‘Grand larceny’ of Fine Gael fiscal policy by Fianna Fáil

Dukes puts the Fine Gael position on a more formal footing with the ‘Tallaght strategy’

 New minister for finance Ray MacSharry unveiling his budget on March 31st, 1987

New minister for finance Ray MacSharry unveiling his budget on March 31st, 1987

 

When Charles Haughey took power in March 1987, having campaigned on the slogan that spending cuts hurt the poor, the old and the sick, he proceeded to implement all of the cuts he had condemned in opposition.

The Fine Gael-Labour coalition split on the budget for 1987, with Labour ministers unable to go along with the spending cuts required by minister for finance John Bruton.

On the night of the election result, when it looked certain that Haughey would lead a Fianna Fáil minority government, the outgoing taoiseach Garret FitzGerald promised on television that Fine Gael would support a Fianna Fáil government if it followed the correct fiscal policies.

There was still general surprise when the new minister for finance, Ray MacSharry, unveiled his budget on March 31st and it became clear that not alone had he adopted the Bruton strategy on the public finance but had actually toughened it up, cutting Bruton’s exchequer borrowing requirement of 11.7 per cent by one point.

To achieve his targets MacSharry introduced deep cuts in public spending across the three big spending departments of Social Welfare, Health and Education, and placed an embargo on public service recruitment.

Electorate

Fine Gael’s finance spokesman Michael Noonan responded in the Dáil by saying: “This is grand larceny of our policy as put before the electorate. The road to Áras an Úachtaráin will now take precedence over the road to Damascus.”

Following the budget, Haughey, determined to pursue a strict fiscal policy, sent a letter to all heads of departments in May demanding proposals for spending cuts for the following year.

He also established an expenditure review committee, headed by economist Colm McCarthy, to put pressure on departments to reduce spending. This committee became known as An Bord Snip.

In the Dáil the new Fine Gael leader Alan Dukes followed up on FitzGerald’s pledge, and generally supported Fianna Fáil on key economic divisions. However, there were occasional difficulties, with Fine Gael being embarrassed by Labour and the Progressive Democrats who tried to exploit their support for Fianna Fáil.

Formal footing

In the autumn of 1987, Dukes put the Fine Gael position on a more formal footing with the so-called Tallaght strategy. In a speech delivered in Tallaght he promised to back the minority government as long as it followed “responsible” economic policies.

It marked a new departure in Irish politics to have a minority government kept in office by the main opposition party.

The experiment, which lasted only two years, was not repeated until Micheál Martin agreed a confidence and supply arrangement with Fine Gael in 2016.