The Lenihan Levy and other post budget reactions…

The reaction so far to Brian Lenihan’s first budget is that (a) this isn’t going to fix the problem of the unbalanced nature of the tax revenue base (b) the predicted parameters are (unemployment 7.3%, negative growth this year of 1.5% and next year 1%, and the deficit of 6.5%) very much on the optimistic side and hence they are hostages to fortune (c) and Lenihan has been far too technocratic in his choices and his demeanour on this – he started one answer to an elderly woman who was in tears with ‘Listen now!’ on the traditional post budget phone in with Pat Kenny this morning.

The Lenihan Levy (alliteration is never the politician’s friend in situations like this) combined with the over 70s medical card issue has the potential to be this government’s equivalent of a British government’s 10% tax rate or poll tax depending on your vintage. Part of the problem is that in the absence of any core ideology in Fianna Fail other than the vague ‘we will do whatever is best for the country’ the tendency is towards a bit of medicine for everyone. One backbench TD was noted as saying strong medicine is needed provided it doesn’t kill the patient. To me it sounds more like medicine for everyone whether you were sick or not.

Full text – apologies for the excessive length. I’m making rather heavy weather of the formatting. The other problem is that with exact details of the budget’s impact in other departments filtering out long after the main event is done and dusted it makes the optics and reaction on the door steps seem even worse. Take for example the changes in unemployment benefit and increases in class sizes. Reducing class sizes are something FF have been banging on about for 3 general elections now, all without delivery on those promises. In this budget they have straight out said they will increase the size of class! And for unemployment the alterations to how many weeks’ stamps you must have before being able to claim benefit instead of assistance sounds too like changing the rules after the match is well underway. No doubt at some point in the near future minister Mary Hanafin will make some reference to migrant workers as being her target in this change.

The drip-drip impact of these announcements will resonate far beyond budget day itself. And the daily reminders of increased charges like A&E access of €100. June 12th next year might even see students who are faced with the €1500 registration charge actually get out and vote for once. Add on top of this the mergers of the various quangos/state agencies and the attendant reduction in services and you’ve got a possible death by a thousand cuts.

And therein lies the longer term problem for FF electorally. The gap between FG and FF at local level is likely to be no more than two dozen seats come the local elections next year. Sure FF ran a whole mess of candidates last time out, too many, many of them too long in the tooth and they are very focused on correcting that this time out. However, the seats they are seeking to win back are now defended by the new incumbents and SF’s 1st preference vote weakened considerably in the capital between 2004 and 2007 but that doesn’t mean that they will face a wide out in Dublin come 2009. Those candidates who are running again should be reasonably secure. The same is true across the country. Now if the backdrop to those elections comprises school building programs abandoned: how many more times will the Ballinamore ward in Leitrim keep electing FF cllrs when they’ve been let down on their replacement secondary school for decades. At some point the worm will turn. If unemployment breaches the 7.3% average figure in late spring you can expect a bloodbath. After that bloodbath comes the longer term problem for FF, they were certainly hurt in 2004 but still through the haemorrhaging of support managed to elect new young cllrs like Thomas Byrne in Meath, Dara Calleary who along with the not so new or young Mattie McGrath in Tipp south and Michael Kennedy in Dublin North went on to win Dail seats. Cut off the supply of elected local reps to replenish the pool of Dail candidates and FF loses the bottom of the electoral pyramid that it has spent its lifetime creating.

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  • Mark McGregor

    Dan,

    Good blog. Thanks.

    I think this line:

    “The other problem is that with exact details of the budget’s impact in other departments filtering out long after the main event is done and dusted it makes the optics and reaction on the door steps seem even worse.”

    Covers a lot of what is going on at present with elements of policy and impacts being drip fed to the public. We’ve had to wait for limited impacts on bankers in return for their bailout, I’m sure the much more damaging affects to the average Joe will be more slowly fed after this budget and the mini-budget to come.