Having generated a political controversy with their demand for tax cuts for middle-income workers, Fine Gael Ministers will have to deliver a significant package in the autumn budget or stand convicted of the charge of political play-acting levelled by Sinn Féin leader Mary Lou McDonald.
The démarche on tax by three Fine Gael ministers certainly got the attention of the political world. The ensuing row was just what the party needed to show the electorate that it is still in business, and in the process provide a morale boost for its weary supporters. However, if it can’t deliver then the party’s credibility will take a serious knock.
It is hardly surprising that after 12 gruelling years in office, Fine Gael TDs are feeling the pressure, with some of them succumbing to a mood of defeatism. That mood has been fuelled by the number of long-serving TDs who have announced they will not be running at the next election. The incessant onslaught from Sinn Féin, which has focused the mind of the electorate on the party’s big failure – housing – and shifted the focus from the extraordinary economic achievements of the last decade, has taken its toll.
This has prompted some in the party to come to the conclusion that a spell in opposition is what it needs to regroup. There is a related assumption that, once in office, Sinn Féin will be exposed to the inevitable stresses and compromises of government and the party’s popularity will slide as a result.
That complacent view is a dangerous delusion, as Sinn Féin is a very different political animal to the other parties in the Dáil. Once in power it will not prove easy to dislodge, regardless of its economic performance. Just look at the way its steadily increasing dominance of politics in Northern Ireland hasn’t been hampered by its dire performance in actual governing.
The political challenge facing Fine Gael and Fianna Fáil as they enter the last phase of the Government’s life is how they can translate their competent management of the economy which, among other things, has brought unemployment to its lowest recorded level, into support at the ballot box come the next election.
The biggest weapon in their armoury is that the prudent management of the national finances by Paschal Donohoe and Michael McGrath has left the national finances in a position that most of its predecessors could not have imagined in their wildest dreams.
That has been achieved on the back of the sacrifices made by so many citizens in response to the financial crisis which almost bankrupted the country just over a decade ago. Income taxes were hiked dramatically, public servants took pay cuts and endured a long pay freeze while many self-employed people lost their life savings and unemployment hit a record high.
The budget surplus is so large – projected at €65 billion over the next four years – that there will still be an opportunity to put a considerable portion of it away to meet future needs
Despite the severe belt-tightening, social welfare rates were maintained at their existing levels. This was in marked contrast to other EU bailout countries, where welfare rates were often the first item of Government spending to be cut. Here, the working population endured massive rises in income tax to ensure that social spending was maintained.
That is why tax cuts for middle income earners are justified, and are in no way comparable to the tax cuts for the wealthy introduced by Donald Trump in the US and advocated by right-wing Conservatives in the UK.
The exchequer is awash with cash as we head into election year, and there is enough money in the kitty to do a range of things that can improve the lives of all. There is financial headroom to ease the burden of tax of working people, while also providing for a significant increase in social spending – and enacting long-overdue reforms like a major investment programme in the Defence Forces.
The budget surplus is so large – projected at €65 billion over the next four years – that there will still be an opportunity to put a considerable portion of it away to meet future needs, the pension time bomb being the prime concern. The Coalition parties are in the remarkable position of having more money than they know what to do with.
The challenge ahead is to devise policies that see to it that some of the fruits of prosperity are shared as widely as possible now, while overdue investment is made
The key to their future is to find a way of spending it that can capture the public imagination. Boldness will be required, along with the basic political instincts to spread the largesse in the most effective way. It is not simply a matter of splashing the cash around to appease every section of society, but coming up with an overarching narrative that can persuade people that the country’s future is safest in their hands, and should not be trusted to people who have consistently opposed the very policies that have brought us to this happy position.
Ireland is no longer a poor country or the basket-case economy of a decade ago. The challenge ahead is to devise policies that see to it that some of the fruits of prosperity are shared as widely as possible now, while overdue investment is made in areas that will ensure that the astonishing upward trajectory of the Irish economy continues well into the future.