Politicians tell us we need certainty while delivering anything but

BUSINESS OPINION:The Government's antics will not have inspired confidence in Ireland Inc

‘CERTAINTY IS what this country needs.” This is increasingly the mantra of political parties of all hues. That doesn’t stop them acting in ways that are in essence inimical to the very certainty they seek.

Fianna Fáil has made a habit in recent months of scrambling to overcome self-inflicted wounds only to immediately transgress again. The rumblings in the party that led to last week’s leadership vote, the mass departure of ministers and the shambolic attempt to replace them have all been catalysts for growing uncertainty about the management of Ireland Inc.

The Greens made a virtue of staying in Government in order to pass the Finance Bill, only to finally step down from Government yesterday.

They promise now to support the Bill from the Opposition benches. They understand, following some discussions over the weekend, that one or more Opposition parties will support this stance. However, the partys two leading figures – John Gormley and Eamon Ryan – disagree over how long passage of the Bill might take.

For their part, on the Opposition benches, Fine Gael and the Labour Party have for some time being calling stridently for elections at the earliest opportunity. This is despite the knowledge that a general election campaign and subsequent negotiations will necessarily delay implementation of the measures which the IMF, the European Union and the European Central Bank consider central to the deal this State has made in return for the €85 billion bailout on which our public finances currently depends.

Speaking yesterday, both parties indicated they might be prepared to facilitate passage of the Finance Bill – but only if it can be done by the end of this week.

The Government, or what’s left of it after the weekend, insists this is not possible – and that’s before taking account of the amendments Opposition parties intend to put forward.

Quite how any of this is supposed to engender certainty is a moot point. You have to wonder how the antics of our Government are viewed this weekend in Frankfurt, Brussels and Washington.

Certainly the view both on the streets at home and in the international media is of significant uncertainty – a Government in disarray and a country in chaos.

The one thing on which some element of consensus exists is the need to pass the Finance Bill into law. The unaccustomed spotlight in which this places the legislation is attributable of course to the fact that it contains the €6 billion savings required of the Government under the IMF-EU bailout.

The import of meeting these targets was illustrated with the imposition of previously unannounced corporate taxes in the Bill. These are expected to raise €60 million this year – presuming the Bill is passed before an election. The additional taxes were required by the decision to defer the phasing out of property tax reliefs following intense lobbying.

These reliefs remain in place now – at least until the tax year after the completion of an economic analysis of the impact of the changes. The cost to the exchequer this year: €60 million.

Under the bailout, Ireland is subject to quarterly review to ascertain that promised measures have been put in place and that growth is in line with projections. The first quarterly review of whether commitments are being kept will take place at the end of March.

Failure to achieve the targets will see whoever is then in government come under pressure to introduce additional measures. It will also give Europe another opportunity to raise the thorny issue of our competitive corporation tax rate – something that is likely to come under pressure separately in March with the publication by the European Commission of legislation to create a common consolidated corporate tax base.

The concession by the Department of Finance last Friday that the institutions behind the bailout had sight of the Bill before our own Oireachtas shows where the balance of power lies. Using the Bill as a pawn in our ongoing political horror show is unlikely to improve those institutions’ relations with whomever forms the next government.

There remains a suspicion that Opposition parties want no part of the responsibility for guiding through the Oireachtas a Finance Bill that implements measures in an austerity budget that is now being felt in pay packets across the State.

They are unlikely to have the time post-election to frame a different set of measures to meet Ireland’s obligations before that first quarterly review. Unpalatable as it is, the finance spokespersons of all parties must find some way of expediting passage of the Bill when they meet Brian Lenihan today. Then they can revert to playing politics.