Green Party fingers evident all over economic recovery plan

The contents of the economic recovery plan had been pretty well flagged in advance, and there were few surprises when they were unveiled in a sunny Dublin Castle on Tuesday morning.

Nor did the Opposition attacks on the plan in the Dáil a few hours later – focussing almost exclusively on planned cuts to the Pandemic Unemployment Payment (PUP) – catch anyone off guard.

The PUP is to be tapered and the wage and business supports continued for now, but we can expect them to also be phased out towards the end of this year and the beginning of 2022.

The howls of “austerity” were perhaps the most predictable part of the day, but for all that the Government is terrified of the label, it’s hard to make it stick when the coalition is still borrowing and spending at such an enthusiastic rate.

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The lack of drama on Tuesday should not disguise the significance of the step taken by the Government; it is a pretty hefty stimulus package for an economy which, if Leo Varadkar is to be believed, is about to "take off like a rocket".

Borrow and spend

It tells us a couple of important things about the Government. Firstly, the plan demonstrates that the willingness to borrow and spend is undiminished at the centre of Government. Tuesday’s package will add some €3 billion to the deficit by next year and if that sum is not as eye-watering as it might have been before the pandemic, it is still worth reminding ourselves of how unimaginable it would have been two years ago for a government to do this – almost casually – in the middle of the year.

Not content with Tuesday's announcements, the leaders of Fianna Fáil and Fine Gael indicated that they would like to have a package of social welfare and tax giveaways in the budget in October as well. To say eyebrows arched in the Department of Finance when they heard this would be an understatement.

But it wasn’t all one-way traffic, either. The willingness to cut the PUP is a statement of political and economic intent to be read in tandem with the continued borrowing and spending announced on Tuesday. Perhaps there is an element of “Lord, make me chaste, but not yet” about this. And if there is a deal between the hawks and the spenders in Government – and there usually is – this is where it lies.

Tax net

Nor is it a coincidence that the Government announced the local property tax legislation on Tuesday, which will bring thousands of people who bought homes since 2013 into the tax net. Why did we do this on the day we announcing lots of spending? asked one Government insider. Precisely because of that.

Finally, the plan demonstrated the clout that the Green Party exercises in decision-making in Government. The range and breadth of the green and climate action investments in the plan is remarkable.

In addition to climate action investments, Minister for Tourism Catherine Martin demanded and achieved the extension of the lower VAT rate on tourism-related businesses – at a cost of €350 million.

The Green Party continues to demand – and receive – its price for being part of the coalition.