Next government must be able to take decisions


OPINION:Firm decision-making and not a debating society is needed to overcome crisis, writes ELAINE BYRNE

DEBATES TAKING place within Fine Gael and Labour – likely partners in any new government, according to the opinion polls – might look to Argentina’s experience with the IMF.

Ricardo Hipólito López Murphy was briefly minister of economy during the worst economic crisis in Argentina’s history.

Only five years earlier, the country had been widely hailed as a booming economic miracle.

He spent just 17 days in office in 2001. His attempts to administer unpalatable budgetary measures imposed by the IMF were deeply resented by a public already struggling with major economic hardships.

In that one year alone, five different finance ministers tried their luck at introducing vital economic reforms.

The failure to navigate between an angry public and the fiscal constraints of IMF conditionality cut short a dozen careers in the Argentina finance ministry in the last decade.

Is this the future that awaits a potential Fine Gael-Labour coalition?

Brian Lenihan’s budget-day speech tomorrow will essentially handcuff the next government to the straitjacket of conditionality. The terms of the IMF-ECB bailout have meant that the Minister for Finance has effectively written the parameters of the next four budgets.

The Fine Gael-Labour coalition will be obliged to implement decisions made by a government widely perceived as responsible for the loss of economic sovereignty. In the public mind, this assumption of democratic illegitimacy undermines the authority of a new government.

If things are to get better, they must first not get any worse.

In a 2003 IMF report, Lessons from the Crisis in Argentina, it noted that: “The inability to mount a policy response stemmed from a combination of economic constraints and political factors – notably, as in many previous crises, insufficient political support and resolve”.

In other words, the severity of Argentina’s prolonged economic crisis was exacerbated by domestic political instability in the immediate year subsequent to the initial IMF bailout.

That’s why the internal dynamics within Fine Gael and Labour and their perceptions of one another are so crucial.

Would a coalition of the centre-right and the centre-left prove cohesive? Will Ireland follow Argentina down the path of myopic self-destruction and politically tear itself apart?

These are questions international financial advisors with multibillion-dollar foreign direct investment portfolios are asking political scientists in lengthy and forensic conference calls over the last few weeks.

The depth of Ireland’s economic situation is now known. The consequences of political instability are not. That’s what scares them.

There are people employed within American investment companies to watch the internet feeds of TV3’s Tonight with Vincent Browne and to listen to every edition of Morning Ireland.

They read the newspaper columnists and observe the frequency of their media appearances as an indicator of their influence. These are the perception barometers being used to measure public opinion as an indicator of projections for long-term political stability.

This is how the decision to continue to invest in Ireland is being made. In the new world we now find ourselves in, we are entirely reliant on the kindness of strangers who watch, listen and read the same news as we do. That scares me.

So, what do the internal dynamics of Fine Gael and Labour tell us about the resilience of the next government to implement the broad parameters of the IMF-ECB programme?

The historical record of both parties has demonstrated that ideological and personality difference has not prevented pragmatic co-operation in the past.

A genuine, mutual respect exists between the parties; many of the frontbench spokespeople have already served in government together during the Rainbow coalition of the mid-1990s.

But Fine Gael has never had to entertain the possibility of a coalition based on an equality of size.

That is the critical unknowable factor from a Labour perspective weary of what is often caustically described as Fine Gael’s “Big House” attitude.

For instance, last June’s leadership heave within Fine Gael was due to deep internal unease about the Irish Times/Ipsos MRBI opinion poll which placed Fine Gael behind Labour for the first time.

Fine Gael perceives Labour as being afraid to take firm positions on issues such as the Croke Park agreement because they are riding two electoral horses at the same time. The rise of Sinn Féin in the opinion polls obliges Labour to look over their shoulder to the hard left while at the same time attempting not to alienate their growing middle-class support.

Fine Gael argues, therefore, that they have more freedom to take the necessary decisions and are not constrained by the convoluted internal policy processes that Labour are obliged to embark upon which require input from the unions. Policy decisions within Labour must be agreed at both national executive and parliamentary-party level while Fine Gael has a more centralised approach.

Labour dismiss this as scaremongering and point to their 2009 Labour Party 21st Century Commission report which minimised union influence within internal Labour decision-making processes.

The failure of Nick Clegg to convert unprecedented high opinion polls for the Liberal Party in the UK into seats has not been lost on the Labour Party. Is the emphasis on finding candidates and nourishing floundering Labour organisations in rural Ireland distracting attention from policy? Other insights suggest that Labour are too reliant on their old guard and have not given their younger TDs a meaningful role.

Joan Burton is regarded as being overly sensitive and too protective of her finance portfolio. Fine Gael, in contrast, rely not just on Michael Noonan but on Richard Bruton and Leo Varadkar. This is the main area in which the culture of both parties collides.

Fine Gael argues that Labour are afraid to take positions and are naked when it comes to in-depth evidence-based policy. Labour feels that Fine Gael’s economic positions have continuously shifted over the last year, particularly since Richard Bruton’s side-promotion and that it is unclear as to who exactly drives policy within Fine Gael.

The Conservative-Liberal Democrat government in Britain is an exercise in managing different coalition expectations within the limitations of fiscal restraint. The comprehensive spending review process is a means of knitting coalitions tightly together in the face of extraordinary challenges.

This mechanism fixes firm spending budgets for each government department over several years. It is then up to departments to decide how best to manage and distribute this spending within their areas of responsibility. It promotes a whole of government policy coherence and instils the principle of collective responsibility from the inauguration of a new administration.

If Ireland is to avoid gathering an unnecessary collection of finance ministers in short succession, as was the case of Argentina, it is imperative that the next coalition is a decision-making body and not a debating society.

Previous coalitions have been distinguished by ministers on solo runs and those who are against expenditure cuts in general while being in favour of nothing in particular.

An agreed process by which painful decisions have to be made will determine the stability of Irish politics for the next decade.

Elaine Byrne is an adjunct lecturer in politics at Trinity College Dublin