ANALYSIS:IN NORMAL times, the publication of the annual Finance Bill is little more than a formality, of interest mostly to accountants, tax planners and others of that ilk.
It gives legal effect to those measures requiring legislation that are announced in the Budget speech the previous December.
Normally, if a government decides to change its mind on any aspect of the overall package in the period between the Budget speech and the publication of the Finance Bill, it is free to do so.
These are not normal times and the current Government has much less freedom of manoeuvre, given that it is constrained by the terms of the EU-IMF bailout.
For instance, the institutions behind the bailout received the Bill in advance, before this State’s sovereign parliament, the Department of Finance confirmed yesterday. A European Commission spokesman last night said the Brussels-based institution had given it the all-clear after a preliminary assessment, while the IMF said the Bill was “broadly consistent” with the terms of the bailout.
The tweaks made yesterday to the Budget package do not change the overall budgetary target of achieving a budgetary adjustment this year of €6 billion. Nor could they have. Any rolling back on fiscal targets would have put the Government on a collision course with the rescuing institutions. And things are already strained.
The last major piece of legislation to to be enacted was the Banking Act. It went on the statute book before Christmas.
For more than two years, the Government had failed at every turn to take measures regarding the banks that were proportionate to the threat they posed to the economic security of the State. When it finally acted in December, the hastily cobbled together law was slated by the European Central Bank (ECB), with its critical opinion of the legislation running to six dense pages. One of the ECB’s many criticisms was that the Government had not asked it for its acquiescence before the Bill was published, ie, before the Dáil’s lawmakers got to see it.
Last weekend, Lorenzo Bini Smaghi, a senior official at the ECB, revealed the bank had repeatedly urged the Government to bring forward the Budget to be seen to be counteracting the run on the economy that began last summer. Its advice was ignored.
José Barroso, the president of the European Commission, usually restrained in public, blew a gasket this week when facing scrutiny in the European Parliament. Joe Higgins got under his skin, leading him to opine very forcefully that the blame for Ireland’s problems lay in Ireland, echoing Bini Smaghi’s comments.
Ireland – one of the smallest states in the EU – is now in a position of weakness, given its economic woes, the precarious state of its banking system and its dependence on outsiders to fund public services for at least three years. Government incompetence has made matters even worse.
The old saying – An té nach bhfuil láidir ní folair dó a bheith glic (he who is not strong must be smart) – has never been more relevant for the conduct of the foreign affairs of this State.
