Fine Gael, Labour continue talks on forming coalition


Fine Gael and Labour are continuing talks today at Government Buildings on forming a coalition government.

The Fine Gael team is led by finance spokesman Michael Noonan Noonan, with Alan Shatter and Phil Hogan. The Labour team is led by Brendan Howlin with Joan Burton and Pat Rabbitte.

Both party leaders, Enda Kenny and Eamon Gilmore, have remained in the vicinity of Government Buildings for most of the negotiations, which are being held in the Sycamore Rooms in Government Buildings.

Mr Kenny indicated today he would again press for a cut in the cost of the EU bailout package when he meets Chancellor Angela Merkel at a meeting of the European People's Party in Finland later this week.

The German leader said last night the EU could not commit to lower interest rates on bailout loans for victims of the debt crisis, insisting that Ireland and Greece signed up to conditions when accessing aid.

Nevertheless, the Fine Gael leader said he expected to have a private meeting with Ms Merkel on the sidelines of the summit. "I'll certainly get a few minutes," he told reporters today.

However, a German government source cautioned that a one-on-one meeting might not be possible given tight schedules.  "In Helsinki there is very little time for any bilateral meeting. So it is not certain that a meeting with Kenny will be possible," said the source.

Mr Howlin said the issues surrounding Ireland’s bailout package would be dealt with once a new government is formed.

“We’re getting to the business end of the agenda now,” Mr Rabbitte said. The coalition negotiations have been dominated by discussions on the economy, the reduction of the national deficit, job creation and the banking crisis. Labour's Mr Rabbitte today described the discussions as “workmanlike”.

Negotiating teams from the parties – who between them control 116 of the 166 seats in the Dáil – were involved in discussions over nine hours yesterday, following a similar engagement on Tuesday. One of the biggest gaps between the parties is their stance on the scale and timing of adjustments to the public sector budget.

The sides were being briefed today by Colm McCarthy,  author of the Bord Snip report.

The parties have set a provisional target of the weekend for completion of the draft programme for government. This would give time for it to be ratified by both parties before the first day of the new Dáil next Wednesday. Mr Kenny will put the proposals to his parliamentary party while Mr Gilmore must get approval for the programme from a full meeting of party delegates. A venue in Dublin has been booked for this on Sunday afternoon.

The atmosphere at the talks has been described by one source as “cordial but businesslike”. The source said the talks have not yet turned to finer detail on the big issues that divide the parties.

Former president of the European Parliament Pat Cox is playing an advisory role to Fine Gael on the margins of the negotiations. He and Mr Hogan were seen in discussions in the Merrion Hotel yesterday during one of the breaks in the talks.

Meanwhile, Fianna Fáil's Dara Calleary said today claims by Fine Gael and Labour that the public finances were "worse than they thought" were merely a prelude to abandoning their election promises.

“The very solemn, but equally predictable warnings by Michael Noonan and Joan Burton should be seen for what they are - a softening up exercise in advance of the inevitable abandonment of their various uncosted and cynical election promises,” he said.

Fine Gael and Labour last night said briefings they received on the economic and banking situation facing the incoming government painted a very serious picture, and included information which neither party was aware until now.

At the conclusion shortly before 9pm of the second day of negotiations between the parties on the possible formation of a coalition, Mr Noonan and Ms Burton separately said the briefings had confirmed the depth of the crisis facing the country.

The negotiating teams have received briefings from the Department of Finance, Central Bank governor Patrick Honohan and the National Treasury Management Agency in recent days.

“We had a pretty good idea before the election that there were certain matters we weren’t briefed about and they’re now informing our discussions," Mr Noonan said as he left Government Buildings last night. “Neither the economy nor the finances of the country are in great shape at the departure of the Government but then I don’t think anybody thought they were.”

Ms Burton, Labour’s finance spokeswoman, said the presentations were "certainly very sobering".

A Fine Gael spokesman confirmed negotiations had focused on economic matters but said both sides had agreed not to make any public statements on qualitative assessments or progress until the talks are concluded.

Fine Gael wants €9 billion in adjustments until 2014 and for the national deficit to be reduced to 3 per cent of national income by then.

Labour argued during the election for a more gradual path, asserting that the adjustment should be no more than €7 billion by 2014, with the target for reducing the deficit pushed back two years until 2016.