Steady. Unspectacular. Dull. Boring: Paschal Donohoe’s ‘magic mediocrity’
The Minister for Finance believes slow but steady progress is our best economic hope
Paschal Donohoe: the “magical mediocrity of sustained average rates of growth” is what enables countries to plan for the future, the Minister for Finance says. Photograph: Chris Ratcliffe/Bloomberg
Steady. Unspectacular. Dull. Boring, even. These are the ambitions of Paschal Donohoe, Ireland’s young Minister for Finance, as he ponders his stewardship of the economy and the public finances for which he is, wearing his other hat, as Minister for Public Expenditure, now entirely responsible.
If they sound less than lofty, Donohoe is at pains to explain that steady economic growth and social progress should be the holy grail for politicians and policymakers. He quotes the former Economist editor Bill Emmott’s description of “the magical mediocrity of sustained average rates of growth”. This, he says, is what enables countries to invest widely, to plan for the future, to make progress. It is, he says, “really precious”.
“The great goal, the great prize that is ahead of our State now is that if we can get to a point where we have an economy that is growing at approximately 3 per cent a year in an environment where we have our books broadly balanced, and we can maintain that level of growth, then we plan for how we can invest in a better way than we have in the past,” Donohoe says.
His aim is both modest and far reaching, banal and revolutionary. Donohoe’s task may be politically easier than Michael Noonan’s, but it is probably more complex, too
His aim is both modest and far reaching, banal and revolutionary. The economy has careered through a violent assortment of highs and lows for the past few decades, lurching from depression to boom to depression and, now, back to strong growth. Donohoe’s task may be politically easier than Michael Noonan’s was in the years of austerity, but it is probably more complex, too. Demands and expectations are greater. The needs of a growing economy are palpable. Demographic pressures in health, education and pensions shove their way to the front of the queue. And all governments think of the next election all the time. Through this minefield Donohoe must guide his ambitions for magical mediocrity.
He set out to achieve three things this year, he says. A broadly balanced budget, a public-sector wage agreement that was “sensible, affordable and recognised the value of public sector pensions”, and a capital plan that met immediate needs but also stretched into the medium term. And those have all been delivered, he says. Well, nearly. The capital plan is a few weeks away yet. “Most of it is ready to go,” he says.
Public transport will feature extensively in the plan, as the Government struggles to accommodate a rapidly growing population in Dublin and the east. “We have a number of projects across the State,” he says, “particularly in transport and particularly within public transport, that are only achievable and are affordable across a planning cycle that’s more than a single budget”.
Or a single term of government? “Yes. That’s a fair comment. Yeah.”
Donohoe’s rise to occupy the second- and third-most-important jobs in the Government has been rapid, by any standards. A senator in 2007 and a TD after the Fine Gael wave of 2011, Donohoe became a junior minister (for Europe) when Lucinda Creighton lost the party whip over the X-case abortion legislation in 2013. A year later, after Alan Shatter’s resignation, he was in cabinet. When Labour collapsed at the last election, he became Minister for Public Expenditure in the minority coalition. And when the time came for Noonan to retire, he became Minister for Finance, uniting the two roles again.
Donohoe has been in the right place at the right time on several occasions. And he has been lucky
He had backed Leo Varadkar’s leadership bid before that, of course, eschewing, it is said, entreaties from Noonan and Enda Kenny to stand himself.
He has been in the right place at the right time on several occasions. And he has been lucky.
But he has been tough, too. When his Dublin Central constituency lost one of its four seats in boundary revisions before the last election, many thought it was Donohoe’s neck on the block. But he dug in, doggedly defending the Government’s austerity policies on the doorsteps of Cabra and Phibsborough, Drumcondra and Glasnevin, first as a TD then as a Minister. He survived.
He now describes that process as his defining political experience, and his mission in charge of the country’s finances is to try to make sustainable social and economic progress that can survive and outlast the next, inevitable downturn.
He is a great advocate of centrist politics, regularly praising his Fianna Fáil interlocutors in the Dáil for their responsible promotion of the national interest. It remains to be seen, of course, if he would be as enthusiastic were he in opposition and Fianna Fáil were in government.
“Despite the challenge of making centrist politics work in Ireland – and God knows we saw the challenges over the last number of weeks, when it was deeply strained – key things that needed to be delivered for this year have been delivered,” he says, pointing again to October’s budget.
But few voters spend their time appreciating the strengthening of centrist politics that Donohoe lauds. Instead they look at the failings of the housing market and at the State’s provision of services in health, among other things.
“I’m acutely conscious of the sort of challenges that you’re referring to there through my constituency work. You know I represent areas that saw such sharp pain in relation to all of this.
“I shared the experience of constituents who were affected by public-service withdrawals and reductions, and affected by what was happening to their take-home pay when they were already on low levels of income. But the achievements that we are talking about there, and the prospect of 3.5 per cent growth next year, against the balanced-budget background, create the resources and the choices that are available to begin to make progress on those matters.
“The example I’ll give you is: next year we expect that we’re going to build about 20,000 homes. This year it was about 17,000.” But the State itself is building only a minority of them. That’s the great complaint people have. “That is changing before my eyes,” he says, citing projects in his constituency and elsewhere. But surely it’s the aggregate number that counts. “That’s true, but the aggregate story is hundreds of these things coming together.”
He acknowledges that the pace is slow but insists the State has shifted gear and is going to build many of the new homes itself. But that sounds like a promise people have long been hearing. He knows the Government will be judged on how it handles the housing crisis.
Insiders acknowledge that Donohoe is the intellectual heart of the Government, seeking to give its central narrative coherence, purpose, direction
“You’re going to see across the length and breadth of the country, medium-sized projects that are being funded by the Government, the sods being turned on them, being opened. Within Dublin Central alone I can identify that beginning to change on the ground.”
He hopes to make steady progress on housing. As with unemployment – “every month for years we reduced it by 0.1 per cent” – he hopes the Government can chip away at the problem. “The same happened with the deficit. The same with the national debt,” he says. “Steady progress is not the same thing as no progress at all.”
Insiders acknowledge that Donohoe is the intellectual heart of the Government, seeking to give its central narrative coherence, purpose, direction. If Varadkar is a student of politics since his teens (maybe before), Donohoe is a student of political philosophy, of economics and of government. He is a voracious reader, peppering his conversation with references to recent reading.
The hail-fellow-well-met persona – “Helloooo, ev-ery-body!” – is not false, but it is hardly the full story, either. Donohoe recently wrote an article for The Irish Times about his favourite political philosopher, Isaiah Berlin.
“Berlin’s advocacy for moderation, his acknowledgment of complexity and fiercely competing claims make him an unlikely seer for modern politics in an interdependent and volatile era,” he wrote.
And yet he knows that fine words and lofty thoughts butter few parsnips on the doorsteps of Dublin Central, as his former colleague Pat Rabbitte might have said. Making improvements that people feel in their lives is the currency of politics here.
“I’m in an inner-city-flat complex most weeks, meeting my constituents and representing them, and I’m privileged to do it,” he says.
They tell him about housing shortages and the health service, and schools and community facilities. He promises them that progress is being made. Slowly, but steadily.