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?
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…