Securing the recovery

Oct 01, 2015
With Budget 2016 and a general election looming, Tánaiste Joan Burton remains focused on safeguarding Ireland’s nascent recovery.

When Accountancy Ireland spoke to Joan Burton in August 2011, she was Minister for Social Protection and Deputy Leader of the Labour Party. Labour had just entered government under the watchful eyes of the troika and an existential crisis in Greece threatened the viability of the euro zone. Four years later, she is now Tánaiste and leader of the Labour Party, and continues in her role as Minister for Social Protection.

With the general election scheduled for spring 2016, the Tánaiste lists a range of achievements during her term in office. She draws attention to the transformation of her Department from a payments agency into a public employment service; the establishment of JobBridge and Tús; and the incorporation of 1,800 staff from both the HSE and FÁS into her Department. She also mentions the visits of Queen Elizabeth and Barack Obama, and the marriage equality referendum as “psychological” wins for a country that was finding its feet.

With Budget 2016 just weeks away, however, attention quickly turns to the future and imminent budget decisions that are currently under discussion. “As we look forward to the budget, I think we’re going to be careful,” she said. “It’s people’s money… but we do need to spread the recovery to the whole country and we need to make sure that, in particular, people who are less well-off are very firmly in the Government’s policy perspective.”

Budget measures

After a series of bruising budgets, the Tánaiste is keen to reward taxpayers for years of fiscal retrenchment and believes that the coalition’s decisions are bearing fruit. “We now have 1.96 million people at work and the figures to the end of June show that, year-on-year, the rate of growth was seven per cent,” she said.

In the forthcoming budget, Labour is expected to push for an increase of at least €1,000 in the threshold at which workers enter the higher rate of tax and a phasing-out of the universal social charge. “The priority in terms of tax reform should be to look at the totality of the charges that people face in employment or self-employment,” she said. “That means not looking exclusively at income tax… but to look at the totality.”

The Tánaiste acknowledged that workers enter the top rate of tax too early and this is also on her agenda for change. “In Ireland, the debate around taxation should be around the effective, real, experienced rate of taxation,” she added. “We will seek to positively reform the point at which people go into the top rate. This is not a conversation the Government has concluded in relation to the budget… but it remains something we must absolutely continue as a society.”

Capital investment

While Budget 2016 will make provisions for investment in key services through a capital investment programme focused on transport, healthcare and education, the Tánaiste believes that revenue generation must be maintained if Ireland is to enjoy high-quality services – even if some of the measures aren’t well-received. “The water charges, for example, are all about investment into a creaking, disintegrating water system broken into 32 separate parts and bringing it into a unified utility, which admittedly has been difficult to do,” she said. “But we would be crazy as a country… to simply throw a unified plan away and pretend that we can magic up the money out of nowhere.”

The Government’s Spring Statement highlighted “fiscal space” of €1.2 billion to €1.5 billion but there are two major problem areas in need of attention – health and housing. While health has been “the most difficult in terms of reform”, the Tánaiste is determined to achieve universal access to primary healthcare services through the extension of GP visit cards to more age groups. She is also pushing for increased investment in social housing and the taming of spiralling rents. “I’m very anxious to see the provision of rent certainty,” she said. “We could provide rent certainty around longer lease situations – lots of European countries do this and it works very well.”

The general election

A clear theme in the Tánaiste’s narrative is improving the lot of the average worker through tax reform and improved services. Economic giveaways have become synonymous with pre-election budgets, but the Tánaiste believes that a longer-term view focused on safeguarding the nascent recovery is required. Indeed, it was this longer-term view that led Labour into government in 2011. “We could have stood on the sideline and say everything about the country is bad, everything about the country is a failure,” she said. “Personally, I took a long view that we could recover the country.”

The OECD’s recently-published assessment of the Irish economy, which it describes as being on a sounder footing than before the crisis, is testament to the Government’s efforts in this regard. “Ireland is the ‘comeback kid’ of Europe’s crisis-hit economies, and much of the credit for this strong recovery goes to the government’s steadfast commitment to reform,” said OECD Secretary-General, Angel Gurría. “To avoid repeating past mistakes, now is the time to build resilience against future nasty surprises while ensuring the recovery is sustained, and its benefits broadly shared.”

The Tánaiste believes that the Irish electorate will give the coalition the mandate to pursue such a policy. “When people come to making voting decisions, they will be looking to hold on to the hard-earned recovery they have invested so much in and worked so hard to achieve,” she said. “I think people will be cautious about throwing that recovery away in response to populist demands that you can have world-class services without any contribution to them.

“We have to be conscious that we have opportunities in Ireland and we need to grab them with both hands to grow the economy and provide serious reform. We also have to be conscious that we cannot do this overnight,” the Tánaiste added. “That’s why I would like to see a further five-year programme for government that would see the recovery bedded down.”

As for her role in that possible programme for government, there is little room for doubt. “With any politician, it’s all about energy, plans and optimism,” she said. “I have a lot of those.”