Some of you who like ancient history may remember when former Taoiseach Charlie Haughey, then Minister for Health, gave the nation’s children a free toothbrush; this was while the State was stony broke. Meanwhile Haughey was accumulating some very expensive ‘gold fillings’ for himself. It’s in their DNA. Politicians just can’t help taking and giving away what is not theirs.
We wonder if Taoiseach Enda Kenny and, more importantly, Finance Minister Michael Noonan knew that Social Welfare Minister, Leo Varadkar, a master of grabbing a headline without necessarily delivering, as he showed in Health, was about to announce his plan to put into law the indexation of the social welfare payments? Better informed commentators than ourselves have referred to this as Varadkar making a rather obvious play for whatever left wing there is in Fine Gael, ahead of his attempt to lead that party. Lack of subtlety is another hallmark of the Irish political class.
We are currently living with historically low inflation rates so indexing social welfare payments to inflation, at say 0.5%, looks quite harmless. However we don’t have to go back to ancient history to know that inflation rates have been higher than 20% within living memory. Inflation runs rampant during the worst of economic times so tying social welfare payments to inflation by law could be absolutely disastrous adding to the destruction (again) of our economy should the economy get rocky.
Once in law, never removed
Even now our national debt is heading over €200 billion. We are not paying our way as a State and we’re still borrowing to keep the ship afloat. But here’s a government minister who thinks that it’s OK to promise to give away money that we don’t have – in the name of social equity, he says. At ISME we are prudent, not heartless. We don’t want to be always seen as the party poopers but we try to give an honest economic based assessment of what our governments get up to. In this case, again, promising indexation is folly.
Losing a vital economic tool
Every member of ISME is involved in the running of a business. Every business forecasts a budget for the coming year. That budget shows the business owner whether wages can be increased or whether new equipment can be bought. No business owner says ‘we’ll pay more wages and see what happens’. That’s why we’re stunned at the silence of Minister Noonan, as making indexation the law means that the Minister for Finance has lost a very important tool of social policy. If times are good, welfare payments may well be upped ahead of inflation but if times are hard, it should be possible to rein in spending on all budgetary items, including social welfare – one of the really big ticket items in the State’s budget.
Alternatives not even discussed
Guaranteed increased spending on social welfare payments reinforces a culture of dependency – a legacy mind-set some say of our colonised past. Instead of spending money the State doesn’t have on welfare, why not take the same scarce resources and pour them into vocational training to get the unemployed ready for work? Alternatively use it to reduce the tax burden on employment and help create more jobs again to get the unemployed back into productive work?
Haughey became Taoiseach partly on the back of toothbrushes. Have we learnt nothing?