A hairshirt budget and that unholy row with the Vatican
The 2013 Budget was a tough one, with Labour having to make tough decisions. But it was not without a casualty ...
Published 01/11/2015 | 02:30
"Discussions on the 2013 Budget took place over several weeks through October and November 2012, between the Taoiseach, Michael Noonan, Brendan Howlin and me in the meeting room just off the Taoiseach's office. Sometimes they ran into the early hours of the morning, which did nothing to improve the mood and temperament of the four of us, as we were often already tired from a hard working day.
We were also at this time dealing with the prom note. Relations between Michael Noonan and I became particularly strained during this period, and there were a number of testy exchanges between us.
Budget Day was set for Wednesday, December 5. By the Saturday beforehand, December 1, there was still no agreement on the measures, and the Taoiseach called a special Cabinet meeting for 5pm on the Saturday. There was stalemate over the USC proposal and welfare cuts.
There were three options. To hold our line on USC and refuse to budge on welfare and risk the collapse of the Government; to bargain a reduction in the rate of Jobseeker's payments for the increase in the USC; or to accept that we could not make progress on the USC and to negotiate a more robust package of capital taxes.
The USC increase would bring in about €70m, whereas a package of wealth taxes had the potential to yield about €500m. Financially, this would be the most productive route to take, but surrendering on the USC increase would be politically damaging for the Labour Party, because it had already been spoken of in the media as a Labour red line.
The six Labour Cabinet ministers discussed the pros and cons of each option. There was no disagreement. We agreed unanimously that the best course was to drop the USC demand, to negotiate a better tax deal and to reduce the proposed cuts in welfare.
Though every cut in that budget was hard to make, some were particularly painful. We had to agree to a cut of €10 from child benefit, something we had committed not to do during the General Election. The telephone allowance had to be halved (although at least some of this loss was offset by extra money for home security for elderly people). The duration of jobseeker's benefit was to be cut back by three months. The cut that attracted most media attention was the reduction in the respite care grant from €1,700 to €1,375.
All of the Labour TDs were troubled by some aspects of this budget. We worked out solutions to their principal concerns, and so I believed that there would be no Labour casualty on this difficult budget as I entered the Dáil chamber at 2pm on Tuesday December 13 for the final vote.
Sitting beside Deputy Leader Joan Burton, I watched the electronic panel as the Government side lit up green and the opposition side lit up red. There was, however, one red light to be seen on the Labour benches. At first I was not alarmed, because sometimes TDs just accidentally press the wrong button (or even mischievously do so only to change over in the last remaining seconds). However, this red light did not change, and I turned to our Party Whip, Emmet Stagg, who was sitting immediately behind me. 'Who is that, Emmet?' I asked.
'Keaveney,' he replied.
I was very surprised. The recently elected Chairperson of the Party had, like other TDs, made some public noises about the budget - but as recently as that morning on a radio programme he had confirmed his intention to vote for the Social Welfare Bill. The previous evening, he had attended a meeting of the Party's management committee at which the Party officers, including Keaveney himself, had discussed ways of managing the political fallout from the budget. He had not informed Joan Burton, whose bill it was, or the Party Whip, or me, that he intended to vote against it. He, therefore, automatically lost the party whip. At a parliamentary party meeting later that day, TDs and Senators felt he had let them all down."
As Minister for Foreign Affairs Eamon Gilmore had to make hard decisions in order to cut Department budgets. But relations between Ireland and the Vatican reached an all time low after he announced the closure of the Irish Embassy to the Holy See as a cost-saving measure in November 2011.
"I asked Secretary General David Cooney for an assessment of each embassy, with particular reference to their role in our trade strategy. Based on his report, I selected three embassies for closure: Timor-Leste (East Timor), Iran and the Holy See.
I recognised, of course, the significance of the Vatican Embassy for the Irish Catholic Church, so I telephoned Cardinal Sean Brady and Archbishop Diarmuid Martin before I made the announcement. They were both understandably saddened and disappointed by the decision, and I sought to reassure both that the resumption of a resident embassy in the Holy See would be reconsidered when circumstances improved.
The closure of the embassy coincided with the Government's criticism of the Vatican's handling of child sex abuse investigations. Following the publication of the Ryan Report, I had called in the Papal Nuncio and told him of our deep dissatisfaction with the Vatican's role, and the Taoiseach spoke about it, in the strongest terms, in the Dáil.
Some criticism went further and suggested that the embassy was closed because I was pursuing a secular agenda which was hostile to the Church. That was utterly false, and when the opportunity arose - nearly two years later - to open new embassies, I included the Holy See, although this time on a one-diplomat basis and no longer based in the Villa Spada - which, by now, had been recast as the Irish Embassy to Italy."