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Mark Stedman/Photocall Ireland
Michael Noonan with his Budget document last year
Budget 2014
Here's why this year's Budget is being held in October
It’s all about the ‘two-pack’…
THESE DAYS NOBODY in this country looks forward to the Budget.
While Charlie McCreevy lavished us with tax cuts and all sorts of lovely goodies when the boom was, er, getting boomier, these days Michael Noonan and before him the late Brian Lenihan deliver pain and austerity to most if not all Irish citizens on Budget day.
We’re well used to having all this happen in December but this year the Budget is in October.
But why is that? TheJournal.ie explains all.
So, er, why is the Budget in October?
The simple reason is that Ireland has adopted a common budgetary timeline along with other euro area countries that have signed up for the so-called ‘two-pack’ proposals.
‘Two-pack’, like this?
No, not quite.
The ‘two-pack’ proposals state that as part of the common budgetary timeline, euro-area member states submit their draft budgetary plans for the following year i.e. 2014, to the European Commission and the Eurogroup – members of the eurozone – before 15 October along with the macroeconomic forecasts on which they are based.
This means Europe has to take a look at our budget proposals in order to make sure they do not breach the deficit rules which we’ve signed up to. Remember all that stuff about the Fiscal Compact Treaty?
So the government is cutting it tight?
True the Budget is not being announced until the deadline of 15 October but last week the European Commissioner responsible for economic affairs, Olli Rehn, said that the government’s budget plans are a “sound basis” for correcting the public finances.
That’s a big thumbs from Europe so the government has the all clear to announce the Budget on Tuesday.
But wait, the EU only needs the draft budget, right?
Yes, but one of the reasons we’re getting the full Budget now is because, as Michael Noonan explained last year: “I’m not too sure our system would sustain a draft budget announced in October, and everybody ganging up to stop it between then and December.”
Not sure if I agree with that…
Neither does the independent TD Stephen Donnelly who was pretty scathing in his reaction to Noonan’s comments last year.
“I find his attitude pathetic, what they’re saying is the Dáil is a joke,” he toldTheJournal.ie.
“Is parliament mature enough to debate the finances of the nation? Let’s find out. Let’s stop treating parliament like it’s some sort of joke.”
What do others think?
Sinn Féin notes some benefits to having an earlier budget.
It’s particularly helpful to the retail sector because it introduces certainty for the rest of the year and avoids the dip you get in consumer sentiment when there is lots of speculation about the Budget in the lead-up to December and Christmas, retailers’ busiest time of the year.
Fianna Fáil is cautious about introducing a budget that does not take account of the full year figures.
Its finance spokesperson Michael McGrath told us last year : “The risk in bringing it forward to early involves increasing the risk of a supplementary budget being brought in the following year.”
All that said both parties have produced their pre-Budget submissions this week and have raised no major concerns about the Budget being in October this year.
Has the Budget always been in December?
No, the financial year in this country used to be April to April which meant that the Minister for Finance usually announced the Budget at the beginning of the year as opposed to the end of it.
However, Charlie McCreevy moved the financial year to January to December in 1997 which meant that there was a nine-month Budget in 1997 with McCreevy delivering one Budget at the end of January and another in December which covered 1998.
It’s not the first time the Budget has been held in October. On this day five years ago the government outlined the Budget for 2009 bringing forward the announcement in light of the financial crisis. While in April 2009 there was an emergency Budget – the government’s second in six months – as the economy began to collapse.
So the Budget is in October from now on?
Yes it’s looking that way at least under this government, for the foreseeable future.
As 2pac might say: “That’s just the way it is.”
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