Yesterday in putting the savage cuts in context I wrote that raising tax on work is just about the dumbest thing to do when in a recession. But that’s largely what we’ve been doing so far. We burst the country trying it for 12 years until 1987 and we were on track to do it again as tax receipts crashed. Minister Noonan, in his first budget grasps the nettle finally. No more income tax increases. Come January end your net payslip will be unaltered. By doing so he’s telling anyone who is squirreling cash, loud and clear, that it’s ok to come out spending again, even if VAT is going to 23% on non-essentials. If you save, DIRT is now 30% and 33% for Exit Tax on unit funds. Motor tax is going up, so too fags and booze though not from excise duty. Capital taxes rise to 30% and thresholds for inheritances from parents to kids collapses to €250k. This Minister is getting his €1billion from taxing our consumption. He has also increased the exemption from USC on those earning four grand to ten grand, about time.

For understanding the psychology of consumer economics in a depression, you have to give Minister Noonan credit but I’m not sure about his attempt to stimulate the deflated property market. It’s clear that NAMA and its €75 billion in our assets is being protected from the failure to deal with upward only rent reviews. Hiding behind property rights and the constitution doesn’t wash. In an emergency we can change anything including the constitution, just ask the next Judge you see about his “unconstitutional” pay cut. Minister Noonan proposes a review of hard cases, retailers ready to go burst, but any agency that is prepared to rewrite NAMA rent contracts must not be part of NAMA.

But there’s nothing here that will stimulate growth, just indirect supports for the domestic economy. He is working on hope, hope that someone else, FDI or savvy domestic entrepreneurs will appear like fairy godmothers and sprinkle some magic growth on the Irish economy. Noonan has a good grasp as a bean counter but he displays no grasp of how to encourage prosperity and generate jobs from it. No flair.  Like Wilkins Micawber in David Copperfield, Mick Noonan’s growth plan is that something will turn up. This passive strategy is tied up with a successful outcome at Friday’s summit otherwise we’ll be back to square one and the Dept of Finance’s estimate of GDP growth of 1.3% will have as much validity as its  gross miscalculation of GDP growth before the burst.

But the glaring chasm in both Minister Howlin’s and Noonan’s plan is that neither of them have provisions to deal with the cancer eating at the marrow of the economy – massive consumer insolvency. There are at least 200,000 Irish people stuck in the blight of distressed mortgages and other debts and their arrears keep growing. The economy cannot recover without a plan to implement a comprehensive and modern debt resolution process. That, according to one report, means at least 100 full time insolvency experts designing, customising and negotiating workouts for those who will otherwise remain in a standby economy, a ghetto, non-participants in any recovery. Although Minister Noonan made passing reference to Government concerns, we are four years into the mortgage and debt arrears crisis and not a single cent has been allocated to any new agency to tackle it. Until rhetoric is matched with clear cut action and backed by sufficient firepower to deal with the vast scale of the crisis, it’s impossible to read this as a budget for recovery.

- Eddie Hobbs