David Murphy: Don’t expect a giveaway Budget
It is less than five weeks to the Budget and the annual routine of ministers arguing their cases for more money for their departments is well under way.
Many of the ministers have legitimate cases. Despite the remarkable economic turnaround money is tight. EU rules prevent countries from excessive borrowing to pay for day-to-day spending.
This week Minister for Finance Michael Noonan tried to manage expectations regarding the amount of money available.
He stood by the Government’s previously stated position was that there was €1 billion of room for tax cuts and expenditure increases.
The Irish Fiscal Advisory Council has pointed out that previously announced spending commitments for 2017 mean the figure will actually be considerably higher, at €2.4 billion.
But attention will focus on the €1 billion of additional room for manoeuvre in the Budget, which is also known as the “fiscal space”. The plan is that one third will be earmarked for tax cuts and two thirds will be for spending increases.
But it is worth remembering Ireland is still borrowing money to run the country.
Next year the Department of Finance forecasts Ireland will have a general government deficit of €1 billion. The country is supposed to eliminate that deficit in 2018.
After years of austerity many sectors are showing the strain.
One good example is third-level education.
Overall public funding for the sector has fallen from €1.4 billion in 2008 to €900m last year. A glance at the annual reports of the colleges backs up the significant reduction in State finance for the sector.
Trinity College Dublin received a State grant of €73m in 2010 – by 2014 it had dropped to €47m, a fall of 35%.
The third-level sector has seen a 16% increase in student numbers since 2010. Among universities staff numbers have fallen by 6% to 4,291, from 2008 to 2015, according to the Higher Education Authority.
Like many areas in the public service there was some room for efficiencies prior to the crash. But the effects of the years of cuts are now being felt.
This week the publication of university rankings saw all but one of Ireland’s universities slide down the international league table.
Staff representatives frequently blame the student-teacher ratio for the deterioration, although the methodology for the rankings uses much wider criteria.
While there is perhaps too much emphasis on the rankings, they remain an important factor in the credibility of our third-level sector.
Ireland markets itself as a country with a young, educated workforce so the standing of its universities will remain critical to living up to that slogan.
The Higher Education Authority expects that the third-level sector will see a 29% increase in student numbers over the next ten years.
The universities have been making their case for restoring State funding – students have already experienced a significant increase in fees.
The universities’ argument is just as legitimate as many other sectors within Irish society that have suffered from cuts.
But with spending increases due to be constrained, the third-level institutions are unlikely to be overwhelmed by good news in the Budget.
And they won’t be the only ones.
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