The process of putting together the annual Budget has, for many years, been far from ideal. Traditionally, the government of the day has done all its planning and internal negotiations behind closed doors and then unveiled the tax and spending plans as a completed package. Often this leads to unintended consequences, which might have been spotted had the process been more open. It also closes the process to much outside thinking – lobby groups and others can make submissions and express opinions, but these can as easily be ignored.
For this reason the changes introduced in recent years in the Budget process are welcome, as is the suggestion by Minister for Public Expenditure and Reform, Brendan Howlin, of a new forum to discuss budget priorities. Together with the proposed Spring statement, this could allow more discussion in advance, more transparent planing and, perhaps, a better outcome.
In theory this could be effective, though the emergence of all this in the run up to a general election also gives cause for some caution. If we get a realistic discussion on the scope available in the budget and what it might be used for, then this would be useful. If, on the other hand, this new process is used as a device to try to promise more to the electorate and to various interest groups in the run up to the general election, then it would carry clear dangers. The Government is at pains to point out that we are not returning to the old social partnership process. This played a useful role in its early days, but was also seen, in later days, to favour those “inside the tent” and to weaken control of the public finances , as it appeared that all sides were given some of what they wanted.
A new process must be open and transparent and a structure is needed if key issues are to be probed in a useful way, rather than it turning into a series of endless demands for more spending. It must also examine the need to get better value for the public money we spend, rather than just presenting a shopping list to the Government. The reform agenda remains vital as we head into a future constrained by limited room to add to spending, due to financial realities and EU rules. The latest exchequer returns for February indicate that the public finances remain on track, probably providing some limited leeway for spending and tax relief in next October’s Budget. Tax growth is strong and the rise in income and spending taxes is encouraging.
Already the demands on ministers are building. There is a limit to what can be delivered in one budget. The important thing is to make the correct choices and to do this within a reasonable framework for the overall public finances, which includes the need for ongoing reform. It is all about setting priorities and also, crucially, delivering on them.