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Friday 19 September 2014

Joan and Enda - no pre-nup deal but the courtship dance begins

Fionnan Sheahan, John Drennan and Daniel McConnell

Published 22/06/2014 | 02:30

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Joan Burton
Joan Burton

ENDA Kenny's and Joan Burton's advisers are already making plans for a new coalition deal when the Labour Party leadership favourite becomes Tanaiste.

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Using back-channels, Mr Kenny's staff has let Ms Burton's aides know that a full renegotiation of the Programme for Government is not an option. However, a special focus on a number of key policy areas will be teased out.

The parties have identified housing, mortgage arrears, political reform – including the justice sector – tax (including low pay) as the priorities, as well as jobs.

Specific plans with targets to be implemented every three months will be put in place for each of these areas, to be supervised by the Taoiseach, similar to the Action Plan for Jobs and the Pathways To Work programme.

The faultline between the coalition partners is expected to come on tax and low pay.

There are also differing views on the level of spending cuts to be implemented in the Budget. Fine Gael wants to target any tax cuts on removing middle-income earners from the higher rate by widening the bands.

Labour wants to go beyond this measure, by moving on the USC and also increasing incomes for those on low pay and the minimum wage.

"There is plenty of common ground. The one that will cause most difficulty is around tax and improving low pay," a Government source said.

Fine Gael wants tax cuts to be a strong feature of the next two budgets, while Labour is concerned about the impact of spending cuts.

"Noonan clearly wants to do something on tax bands. Most of the Government's problems are to do with expenditure cuts, when you look at issues like health and the medical cards. We have to try as much as possible to avoid expenditure cuts.

"If the numbers are there, if the flexibility is there, we won't stand in the way of tax reductions," a senior Labour source said.

Ms Burton has clearly stated she is favour of adhering to reducing the deficit to 3pc of GDP in 2015, so the parties are agreed that the adjustment level will depend on reaching that figure.

Finance Minister Michael Noonan reiterated last week that the planned €2bn tax and cuts package won't be required.

Key advisers of Mr Kenny and Ms Burton have met informally on a number of occasions adjacent to Leinster House and in Government Buildings over recent weeks.

However, Mr Kenny is said to be extremely conscious about not being in formal negotiations with Ms Burton as he is highly respectful of the internal Labour contest.

"I don't think the Taoiseach wants to be prejudging these things," a source said.

Mr Kenny's officials have "indicated" to Ms Burton's side that the Programme for Government is not to be reopened.

Sunday Independent

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