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Sunday 22 October 2017

No giveaways as Noonan looks to play steady hand

Michael Noonan has become the Old Man River of Irish politics. He just keeps rolling along.

The Minister for Finance (below) may be 71, but he is promising that next month's Budget will be just the first in a series of three or four designed to transform Ireland's 'boom and bust' economy into something closer to the more stable Nordic model.

But what does this mean in practice?

For a start, it suggests that nobody should expect to feel richer after Noonan unveils his financial package on October 14.

The exchequer returns may have given him an extra €1bn to play with, but he is already hinting at raising some taxes as well as lowering others.

In exchange for keeping a tight rein on the purse strings, however, Noonan is offering a long-term reward. He believes that by following the recent example of Germany, Sweden, Denmark and other north European countries, Ireland can achieve steady growth rates of 3pc for a full decade or even longer.

That might seem boring compared to the Celtic Tiger growth rates of over 10pc but it would provide the sort of security that we desperately need to provide a future for our young people.

In other words, Noonan is setting himself up as the anti-Charlie McCreevy.

At the height of the boom, 'Champagne Charlie' presented a string of giveaway budgets that threw petrol on the fire and let tomorrow look after itself.

A gambler by nature, McCreevy's philosophy was, "When I have it, I spend it" - which left Ireland with nothing in the bank when our luck finally ran out.

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Noonan has calculated that Irish voters are now looking for something very different. Back in the day when budgets were held in December, McCreevy loved to dole out goodies like a national Santa Claus.

The current finance minister will instead act like a responsible parent who refuses to pay too much pocket money but guarantees you a decent inheritance.

Of course, Noonan's message is political just as much as economic. He knows that at the 2016 general election, it will not be enough for Fine Gael and Labour to boast about saving the public finances.

To earn a second term, the coalition parties must also set out some sort of vision to prevent future recessions.

Noonan's safety-first approach could certainly be a political winner. After all the trauma of recent years, we know that economic booms have a nasty habit of ending in crippling hangovers.

Mary Harney once declared that Ireland was "closer to Boston than Berlin", but nobody would turn their noses up at a bit of Germanic growth and prosperity these days.

On the other hand, Noonan's cautious strategy also has some obvious flaws.

Many workers still feel savaged by income tax, particularly the 52pc marginal rate that kicks in at the relatively low figure of €32,800.

If Budget 2015 does nothing to change this, then promises of jam tomorrow may be just too airy-fairy to win back support for Fine Gael or Labour.

It is also possible that a Nordic economic model simply does not suit the Irish character.

Some of us would be happy to pay Swedish-style taxes if we could be guaranteed Swedish-style public services. For a whole series of complex reasons, however, no amount of money thrown at our health and education systems has brought them close to that level.

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So, the jury is still out on Noonan's plan. Even so, he deserves credit for offering us at least a little bit of what George Bush Snr used to call "the vision thing".

Ironically, the conservative image that made Noonan a disastrous leader of Fine Gael has helped him to become a widely respected Minister for Finance.

After surviving a recent cancer scare, his lack of ambition to rise any higher means that he can dictate party policy without being accused of undermining his boss.

Enda Kenny might be better at kissing babies - but in many ways Old Man River comes across as the real Taoiseach.

Michael Noonan has proved that he can talk a good game. In 40 days time, we will see whether or not he can play one as well.

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