Signs of Coalition losing nerve as winning post looms

The Coalition has performed solidly for the first half of its term in office but faces important tests in the coming weeks that will determine whether it ultimately succeeds or fails in the great challenge it took up in March 2011.

The overwhelming task facing the Coalition from the start was to nurse the economy back to health and there is no denying its achievements to date on that front. The country is on course to exit the EU-IMF bailout by the end of the year and the tide is slowly but surely beginning to turn on unemployment.

One last really tough budget will be required to keep on track but there are worrying signs of a loss of nerve just when the finishing post is coming into sight.

Tánaiste Eamon Gilmore has given a hostage to fortune with his declaration that the €3.1 billion adjustment target agreed with the troika should no longer apply. He correctly pointed out that the targeted percentage reduction in the national debt can be achieved with cuts of less than €3.1 billion but by publicly committing himself to that position he has created two problems for himself.

The first is that he will suffer a serious loss of face if he doesn't manage to get an adjustment of significantly less than €3.1 billion. Whatever their reservations, his Coalition partners in Fine Gael will probably be willing to help him out as he has been a loyal colleague in government, but the troika may not be as accommodating.

Emergency funding
While the troika has less influence now that the country is on the verge of exiting the bailout, its strictures still cannot be ignored, particularly as its approval is needed for access to any stopgap emergency funding that might be required in the future.

The international money markets will also take note of any significant watering down of its commitments by the Government the moment that the troika discipline begins to be relaxed and that could lead to higher than expected interest rates on future borrowings.

The Fiscal Advisory Council, one of the institutions established to ensure that the mistakes of the boom are not repeated, has strongly advised the Government to stick to the €3.1 billion target. Central Bank governor Patrick Honohan did so more obliquely in an article in The Irish Times earlier this week.

Politically it does not make a great deal of sense for Gilmore to risk so much on whether the adjustment is going to be €3.1 billion or, say, €2.8 billion. One way or another there are going to be serious spending cuts in the budget and the public is hardly likely to give Labour much credit for avoiding some unknown potential cuts that might otherwise have been implemented.

One of Labour’s recurring dilemmas in office is that it is always subject to sustained criticism from a range of voices on the hard left who oppose its participation in government in the first place. Trying to appease these forces means the party often gets little or no credit from the public for the things it manages to do in office.

The real achievement of Labour in this Government is that it has helped to minimise the impact of the crash on ordinary people. By adopting the language of their enemies and talking about the need to end “austerity”, senior people in the party are only helping to undermine their own position.

The only way Labour will come out of this Coalition with a real chance of retaining most of its seats at the next election is if the country is well on the way to recovery by that time. The party needs to stay in power long enough to be able to deliver at least one expansionary budget but slowing the rate of adjustment at this stage is hardly the best way to get to that position.

If the Tánaiste has put himself out on a limb over the budget, Taoiseach Enda Kenny has done the same on the Seanad referendum. This is his pet project and the timing is also his responsibility. Many of his colleagues in Fine Gael are distinctly lukewarm about it, while a number of Labour TDs are openly hostile to the notion of abolishing the Upper House.

Losing the Seanad referendum would hardly amount to a disaster but would certainly put a dent in Kenny’s credibility. That is why it is vitally important for his authority and that of the Government as a whole that he convinces the electorate to back him.

The programme of Dáil reform announced during the week is more extensive than many on both sides of the Seanad argument had expected. While it won’t transform the Dáil overnight, it will open up the legislative process to the wider civil society and will give TDs a greater opportunity to participate in the shaping of legislation.

Challenge
It will also represent a challenge for civil servants to adjust to a new way of doing business in the public eye. In the long run that should benefit them as it will give the public an opportunity to see the kind of commitment so many senior officials give to their work.

One problem with the reforms is that it is questionable how much credit voters will give to TDs who devote most of their effort to participating in the legislative process.

As long as our system of multiseat proportional representation remains in place, the pressure on TDs will be to keep delivering for their constituents rather than engage in law-making.

The big disappointment of the constitutional convention is that while it has proposed a number of relatively minor amendments it shied away from recommending any change in the electoral system. It is difficult to see how Dáil reform without electoral reform will really change the system.