Just how "prudent" and "conservative" were Brian Cowen's budgets?

The former Finance Minister and Taoiseach faced the Banking Inquiry last year

Towards the end of last year, former Finance Minister and Taoiseach Brian Cowen appeared before the Banking Inquiry.

On top of discussing the night of the guarantee, Mr Cowen discussed the budgets during his time as Minister, budgets that he described as "prudent" and "conservative" in a sneak preview of his statement which was published by the Sunday Business Post.

Before Mr. Cowen's appearance began, we took a look back at some of those budgets and how they match up to his statement.

2005 Tiger-Socialism

Mr Cowen framed his first budget as a plan to spread the benefits of Ireland's boom through all sectors of society.

During the opening remarks of his budgetary speech, he said: "Government has a responsibility to ensure that the benefits of our economic performance permeate society as a whole. Proper budgetary policy involves careful evaluation and our task is to put together an economic model that builds a society of which we can all be proud."

The then-Minister went on to tell the Dail: "There is a general consensus that Ireland has a bright future. We can grow our economy to give us the resources we require to meet the needs and aspirations of our citizens. This requires balanced, consistent policies, seeking fairness in the distribution of resources and efficiency in the delivery of public services"

Budget 2005 significantly increased social welfare payments, tax bands and credits, and spending on disability.

Mr Cowen pledged to "distribute the fruits" of Ireland's growth to all people "through better services and a fairer sharing of resources."

The socially focused budget took minimum wage earners out of the tax net and pledged to invest €6.3bn in infrastructure projects - with only one-sixth of the funds being borrowed.

Other key measures included: 

  • Employee tax credits were increased by €230 to €1,270 and personal tax credits went up by €60 to €1,580.
  • Child benefit payments increased by €10 per month for first and second child, €12 for third and subsequent children.
  • Stamp duty was cut for first-time buyers of second-hand homes.
  • Old age and related pensions were increased by €12 per week.

Acting as Fine Gael spokesperson on Finance, Richard Bruton said that the Budget was "crafty and cunning" and "designed to press the right buttons" with the electorate.

Joan Burton warned that one-third of workers would still pay tax the top rate of tax because tax band adjustments didn't go far enough.

2006 The Blooming Boom 

Cowen began his 2006 speech with: "We are living in the midst of the longest and strongest era of sustained prosperity in all of Irish history. This didn’t happen by chance. This involved careful planning."

He went on the announce a budget which featured €4.4bn of spending measures and included tax reliefs for high earners and substantial welfare spending increases.

  • Government spending was pushed to over €50bn - this was an 11 percent increase in spending, off the back of a year when Ireland's GDP grew by 5.7 percent.
  • 52,000 earners were removed from the tax net - the standard rate tax band was also increased by 9 percent, meaning that 90,000 less taxpayers paid the top rate.
  • On top of the above, €900m was invested in taking minimum wage earners out of the tax net.
  • New childcare supplements were offered, maternity leave was extended and pension payments increased.

The main opposition parties again complained that the budget didn't go far enough to move workers into lower tax bands.

2007 - The Last Hurrah

"In short, this Government has achieved a fairer, more progressive and more rewarding income tax system. Thanks to the strength of our economic performance we can now go further," this is how Brian Cowen summed-up his final boom Budget.

  • A €1.25bn package of tax reforms were introduced, including a 1 percent cut in the top rate of tax and a widening of the tax bands.
  • Budget 2007 also included a substantial increase in tax relief on mortgage interest for first-time buyers.
  • The Minister also pledged that the government would introduce another 1 percent reduction in the top rate of income tax if the coalition was re-elected.
  • There was also an increase in the cost of private health care

This is how he summed up Fianna Fail's Celtic Tiger budgetary policies: "The success of our policies is best highlighted by the hundreds of thousands of new jobs created and the changes to our tax policies which have rewarded work and allowed people take home a greater share of their pay."

He continues: "We have also been able to provide for the less well-off in ways which no Government has ever achieved before.  We have built up the productive capacity of the country by investing in capital spending, thereby helping us to compete better in the long term also."

2008 - "A Budget designed to restore confidence"

By 2008 the wheels had started to come off the economy as the housing market slumped, Mr Cowen put forward a series of initiatives aimed at helping the housing market but it was too little too late.

  • Some changes were made to stamp duty, mainly to counter the slump in the housing sector but also to help those on lower incomes
  • Personal tax credit was increased by €70 for a single person and €140 for a married couple

The Minister summed up the situation: “Over recent months, the dynamics of the housing market have changed fundamentally. A natural and welcome slowdown in property price inflation has been compounded by higher interest rates, tighter credit control and changing consumer sentiment as well as uncertainty about the global economic outlook and turmoil in international credit markets."

"This is a Government that no longer commands control of the economic agenda. It looks on helplessly as an economic storm looms over the horizon, with no idea at all on how to come to grips with the new reality," this has how Joan Burton called the 2008 budget.

Beginning of the end

Cowen announced his resignation as leader of Fianna Fáil on 22 January 2011 in the aftermath of the economic collapse in Ireland. He continued as Taoiseach up to the election. The Green Party withdrew from the coalition and Cowen was forced to call an election following the introduction of the new Finance Bill. He retired from Irish politics after 27 years.