules for over a year now so unfortunately you are mistaken there again with your ‘Autumn’ quip.

    You are also mistaken regarding who is stealing whose lunch. SF were way ahrad of FF on adjusting the USC, way ahead on health policy, way ahead on the need for more gardai and stations, way ahead on the issue of wind energy, metro north etc. etc. In fact FF have attempted to rob SF’s cloak in so many areas now its dizzying. Martins recent shift to the left and complete back flip on Irish Water are probably more remarkable examples of the shinnerisation of FF. Nothing Newt might say could be of any use to Gerry Adams or anybody else interested in the ways of modern Irish politics.
    You did get one thing right my friend. #GE16 😉

  • Robin Keogh

    Lol, you have left yourself open there for some whopper comebacks. I shall resist cos i am still in such a good mood 😉

  • T.E.Lawrence

    SF way ahead on the need for more gardai and stations ? Any Links or Data on this point Robin ?

  • mickfealty

    I haven’t read the SF Health policy yet to be honest, so all I can go on is the media output. Which is long on long term proposals, but short of a roadmap.

    Key argument in FFs big report was an attack on Govt’s proposal of the Dutch insurance based model. Not the most inspiring, but more realistic in the short term at least and relatively effective.

    Not sure what you mean by adjusting the USC? Abolition ala budget proposals circa 2012, or the latest adjustment?

    PS, you really shouldn’t let me off that easily you know. I’ll take any kicking that’s coming my way if I deserve it…

  • Robin Keogh

    If u have a gander in Google you will find dozens of these going back over the last few years from all over the country http://www.northernsound.ie/news/cavan-councillors-call-for-reopening-of-rural-garda-stations/

    Or you can check out tge party’s recent document ‘ citizens charter for older people’

  • mickfealty

    Here’s Pearse’s figures this morning: “current expenditure of €6.3 billion, capital expenditure of €3.1 billion, and unallocated capital/current expenditure of €1.2 billion. Giving a total of €10.68 billion.”

    Weirdly similar to FF’s ‘cooked books’? Cannot see anyone in an overworked press corps going back to pick that one up now the ‘infallibility message’ has been indelibly inked into the public mind.

    Ref: http://goo.gl/n5vdkM

  • NMS

    The fiscal space argument is in ways spurious as the amount involved is about 1% of total spending in the period involved. It is extraordinary so much hot air expended over so little. Though perhaps not so surprising when you see how little new or realistic the parties have to say.

    In going through the documents, the long serving US Senator, Russell Long, son of the famous Huey came to mind. He served for 15 years as Chair of that house’s Finance Committee and 37 years as a Senator and had a little ditty,

    “Don’t tax you,
    Don’t tax me,
    Tax the fellow behind the tree.”

    which he recited when people came up with proposals to reduce someone’s or some group’s tax, or with a spending proposal.

    I have gone through the tax proposals of all of the main protagonists and find all seriously wanting, bar possibly the Green Party’s proposals. On the issue of the fiscal space, there is no room in any of the proposals for handling the likely economic shock of the UK leaving the EU.

    The economic figures used are also rapidly going out of date as we seem to be facing into a rapid decline in sterling because of an old fashioned economic problems. The fiscal space is rapidly becoming negative.