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IT MAY sound trite to say, but it is worth repeating that this Government will be defined by how it deals with our fiscal and banking crisis.
It was on the back of this crisis that this Coalition was elected. It was the competing promises which Fine Gael and Labour made about how the crisis could be solved which determined their respective strength in the Dáil and, ultimately, within the Government.
It was always going to be impossible for the parties and for the Labour Party, in particular, to retain the levels of support they had when they first came to power because they have to make unpalatable decisions necessary to tackle the crisis. However, their confused communication about budgetary issues has to some extent further eroded their position.
The Government’s news management for the last few days contrasts sharply with the mess they made of things earlier in the week. Last weekend a number of well-sourced stories appeared suggesting that the commitments to preserve income tax rates and basic social welfare rates might have to be abandoned in next December’s budget.
On last Sunday evening’s The Week in Politics Pat Rabbitte talked about how red lines should not be drawn at this stage around any tax or spending headings. On Monday morning stories surfaced about how a projected half a billion overrun in the Health Service Executive budget would require premium payments to employees in a manner which might undermine the Croke Park pact. That morning Minister for Transport Leo Varadkar suggested to Newstalk that increment payments in the Civil Service should not be paid next year.
His remarks caused such a furore that Tánaiste Eamon Gilmore felt compelled to deliver a public rebuke to him, bemoaning the fact that some Ministers felt it necessary every Monday to share their thoughts on the airwaves about Croke Park and related topics.
Then came leaked details of a European Commission report suggesting that the State could no longer afford the universal provision of child benefits or free travel and TV licence for all over-65s.
This week was also marked by the leaking of tense correspondence between Ministers from both parties.
The more significant of these was a letter from Minister for Public Expenditure and Reform Brendan Howlin demanding that Minister for Health James Reilly personally get more involved in addressing the overrun in the HSE budget. This formal admonishment suggests Howlin felt that Reilly had not being doing enough to date.
The fact that this letter made its way into the public domain also suggests an effort by Howlin, as bookkeeper-in-chief, to leverage public pressure with his other Cabinet colleagues upon Reilly. A leaked letter from Minister for Agriculture Simon Coveney to Minister for Communications Pat Rabbitte warning against a watershed on television advertising of cheese seems similarly designed to force Rabbitte’s hand.
Government incoherence culminated in a bizarre press event on Tuesday afternoon. The media were invited, at short notice, to hear Taoiseach Enda Kenny and the Tánaiste do no more than announce that the Cabinet had approved legislation dealing with personal insolvency. They revealed that the Bill was cleared to go for printing but they could give no details about it, except to say that once it was printed the relevant Ministers would hold another press conference about it on Friday. This is the kind of information which the press secretary routinely gives correspondents after Cabinet meetings. It doesn’t requires the two most senior Government members to announce it.
Through a combination of accident or design things improved for the Government from Thursday. Mother nature created some diversionary stories in the form of floods.
In case that wasn’t enough, Minister for the Environment Phil Hogan chose Thursday to announce the burial rites for electronic voting machines. It was a media management master stroke. What better way to deflect from what had until then been a bad week for the Coalition than to remind people of one of the most colourful incidents of mismanagement by the previous administration.
It was a brilliant stroke for which Hogan was handsomely rewarded. Recycling the machines even supplanted the floods as the lead item on the 9pm news bulletins and several Friday morning newspapers led with headlines reminding voters of how much money had been wasted on the electronic voting folly.
As it turned out the Government didn’t need to manufacture diversionary stories.
The newspapers had gone to bed early Friday morning before an even better news story broke for the Coalition from the European summit in Brussels. EU leaders agreed to allow Europe’s rescue funds to directly bail out banks without lumping the debt on the national sovereigns. In so doing they also specifically agreed to revisit the question of the Irish taxpayers’ liability for our bank debt.
It’s welcome news for the country and terrific news politically for the Government. In the medium term this deal will not only ease the situation Europe-wide, but it could give rise to a dramatic easing of the burden on Irish taxpayers. That will dramatically affect the Government’s fortunes and do so in time for the next election.
In the immediate future, however, the Coalition has to frame a savage budget. Doing this in a manner which freezes income tax rates and basic social welfare rates while not impinging on commitments in the Croke Park pact will be near impossible. There needs to be a lengthy and informed public debate about the hard choices and the Government needs to make a coherent contribution to that debate. The news from Europe is good but the Government’s budgetary woes have not gone away. Better co-ordination and communication would make their task easier.