Five-day slog for talks but no major stumbling blocks between Kenny and Burton

Tax reform and jobs portfolio main areas of debate between Taoiseach and Tánaiste

Less than an hour after Joan Burton became Labour Party leader last Friday week, negotiations on the future shape of Government kicked into action.

Within minutes, Burton was speaking on the telephone to Taoiseach Enda Kenny. The conversation was general and convivial.

But after Ms Burton's team made their way back to Leinster House in the heavy summer showers that pounded the footpaths between the Mansion House and Leinster House, they made the first move in a discussion process that took almost a week to play out.

It was a short document, setting out in bullet-point form the Labour priorities in government. This included the need for a social recovery as well as an economic one; a low-pay commission; action on housing; tax reform; less austere budgets; political reform; marriage equality; and more initiatives on investment at EU level.


The document's author was Ed Brophy, Ms Burton's main adviser. In the next week, it would be Brophy and Andrew McDowell, the Taoiseach's special adviser, who would work on reaching agreement on policy – which manifested itself in the 10-page document released last night. The Taoiseach's other adviser, Mark Kennelly, would be involved in the more political decisions, including departmental changes and the reshuffle on the Fine Gael side.

Burton and Kenny agreed to meet on Monday and did not speak over the weekend.

Kenny cycled the 170km Ring of Kerry, as he does every year, telling reporters at the end of it there would be significant Cabinet changes. The same was said on Monday in Brussels by Minister for Finance Michael Noonan.

Policy document template

Meanwhile, behind the scenes, Fine Gael sent back a fuller document in response, with some of its priorities, including on tax and on stimulating jobs in the economy. Both sides began working on a template of an agreed policy document.

The fact that the negotiations lasted for a week suggests there were plenty of blockages, but both sides say privately the differences between the two sides boiled down to only a few issues and none of those ever seemed insuperable.

It was explained that Ms Burton’s team was new to a lot of the detail with which the Taoiseach’s side would have been familiar for three years. The team members needed time to read and fully understand the implications of each measure before agreeing to it. And the Taoiseach and his team made it clear that they would wait, that it was more important that agreement was reached than a deadline was met.

Labour had made it clear from the outset that they were eying up the jobs and enterprise portfolio held by Richard Bruton. The party had made the point that the job of EU commissioner was being ceded to Fine Gael and argued that should give it leverage for a key portfolio in the context of a recovery.

“Yes, there was a play for Jobs and we set out concerns very clearly,” said a Labour source. “We had sought a low-pay commission and collective bargaining.”

But Fine Gael was not prepared to concede this ministry.

“From day one the Taoiseach made it very clear that this was non-negotiable,” said a Fine Gael source.

“There had to be some quid pro quo. But with the jobs portfolio never up for discussion, it made sense with environment. With Phil [Hogan] leaving, that became vacant.”

So Labour accepted this relatively early in the process and took environment, bolstering the Jobs part with a new super- junior (with Gerald Nash as Minister) that would have responsibility for business and employment.

The biggest amount of wrangling took place over tax. Labour wanted reforms that would assist low-income earners and lower-middle-income earners. Fine Gael shared those concerns but wanted to target middle-income earners also.

“Tax took a lot of consideration. It was getting the balance right and producing a fair and inclusive package for low- and middle-income earners. It took a while to get the wording right.

“That commitment to reduce the effective 52 per cent rate was in the context of a package that included lower-income workers,” said a source.

Kenny and Burton held their first meetings on Monday, spending some six hours in total in private session that day, without advisers. Those close to the process say the initial talks were general and at least some of it was familiarisation.

Process of shuttling

Over the next two days, the talks were sporadic but, behind the scenes, the shuttling continued on policy as officials worked out the finer details of the six Government priorities that had been identified.

In the absence of any news from a very tightly controlled process, speculation began to mount about possible casualties of the reshuffle. Pat Rabbitte was said to have been very annoyed with a report in the Sunday Independent saying he was definitely gone, in an edition that also contained a long interview with Ms Burton.

Similarly, it was reported that Noonan had met Kenny on Tuesday night and had "parlayed" Jimmy Deenihan back into Cabinet.

He denied that.

On Wednesday, Noonan and Brendan Howlin met to go through the almost-completed document to ensure it wasn't off-beam in relation to budgetary realities – an illustration of the power both Ministers yield.

Meanwhile, amid rumours that Bruton was about to be shifted from jobs, his officials went on the offensive with a massive lobbying campaign to ensure he stayed there and was not shifted to health.

He need not have worried. Despite the impression that a low-key operator was required for health, Mr Varadkar was always in the frame.

“Leo has a proven capacity to run a department. He has an understanding of issues. He is a strong political manager who will put order on the department,” said the source.

By Thursday morning, the policy part had been signed off and both leaders then began focusing on the reshuffle.

Jan O'Sullivan was promoted over Kathleen Lynch. However, the Limerick TD has been solid in housing.

And then to the interminable delays yesterday. There were no last-minute changes, according to the source. Part of it was timing. Heather Humphreys got the unexpected news only at 11.45am yesterday her conversation with Kenny was a long one.