Politics »

  • Climate Change legislation

    February 11, 2013 @ 3:24 pm | by Harry McGee

    The Heads of Bill (or draft) for the long-awaited Climate Change Bill will be published tomorrow after going to Cabinet. A little later in the day we will expect to see the final report by the secretariat of the National Economic and Social Council (NESC) which provides the ground for Phil Hogan’s legislative initiative. (more…)

  • Emergency legislation emerges slowly

    February 6, 2013 @ 10:53 pm | by Harry McGee

    It’s just after 10.40, ten minutes after Minister for Finance Michael Noonan was due to get on his feet and present the emergency legislation on the promissory notes to the Dail.
    The Cabinet has been in session since 9pm drafting the legislation that will essentially liquidate the skeletal remains of Anglo Irish Bank (now known by the unwieldy title of the Irish Bank Resolution Corporation) with its assets transferring to NAMA and the accountancy firm KPMG taking over management duties.
    There has been a stay of execution but it is temporary. The guillotine will fall and Anglo will be no more before first light tomorrow.
    Michael Noonan will now get up on his feet to address the Dail at 11pm. The reason for the delay is that the Opposition needed to be briefed on the contents of the Bill.
    It’s been a whirlwind evening. Rumour started circulating from early afternoon that the Government was going to push an emergency bill through the Dail tonight. In any event, there have been lots of leaks to the financial press over the past couple of days (much of it emanating from Frankfurt) and it was clear that the ECB had the former Anglo in its sights.
    This was the solution they said could not be done. Did the Government want it? I don’t think so. But what the ECB wishes the ECB gets seemingly. And so Anglo will be no more.
    The promissory notes will be extinguished along with the IBRC. What it will be replaced with is an issue of long-term bonds. There have been various narratives tonight about the duration of the term, ranging from 27 to 40 years. Whatever, the overall debt will remain the same… it may become greater if the cumulative interest is taken into account. But in the more immediate future, the annual Anglo debt cliff of €3.1 billion which the Government faced each March has been, if not bulldozed, certainly reduced in size. The upshot will be smaller annual repayments which will undoubtedly help the bottom line.
    The details of that, plus how the bank will be ‘disappeared’ will all become apparent over the course of the next few hours.
    It’s quite exciting and it’s one of those nights where the Dail is pulsing with people and with energy. After the Dail debate, it will go to the Seanad from before midnight with the debate scheduled to be concluded at 2am or 2.30am at the outset. President Michael D Higgins who was in Rome on an official visit has returned home by Government jet and is available to sign any legislation into law as required, before resuming his trip tomorrow.
    There have been a few nights in the last few years that compare to this and all are related to the bank crisis. There was the night of the bank guarantee and also the decision to nationalise Anglo Irish Bank where the political equivalent of the Ghost of Banquo first emerged… the incorporeal Cabinet meeting.

  • Ministers bark but ECB leash still holds

    January 28, 2013 @ 9:41 am | by Harry McGee

    Over the weekend we had a pantomime we have seen almost as often as reruns of Mrs Brown on RTE.

    After weeks of Government Ministers hyping up a solution on the promissory note repayments the European Central Bank comes out and says something unhelpful like ‘No’.

    And then Irish Ministers come out with a mixture of threat (Gilmore) and reassurance (Rabbitte and Varadkar). The question is will it get them anywhere this time?

    There are two separate ways of getting relief (or sustainabilitity to use the buzz word) on Ireland’s debt relief: either by getting a deal on the promissory note, or getting some payback for the €64 billion Irish governments have pumped into the performing banks. You always know that talks are failing on one of those solutions when the Government starts talking up the other solution.

    How many times since August of 2011 has this newspaper reported that the Government was on the brink of a breakthrough or a deal on debt relief, only for everything to evaporate?

    This time it’s a little different. There’s a looming deadline on March 31 for the next repayment of €3.1bn. What would be almsost as bad for the Government as no deal would be some kind of three-card-trick on the €3.1bn that would alter the form of repayment but still leave the Government on the hook for it within a relatively short time period.

    And in any instance, the three bodies in the Troika arrive in Dublin today to begin the latest quarterly reviews. Ironically one of their concerns is that the Government has become obsessed with the debt question to the detriment of all the tough fiscal decisions that remain to be taken.

    There are two narratives on Ireland’s performance under the bailout programme. There is the one given by Micheal Noonan and Brendan Howlin at the end of each quarterly review. Invariably, both hand out gold stars to themselves for being the best students in class.

    Then there is the less gilded narrative of IMF and EU Commission staff. It’s slightly harder to decipher, because it’s heavy on jargon and nuanced. But it’s clear that its message is: not paying enough attention in class and must try harder.

    As officials arrive today to begin the ninth review of the programme, it is clear the gap between the Government and the Troika on the expectations for recovery have widened measurably despite the continued success in meeting the programme targets.

    Analysis based on the latest staff reports from the Commission and the IMF, as well as from well-placed sources, shows there is real concern that radical Government reforms have slowed down and may even hit the buffers.

    The first criticism is the Government has portrayed a deal on bank debt and promissory note as some kind of panacea when it’s not. Then there is the recurrent theme that the public sector pay bill has not been tackled sufficiently; that not enough has been done to tackle the growing problem of long-term unemployed people; and measures to address over-runs, especially in health, have been inadequate.

    The net outcome of that is the Government will not be in a position to hit the magical 3 per cent of national debt target by 2015 if it continues to pursue current policies. Its own figures are €1.2 billion more optimistic than that of the Troika.
    In its staff paper, the Commission drily notes that the current plans “may not be sufficient to reach the (3 per cent) deficit target”.

    “We express doubt that Ireland will get to under 3 per cent before 2015 with the triple lock (the Croke Park agreement protecting pay; no cuts in basic social welfare; no increases in income taxes)”.

    “That is why Croke Park Two has to be more ambitious…

    “The political point is it’s very hard to say to other countries you should help Ireland if there is evidence that Ireland is not doing enough,” said one source who spoke on condition of not being identified.”

    While acknowledging programme implementation, the Troika has a sense that the huge emphasis placed on debt sustainability has meant that, as one source puts it “the reform momentum may have slowed a little”.

    A deal on debt sustainability is not the solution to all Ireland’s problems, says the source. The separate fiscal crisis, with the collapse of 30 per cent in tax earnings, posed a huge challenge to public finances. Massive permanent increases in spending were financed by transitory tax revenues.

    “Even if your fairy godmother arrives and in one stroke all the bank debt is gone, there is still a huge amount of austerity to got through [on the fiscal side],” the source said.

    That said, the IMF and Commission staff reports underlined the importance of a deal on bank debt pointing out that otherwise the fall in spreads on Irish debt could be reversed. Both reports suggest that expectations were raised too quickly after the June 2012 summit that a deal could be struck.

    Perhaps that sentiment has been borne out this weekend as Government ministers have tried to ‘spin’ bad news from ECB sources. It happened last autumn too when Enda Kenny had to place a personal phone call to Angela Merkel to get her to contextualise comments she made that there would be no retrospection (ie money paid back to Ireland for propping up its banks) when the new European Stablity Mechanism came into being.

    Troika staff have focused to an inordinate extent on the public sector pay bill in recent months. The core argument is that cutting numbers isn’t enough.

    The Commission noted that Irish medical consultants were the highest paid in the EU for their public work, being paid twice the rate in the UK. The IMF noted: “Public pay is elevated in Ireland especially for teachers and medical professionals.”
    It has honed in on medical consultants in particular. One example is of the consultant who described a proposed public salary (€205,000) as ‘Mickey Mouse money’ [six years ago].

    “Some of these guys don’t realise the party is over,” said the source.

    Other unpublished figures showed that Ireland had the largest increase in public wage bill between numbers and wages since 2000 but that public sector pay cuts since then have been markedly smaller than other programme countries such as Portugal and Spain .

    Its net argument: the Irish public service has suffered less than other programme countries. It accepts that it has brought industrial peace but asks is Ireland paying too high a price for it?

    Troika officials are also cool on universal payments and make the point that they end up going to too many people who don’t need them. The health over-runs, the Commission suggests, reflects the lack of binding targets for departmental spending ceilings. An “escape clause” may be evoked.
    They are also worried about the lack of detail of how the Government will achieve further cuts in 2014 and 2015.

    They want the Coalition it lay its cards on the table now – the IMF suggests reforming tax relief on private pensions; greater use of generic drugs and (controversially) an “affordable loan scheme” for third level students.

    Other criticisms: the slow pace of progress of Irish Water; the scrapping of rent supplement to be replaced by a payment based on level of income rather than employment status. This is designed to incentivise (with a stick rather than a carrot) people to look for employment. With its continuous pressure on the Coalition to improve job activation measures, the Commission has recommended private sector involvement in activation programmes.
    The supposed irreconcilable nature of Ireland’s approach is summed up by an official: “Ireland wants Sweden’s welfare State and an American tax rate.

  • Cabinet Meeting on Jobs

    January 17, 2013 @ 3:33 pm | by Harry McGee

    This is a slightly longer version of the analysis piece I wrote in this morning’s edition of the paper – with some additional commentary – putting the three Government initatives to date on job creation into context: (more…)

  • New Term, new leaf? Hardly

    January 15, 2013 @ 2:21 pm | by Harry McGee

    The Dáil resumes tomorrow for the Spring term and later today the Government will announce its legislative progamme, in other words the Bills it hopes to publish between now and the end of the Easter break. There will be a little less than 30 Bills, I am told, and there are two chances of them all being published: little or none.

    It always happens. Government guillotines debate on legislation in the Dáil and Seanad. Opposition complains bitterly. Says it will bring in reform. Opposition becomes Government and sets about imposing guillotines on debate in legislation in Dáil and Seanad.

    Ditto with legislative programmes. The opposition constantly criticised the fact that so few of the promised Bills each term actually got published. Now the opposition is in Government and it’s going through the same process.

    Ditto Dáil reform. The opposition mocked adjournment debates because they were too late at night and the relevant Minister never showed up but farmed it off to colleagues. Now it’s called topical issues and even though it’s on earlier that day, it’s not a huge improvement on what went before. Certain ministers are seldom there to answer questions relating to their brief.

    Like everything else in Ireland – a small country, a settled democracy, a very oligarchical form of governing, innate conservatism, resistance to change – when they happen occur, changes happen incrementally, a little like the way the days gradually get brighter as the year progresses.

    That’s why the claim by the incoming Government that it had affected a “democratic revolution” was such an assault on the English language. That said, there are a number of important and substantial issues that will dominate this Dáil term.

    The most obvious one is abortion. From a legislative point of view, it’s going to be relatively quiet for a month or so, as the Department of Health prepares draft legislation.

    But that wont’ prevent the intensification or the continuance of the debate and the divisions in the public sphere. The pro-life rally on Saturday will serve as another reminder that this tangled and problematic issue will be a dominant issue in the political year.

    But it seems certain that the legislation and guidelines – including a threat of self-destruction as grounds for lawful abortion – will pass, given the whips being imposed and the huge majority of the Government.

    Even without a whip, the middle ground of Fine Gael will support the Bill. Many who had been veering against the Bill were convinced enough by the medics last week to veer the other way.

    There will be an issue with a minority of Fine Gael TDs who can see no alternative but to vote against the law on grounds of moral conscience. Politically, the most salient aspect will be their number and how the Fine Gael party deals with them from a disciplinary perspective.

    Elsewhere, the promissory note issue will feature prominently in political discourse between now and Easter. There’s a looming deadline waiting at the end of March. Last year, the Government did a bit of a three card trick and ‘magicked’ away the €3 billion due for a year.

    But anything less than a permanent deal to make the €30bn burden (originally to be paid over a shockingly short ten years) sustainable will cause a huge amount of bother for both Coalition parties.

    That is particularly so given the overweening confidence which Ministers have displayed in telling all and sundry that a deal is in the big/imminent/ there for the taking.

    We’ll believe it when we see it. There have been too many false dawns on debt deals with the ECB and others in the short lifetime of the Government. If they pull it off, they will be heroes. If they don’t, they will be hammered. It’s a simple as that.

    A little later in the year, the introduction of the property tax will be the pencilled-in event that should dominate the middle of the year. It’s a big new tax and will rake in €300m in a full year adding hundreds to the annual household tax bill.

    I’m not sure if it’s by happenstance or design but the fact that it is being staggered in will make it seem a little palatable. Householders will pay for six months this year and it will not be until 2014 that the full weight of it will have to be borne.

    The Government’s calculation is that by that stage it will have bedded itself in and people may grumble about it but will generally accept it. I’m not so sure about that. It’s going to be very unpopular, in July this year, in January next year too.

    The other question is: will there be a campaign of disobedience this year and will it have the success of last year’s campaign? Yes, for sure, but I suspect it will not have the traction of last year.

    For one, Revenue is in charge and having studied the mistakes from last year will not repeat them. Also, there won’t be any messing around with those who don’t comply.

    It’s interesting that Sinn Féin today said very firmly that it will confine its opposition to the Bill to parliamentary protest, including drafting its own bills. The fact that the party won’t take to the street, to me, looks like another of those small and deliberative steps towards the mainstream.

    Sure, it didn’t officially protest on the streets last year. But like everybody else in Irish politics, incremental change is the name of the game for Sinn Féin.

  • On Politicians and Abuse

    January 8, 2013 @ 5:46 pm | by Harry McGee

    This is a piece I wrote for the Connacht Tribune  just before Christmas about the extent to which politicians should be fair game for criticism – and when crticism ends and abuse begins. I’ve added it here in the context of a twitter exchange earlier on social media. I think it gives a fuller picture of my views on the issue. In the meantime, I spoke to Paschal Donohoe, the Fine Gael TD, who was a former and avid user of twitter and facebook. He closed both accounts down in the autum because of the volume of abuse he was receiving. (more…)

  • Defections and Expulsions

    December 14, 2012 @ 4:55 pm | by Harry McGee

    The expulsion of Colm Keaveney this week brings the total of its parliamentary party back to 33, the same as during 1992 to 1997, the ‘Spring Tide’ years.


  • Budget or fudge it?

    December 5, 2012 @ 12:16 pm | by Harry McGee

    We’re almost within two hours of Budget 2013 being unveiled and already you can feel the nerves among Coalition backbenchers about the mesaures.
    It’s not the most savage Budget in recent years in terms of the quantity of ‘adjustments’ (the late Brian Lenihan took €6 billion out in one fell swoop in December 2010)) but the blunt reality is that all of the less painful cuts have been made and the changes being made later today will cut to the core.
    There has been a lot of Labour discomfiture about the fact that the party lost the battle over the 3 per cent increae in USC for higher earners on PAYE. I was away last week so wasn’t in a position to follow the events as they happened but it seemed to me that Fine Gael really asserted itself as the biggest party in Government. It’s counter proposal of a 3 per cent cut in social welfare rates was never realistic and was bullyish tactics. So Labour folded on that one.
    Then there are the cuts to child benefit, a really biting property tax (but there’s a stay of execution on that until July 2013) and the nasty sting in the tail – the loss of the €127 exemption for PRSI, which will only cost about a fiver a week but will affect those with lowest pay levels (above €352 per week) most.
    Labour has managed to get in a package of measures aimed at pensioners and those with high incomes which it claims will be worth €500m. It’s a bit harder to explain than the neat increase of 3 per cent in USC for those earning over €100,000 but explain it Labour will have to do, otherwise its members and supporters will begin to think that FG is getting it all its own way.
    I expect some unhappinness (private) among Labour backbenchers but no defections.
    “Mild jitters but not destabilising” was the view of one Labour minister of state in a text to me.
    Fine Gael TDs, especially in Dublin, are not going to be happy campers about the property tax. There’s no doubt that it’s a relatively crude bludgeon and those who will be affected most are people in relatively modest houses with relatively modest incomes in Dublin’s more affluent suburbs. When bills of €500 to €800 come in through the door, there will be a lot of gnashing of teeth.
    I did a calculation last night (very rough one) based on a couple with three children living in a house worth €250,000 who are running two middle of the range cars. I estimated that the changes in PRSI, child benefit, property and motor tax could end up costing that family about €1,430 a year.
    Now, there may be some compensating measures on the other side that will be of net benefit to them.
    But it seems that everybody is going to be affected and will be out of pocket.
    And I think this time, the sense of social solidarity, may not be quite as strong.
    People are beginning to really feel the squeeze.
    Maybe this will mark the moment when the Government’s prolonged honeymoon truly reaches its end.

  • Political Seismologists

    October 23, 2012 @ 9:52 pm | by Harry McGee

    It is a surprise that international geophysical bodies have not alighted onto Leinster House yet to headhunt all the expert commentators who patrol the corridors.

  • The Political Life of Reilly

    October 4, 2012 @ 1:54 pm | by Harry McGee

    I tweeted yesterday about the Alastair Campbell rule that a consecutive number of days in the eye of the media storm meant curtains for a Minister.
    I incorrectly said it was four and was subsequently corrected by Mandy Johnstone, former FF Government press secretary, that it was ten.
    It didn’t matter that much. The punchline was the same. It was that it takes four years of unrelentless headlines to achieve the same in Ireland.
    British politicians seem to go far more meekly than their Irish counterparts. Just casting my mind back to recent examples in Ireland, the likes of John O’Donoghue and Willie O’Dea clung on to the ministries like limpets, until their hands were prised off the steering wheels of the Mercs by their reluctant then boss Brian Cowen.
    The four-year thing was a bit of a joke. The point I was making that it takes far more in Ireland. James Reilly is still one further damaging headline, and more likely two, from having to walk the plank.
    One of the reasons is that like the advert for the home furnishing shop, in Ireland, when you are gone, you are gone.
    There is no way back as there is in Britain for the likes of Peter Mandelson and David Laws. At least not for a very long time. It is conceivable that Willie O’Dea could be a Minister again… but I would say that Limerick will have won at least one All Ireland in hurling (or even football) before that happens.
    After weeks of not saying a peep against Reilly we are beginning to see some annoyance being expressed by Labour Party ministers. Ruairi Quinn was very unhappy about being misled yesterday about the site in question been chosen by Mary Harney. And Eamon Gilmore let it be known for the first time today that he wasn’t consulted by Reilly but was party to the decision approving the 35 sentences. However, the important line in his contribution was his statement that there was no Ministerial involvement in choosing the site at Balbriggan; in other words, the decision was made wholly by HSE officials. That gave Reilly important political backing on the specific question of the Balbriggan site.
    So where does it go from here? I think Labour TDs will find a formula of words to describe their unhappinness at this ongoing saga, with some criticism of Reilly thrown in . They will also hope that there is nothing else going to come out of the wash that will put further question marks over his tenability.
    Because even though they hang in tough in Ireland, it doesn’t mean that they can’t be ousted. And Reilly at the moment is going through the swivel doors to enter the rather unenviable surroundings of the last chance saloon.

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