As Budget 2013 hoves into view on 5th December 2012, you can expect to see a lot more of Brian Hayes, the junior minister at Brendan Howlin’s Department of Public Expenditure and Reform. Which may not be good for your blood pressure as the €130,042 junior minister challenges us all to find ways to save the State money?
Brian is the junior minister that has had something of a Pauline conversion as regards the sustainability of Irish debt in the past year – a year ago, he swore blind that the debt was sustainable but as talks intensify with the Germans over a debt deal, Brian now swears blind that it’s not sustainable. Confused?
Well, with Brian’s latest soundbite, you are likely to be really confused. He is now telling people that okay, the €3.5bn adjustment that will be announced in the Budget in just over a week, will be tough, and that indeed we have a total of a further €8.5bn of adjustments to go, but we’re over the hump having already adjusted by €24bn. Seriously that is what he said more than once this weekend, most recently on RTE’s The Week in Politics.
The junior minister is talking rubbish.
In 2013, we are set to cut and tax €3.5bn, that much is true. But in 2014, we are set to cut and tax a further €3.1bn and in 2015 a further €2bn still. Yes that adds up to €8.5bn but the adjustments are INCREMENTAL. In other words, we have a deficit of €13bn today, in 2013 we will reduce that to €9.5bn, in 2014 we will reduce it to €6.4bn and in 2015 we will reduce it to €4.4bn.
So we are taking €3.5bn out in 2013, €3.5bn PLUS €3.1bn in 2014 and €3.5bn PLUS €3.1bn PLUS€2bn in 2015, that is, a total of €18.7bn. Yes, we are presently planning to take €18.7bn out in adjustments in the next three years. NOT €8.5bn.
That would be bad enough but when Brian refers to the €24bn already taken out in budget adjustments, he IS referring to the cumulative taken out since 2009. Remember at our peak, our deficit was about €25bn. So if we had taken out €24bn from the annual deficit, then we’d almost be balanced. So Brian is talking about cumulative with his €24bn but an annual incremental with his €3.5bn and €8.5bn. It like apples and crate loads of apples.
The best comparison might be that by reference to 2008 we have to the end of 2012, taken an overall total of €24bn out through budget adjustments. And that by reference to 2012, we have a further €18.7bn of planned adjustments and even then we will still have an annual deficit but it will be less than 3% of our GDP. Or to put it in a simpler way, we have endured a lot of austerity since 2008 – €24bn in fact – but we have a lot more still to endure – €18.7bn planned.
Seriously, for €130,000 a year of public money, we should have better.
(Graphic above produced by Japlandic.com, contact here)