Last month I wrote an analysis of Sinn Féin’s alternative budget, with particular regard to the fiscal side. You can read that here. Today I received a detailed and generous response from Sinn Féin where they confirm that their alternative budget for 2022 does indeed include borrowings of €1.5bn, as well as a re-dedication of €1.1bn in capital spend from the summer.
These are welcome clarifications arising out of a rich and respectful engagement and I’d like to thank Pearse Doherty and his team for taking the time to do so.
The Sinn Féin response:
I am writing to clarify what I believe is a misunderstanding with respect to Sinn Féin’s Alternative Budget proposals, published in advance of Budget 2022.
Page 7 of the document outlines the fiscal approach of our budget proposals – one that is progressive, redistributive and expansionary.
These budget proposals were predicated on the budgetary strategy and forecasts as laid out in Summer Economic Statement 2021 – which, as you know, are now out of date.
SES 2021 outlined the Government’s Budgetary Strategy for Budget 2022.
This was for a total budget package of €4.7 billion – with €3.2 billion comprising ‘budgetary decisions’.
This €3.2 billion included funding for Existing Levels of Services (ELS), Demographic Change and Public Pay (total €2.1 billion). Sinn Féin’s Alternative Budget proposals provided for this funding.
€1.1 billion of this €3.2 billion was for an uplift in capital expenditure ceilings, relative to the 2021 Capital Allocation per Mid-Year Expenditure Report, to reflect the revised National Development Plan, which was at that point unpublished, and remained unpublished until October 2021.
As you will now know from Budget 2022, this uplift, while being totally inadequate to deal with challenges in housing and hospital capacity, was also used to fund schemes such as Darragh O’Brien’s hare-brained Shared Equity Loan Scheme.
Sinn Féin were unwilling to essentially have faith that the Government would allocate this €1.1 billion judiciously and fairly. It had been well flagged that a portion of this uplift was to fund the Shared Equity Loan Scheme. If the Government were willing to commit this uplift to such a poorly designed and inflationary measure, what else were they willing to commit it to?
By contrast, Sinn Féin proposed a €2.9 billion increase in capital expenditure relative to the 2021 Mid-Year Expenditure Report. This is nearly three times the increase in capital expenditure ceilings as that provided in Budget 2022.
Budget 2022 finally revealed the manner in which this €1.1 billion was allocated.
For example, Budget 2022 provided a core National Development Plan increase for the Department of Environment, Climate & Communications of €60 million relative to the 2021 Capital Allocation per Mid-Year Expenditure Report, whereas our Budget proposed an additional €132 million.
Similarly, Budget 2022 provided a core National Development Plan increase for the Department of Health of €85 million relative to the 2021 Capital Allocation per Mid-Year Expenditure Report, whereas our Budget proposed an additional €648 million.
Budget 2022 provided a core National Development Plan increase for the Department of Housing, Planning & Local Government of €632 million (for measures such as the First Home Affordable Purchase Shared Equity Scheme) relative to the 2021 Capital Allocation per Mid-Year Expenditure Report, whereas our Budget proposed an additional €1,835 million.
The budget package outlined in SES 2021 also provided for €1.5 billion in ‘discretionary measures’ – €1 billion for additional current spending and a €500 million regressive tax package.
In contrast, Sinn Féin proposed €2.7 billion in additional current spending.
Compared to the Government expenditure package of €4.2 billion (less €0.5bn tax package), this amounts to a total expenditure package of €7.7 billion (€2.1bn + €2.9bn + €2.7bn).
To fund a portion of this additional expenditure, Sinn Féin’s Alternative Budget proposed €1.5 billion in additional net tax revenue.
Consequently, Sinn Féin proposed a net expenditure envelope of €6.2 billion (€7.7bn – €1.5bn) compared to the Government’s €4.7 billion budget package as outlined in the SES.
As a corollary, Sinn Féin proposed additional borrowing of €1.5 billion (€6.2bn – €4.7bn), funding additional and much needed public investment.
Had they been implemented, these Budget proposals would have been transformative – improving public services, addressing the housing crisis, slashing the cost of childcare and responding to the increased cost of living.
Pearse Doherty T.D.”