Brendan Keenan: Little political appetite for Finance Bill debate
A LOT of people are already very familiar with the Finance Bill. They only had to look at their pay packets to see the impact of the new universal social charge and reduction in tax credits. That is the kind of thing which becomes law in finance bills.
So no one can say it is not important. In normal times, there would be no great difficulty about letting the bill fall with the Government, and having a new government start over again.
Four months are allowed between tax changes coming into force after the Budget and having to become law under a finance bill. Crucially, though, the clock stops ticking if there is an election. So, technically speaking, there is no rush.
The times, however, are anything but normal. The key to all of this is the rescue package agreed with the EU and IMF.
Even after the draconian Budget, the expected gap between public spending and taxation this year will be €17bn. Public services and transfer payments from the State to households would collapse without those rescue payments.
While the funds may guarantee that government workers get paid at the end of the month, everything else is going the wrong way. Deposits have poured out of Irish banks. Their credit ratings are often too low to qualify for corporate deposits, but many ordinary people are now too fearful to leave their savings with them.
The corollary of that fear is the plunge in consumer confidence. Early signs say that has translated into a plunge in spending as well this month. Together, the new government and the EU/IMF will have to steady the ship, and quickly.
As is well known, the bailout money comes in quarterly doses, with conditions attached. The next review of how the conditions are being met is due in March. The new administration will be in place, and the Finance Bill will presumably be law, but it seems unlikely that there will have been much improvement in confidence.
The rescuers, in Brussels, Frankfurt and Washington, are also in a difficult position in all of this.
The political crisis will be seen in two ways -- as a sign that Ireland is still being governed recklessly, and an indication that the will to engage in the corrective austerity programme is weakening. Many foreign commentators and investors will hold both opinions.
It is too early to say what the attitude of the EU/IMF will be. With the Finance Bill passed, and the election over, the €6bn in tax rises and spending cuts -- mostly tax rises -- will still be on track.
It seems plausible, though, for the emergency lenders to seek a fresh commitment from the new government to the targets in the four-year plan. Public opinion and financial markets across Europe will expect it.
This will be especially the case since the election campaign is bound to raise more doubts about Ireland's attitude towards the rescue agreement. Even in its enfeebled state, Fianna Fail will do its best to separate Fine Gael and Labour on the economic and fiscal issues.
Sinn Fein, and the new European champion Joe Higgins MEP, will be able to say the whole thing should be overturned, and Ireland should stand alone against the financial and foreign hordes. By the time the campaign is over, such views will have received a lot of publicity, both here an abroad. They may even receive a lot of votes.
So it will be difficult for Fine Gael and Labour to seek a mandate in the campaign to apply the remaining €9bn of the austerity programme. We will hear much of growth, jobs and re-negotiation; rather less of what has already been agreed in the four-year programme.
One can see why the last thing the new government would want is to have the passage of the 2011 Finance Bill as the first item of business. But it is also true that an election without the bill having passed -- however normal under Irish law -- could send shockwaves across the teetering eurozone.
These are the kind of political calculations that prompted demands for the bill to be rammed through in just four days. It can be done, no doubt. The far more dangerous Credit Stabilisation Bill on the banks was forced through in just this way. Usually though, as in that case, it is government that does the forcing, not the opposition.
It is always unfortunate to see such important legislation passed in that way. There are new things in the bill, and it is the piece of legislation where governments most frequently give way to counter-arguments.
As well as the social charge and reduction in tax credits, the bill proposes extensive new anti-evasion powers for the Revenue and enhanced penalties and an extension of property tax reliefs. The unexpected extra charges for third-level students certainly merit debate in a parliamentary democracy.
But these are debates that no one in the mainstream parties wants to have in current circumstances. But then, democracies ought not to get into such circumstances in the first place.
- Brendan Keenan
Irish Independent
