The ratio of tax hikes to cuts is the only big issue where compromise will be needed post-election
I CAN add nothing to the many thousands of words written and spoken about Thursday’s political debacle – save for the comment that when a taoiseach loses control of the process of government, including even the power to appoint ministers of his own party, he clearly should not continue in office.
Let me turn instead to the likely capacity of the future Fine Gael-Labour government to offer a coherent approach to the tasks that it will face.
Despite the apparent implosion of Fianna Fáil, the main Opposition parties may face more of an electoral challenge than many expect. Labour is being challenged by Sinn Féin and the new United Left Alliance, while a new crop of Independents, including some celebrity economists, could attract voters away from Fine Gael.
Moreover, even in its present depleted condition, Fianna Fáil is a party not to be underestimated in an electoral contest. Recent polls may have underestimated its level of support because some of its traditional supporters may have been reluctant to admit to pollsters an intention to vote for Fianna Fáil. And at local level its TDs will certainly fight hard to save their seats, with many of their committed activists turning out to canvass support for a local TD, if not for the party itself.
In the election campaign Fianna Fáil’s best and perhaps only worthwhile ploy will be to seek to exploit policy differences between Fine Gael and Labour. In this it could be helped by the extent to which Labour, at one stage seeming to challenge Fine Gael, will be competing with that party for votes. But problematically for Fianna Fáil, it will be seeking simultaneously to secure transfers from both Fine Gael and from Sinn Féin and the new left-wing group.
It is worth addressing at this stage this issue of policy differences between Fine Gael and Labour, which I believe to be much less of a problem than many may imagine – save on a single issue: that of the emphasis to be placed on fiscal adjustments upon tax increases versus spending cuts. In their post-election negotiations these parties will need to find a compromise, largely based on the relative strengths of their parties in the next Dáil.
Other choices in relation to economic policy are largely constrained as a result of the endorsement by Europe and the IMF of the Government’s fiscal adjustment programme for the next three years. The two parties will no doubt suggest to the electorate that they will seek to renegotiate this programme, but the room for such a renegotiation will be limited by the fact that any relief sought in relation to recent tax increases or spending cuts would have to be matched by new cuts or tax increases that could prove even more unpopular.
If, as they have proposed, they seek to reverse the cut in the minimum wage, they may have difficulty in securing agreement to such a move, as the EU authorities may see this as a necessary element in reducing the wide gap between Irish and EU salary and wage levels.
There is now a possibility of a European reduction in the rate of interest to be paid on our – and other possible – bailout funds, but the present timetables for this project and for our general election suggest that this may already have been decided at European level before our new government takes office.
This would perhaps be a pity, because the close links the new taoiseach and tánaiste would have with many other European heads of government, through their parties’ membership respectively of the Christian Democrat and Socialist groups at European level would have given them more influence than the politically more isolated Fianna Fáil. That said, the end-of-March deadline for a revised bailout process may yet slip into April.
The other major issue facing the new coalition is political reform. Here there seem to be few problems, for a comparison of their reform programmes shows a remarkable coincidence of views.
Both parties propose a constitutional review to be undertaken by a citizens’ assembly (FG) or constitutional convention (Labour). Both parties propose that one constitutional change should be to rescind the Supreme Court decision in the Abbeylara case against Dáil committee inquiries.
Longer sittings of the Dáil are proposed by both parties, with Labour suggesting that this be achieved through shorter breaks.
Both are committed to more open government – involving removing Fianna Fáil restrictions on Freedom of Information, a whistleblowers’ charter and registration of lobbyists.
Both propose to establish an electoral commission, to control more tightly political funding.
Both propose changes in the budget system, including a fiscal advisory council, independent of the government and reporting to the Dáil and the public, with responsibility to identify and propose anticyclical policies so as to avoid any recurrence of our present financial disaster.
Both have proposals for improved accountability, in Labours case concentrating on the government and in Fine Gael’s case on public bodies.
Finally, there is a Fine Gael proposal, with which I am sure Labour will agree, for a Public Appointments Transparency Bill that would require Dáil committees to vet appointments by ministers to State boards, agencies and regulators, as well as quite detailed Labour proposals, which Fine Gael will I believe support, to reform the public service and to strengthen parliamentary monitoring of our engagement with Europe.
With most key areas of economic policy already predetermined by our bailout commitments, and with such close agreement on political reform, once the two parties have agreed a compromise on the ratio of tax increases to spending cuts – which will be necessary to form their government – the argument about policy differences will have little substance.