Apple windfall is not the EuroMillions. We need to get a grip

Though you’d never guess it from the reaction within the Department of Finance, there are worse disasters that could befall the country than a €14 billion windfall.
But it is certainly true that there are some downsides to the European Court’s judgment in the Apple tax case for the Government. It has spectacularly lost a case in which it invested a lot of time, money and credibility. It has a jumpy multinational sector – and remember, nothing is as important to the Irish economy as the multinationals – to contend with. You may be sure that strenuous efforts are under way to reassure the multinationals there is nothing to worry about, etc; but ultimately the big boys will make up their own minds about their own interests.
There is also significant concern about how Ireland’s interests in the EU will be affected. How Ireland taxes the multinationals to our and their advantage has never ceased to be a bone of contention in Brussels; bluntly speaking, many EU countries believe that at least some of the billions that have been gushing into the Irish exchequer should be instead flowing into their national treasuries.
Over the past two decades and more, Irish diplomats and ministers have had to fight countless battles on this. Since the Apple case was taken, they have been able to adopt the holding position of we-did-nothing-wrong-and-no-laws-were-broken. Now that’s no longer possible. The authority of the Court of Justice is unquestionable in the EU. So now the inevitable question: how many other times did you break the rules? “A very big problem,” grimaced one veteran of these fights. Others concurred; none dissented.
It comes at a time when the EU is facing up to the fact that – as per the dictum in Lampedusa’s famous novel – that if it wants “things to stay the same, then things will have to change”. So former European Central Bank governor Mario Draghi – saviour of the euro, remember? – this week presented his report on the future of the European economy, intended to guide the work of the incoming commission.
It is a vauntingly ambitious template, calling on the EU to raise investment by €800 billion a year – funded in part by joint borrowing and other new sources of EU revenue – to finance reforms in industrial policy, competitiveness and defence. Draghi’s conclusion was stark – if the EU does not make these sort of changes, it will fall irretrievably behind China and the US. If Europe wishes to maintain the living standards and security of its citizens, the social model that protects them and the economy that sustains it, profound changes are needed.
[ After Apple ruling, should Ireland be worried about what comes next? ]
Draghi’s ambitions did not meet a universal welcome in Dublin. What he is suggesting has the potential to alter the character, structure and operations of the European Union, and in a way, Ireland doesn’t want the EU to change because it has worked so well for us. Not all change, obviously, is for the better. But change is inevitable. What matters is how it is prepared for, managed and how Ireland contributes to this process – and also how future Irish governments protect our interests. That became harder this week.
Away from the high politics of the EU, there is another way in which the Apple tax case presents a clear and present danger to the country: it threatens to transform our entire political debate into a massive auction, with parties competing to outdo each other in what they can promise on the back of the Apple billions.
That would be insanity. The Apple windfall is substantial; but it is not, for the State, a life-changing amount of money. It’s half of what it will cost to fund the health service this year and maybe a little more than half of what corporation tax will bring in this year. It will cost (depending on how you measure it) maybe about €100 billion to run the country this year. Lots of people are sounding like someone who has won the EuroMillions and will never have to worry about money again. So let’s all get a grip.
For politicians – who are supposed to know about these things – it takes a special brand of shortsightedness to think this completely changes the country’s fiscal outlook. That is precisely, however, what seems to be happening. The Apple case has convinced lots of people who should know better that money is no longer an object to anything the Government might wish to do. With an election looming, as George Hamilton might say as an opposition striker approaches the Irish goal, “danger here”.
If the country thinks it can have an election campaign predicated on the idea there is an endless supply of money, then we have clearly forgotten the dreadful experiences and bitter lessons of the very recent past.
If politicians are ignoring this, then voters need to take the responsibility to remind them. It was ordinary voters, after all, who bore the brunt of the last financial crisis. That, too, was preceded by a political debate – which reached its apogee in the auction of the 2007 general election campaign – in which it was broadly assumed that the money would keep rolling in forever and future governments could spend whatever they liked.
Of course, reckless management of the public finances did not cause the banking collapse; but it made the bust much more painful than it had to be, more painful than anywhere else in the world. The price of that continues to be paid today in many ways, not least in the housing crisis.
The Apple money has not dispensed with the need for prudence to be a demand of the voters for the coming election. It has made it more important than ever.