#Budget2020 Analysis: Little to see as ‘Paralysed Paschal’ happy to play safe – Irish Examiner

From the ‘Do Nothing Dáil’ came its most fitting finale – the ‘Do Nothing Budget’.

On his way into his department yesterday, the man of the moment – Finance Minister Paschal Donohoe – told us all not to expect any surprises.

He wasn’t lying.

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Never has a budget in recent times been so underwhelming and frankly boring.

This was for two reasons. Given how widely leaked the budget was, combined with the extremely tight scope for additional spending, there was little to get excited about.

For Donohoe, the limited increase in spending, €2.9bn (but just €700 million of that in non-allocated funds) meant the pressure to try and appease those around him was considerable.

Those close to him have made clear how difficult he found it and as a result, spent most of his time saying no.

No to his Fine Gael colleagues, no to the Independents in Government, but also no to Fianna Fáil.

As a result, that when he took to his feet in the chamber at 1pm, Donohoe’s primary ground was to shape the narrative.

Given it is the last budget before the pending General Election, there is a traditional giveaway splurge.

This time, Donohoe was seeking to make a virtue of doing the exact opposite, and was happy to use the cover of Brexit to make his point.

He also insisted that he has listened to the repeated criticisms of the Irish Fiscal Advisory Council about the large spikes in spending in his previous two budgets.

Political Editor Daniel McConell speaks to Minister for Finance Paschal Donohoe

His speech, heavy on the ramifications of the potential impact of a no-deal Brexit, sought to explain to the Dáil and the country that the next few months could be very hairy indeed and that much of the progress made could be undone.

To deal with Brexit, Donohoe outlined a €1.2bn contingency fund which will seek to ease the pain for the tourism, agri-food and fisheries sectors as well as small and medium businesses.

For example, he made clear that the Rainy Day Fund will have to be raided as the rainy day is here.

“While I am committing that this €1.5 billion will be transferred to the Rainy Day Fund, given that a No Deal Brexit is more likely, I have decided not to transfer the additional €500m from the Exchequer this year,” he said.

Keen to regain his mantle for fiscal competence, Donohoe sought to highlight the need for caution and prudence..


He appealed to the so-called squeezed middle, or as Taoiseach Leo Varadkar likes to call them, “those who get up early in the morning,” to realise it was not possible to deliver more tax cuts but insisted supports like childcare will be forthcoming in due course.

Even though he had little to give out, he still managed to speak for an hour and 15 minutes or thereabouts.

The leaks proved to be correct and the biggest news centred around the €6 per tonne increase in carbon taxes to €26 per tonne. That leaves nine budgets to make up the other €54 per tonne to get to the 2030 target of €80 per tonne.

In his speech, Donohoe gave voice to the rearguard action he faced in recent days about the impact of such increases will have on rural people.

I know that this will not be easy for everyone. Therefore, instead of a larger increase in any one year, I am committing to a €6 increase as a first step towards the 2030 target. It is this Government’s intention, and my ambition, to increase this steadily to meet the 2030 target.

“This increase will apply from midnight tonight to auto fuels but its application to other fuels will be delayed until May 2020, after the winter heating season,” he said.

Donohoe also made clear that the reason he lowballed the carbon tax increase was because of the nightmares he still has from the disastrous experience of the water charges five years ago.

He said a gradual introduction was better if it allowed him win the argument rather than having to reverse a decision down the line.

But for all the talk of prudence, Fianna Fáil’s finance spokesman Michael McGrath did strike an ominous tone when he highlighted the increased reliance on corporation tax.

“We have been seriously exposed by the management of the public finances in recent years. Corporation tax receipts are surging ahead again this year, with over €10bn expected to be collected,” he said.“In 2011, we collected €3.5bn in corporation tax – 10% of all tax received. Last year, we collected €10.4bn – almost 19% of all tax collected. So not only has the quantum of corporation tax receipts multiplied, our dependence on it has increased significantly. There are major risks associated with our reliance on corporation tax,” he added.

Political Correspondent Juno McEnroe joins Political Editor Daniel McConell to break down the main details from Budget 2020.

“According to the Revenue Commissioners, 45% of the €10.4bn received last year came from just 10 multinational companies which is up 10% in less than 10 years. That is about €4.7bon by just 10 companies, which is more than the entire money received from the Universal Social Charge (USC) and represents nearly €1,000 per person in this country,” he said starkly.

One subplot of the budget is the fraying of the Independent Alliance as junior minister Finian McGrath stands isolated after being accused by his colleagues of going on a solo run.

The night before the budget, the main evening news was dominated by word that he had secured 56,000 additional medical cards for the over 70s, as opposed to it being a win for the Alliance.

Transport Minister Shane Ross and McGrath, who have been very close, are said to be barely speaking after accusations of treachery flew.

Fellow Alliance ministers John Halligan and Kevin ‘Boxer’ Moran are also not on speaking terms.

The big fear for Fine Gael is the absence of any measures for the elderly by way of primary welfare increases.

Donohoe acknowledged there would be disappointment but said he accepted that the elderly pension can be difficult to get on but did point to the fact that he did approve the Christmas bonus, which is not inconsiderable.

But pensioners, who are the most likely to vote, could well wait in the long grass for Donohoe and his colleagues, given the were left empty-handed.

Pensioner Gráinne Kenny has claimed that the Government’s changes to the medical card threshold has not gone far enough and has disputed the number of people who are set to benefit. Picture: Niall Carson/PA Wire

The major weakness of the budget is the absence of any major new initiative to tackle the country’s housing shortage and the U-turn on the help-to-buy scheme which will cost €40m stands out as a pretty minimalist effort.

Given how little was in the budget, broadcaster and former agriculture minister Ivan Yates branded Donohoe as “paralysed Paschal”.

Donohoe said such description was not fair but in truth he is pretty happy to take the hit for the budget being a non-event if it helps him restore his economic credibility.