Tuesday 25 October 2016

Election campaign harmful to long-term policy strategy

Published 25/02/2016 | 02:30

'Good luck: sorry to leave it in such a mess," was the marvellous comment of departing British Chancellor of the Exchequer Reginald Maudling to his successor, Labour's Jim Callaghan, after the Conservative defeat of 1964.

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No such problem for the next Irish government, or so we are told. Indeed, whatever the outcome of tomorrow's vote, Fine Gael and Labour will think that their role was once again to clean up Fianna Fáil's awful mess.

They had hoped that this time they would get their just reward, and will continue so to hope until the boxes are opened. Truth is, whoever succeeds, it may not be quite the glittering prize that the election campaigns would have led one to believe.

Perhaps an election campaign, however cynically devised, leaves an opposition partly believing its pledges, so that having to abandon them when in office is not as easy as it might seem.

And what if the campaign is not cynical, and the politicians believe what they are saying?

While the reality of 2011 should have been obvious to everyone, the situation in 2016 is anything but obvious - not even perhaps to those who have been in government for five years.

Perhaps they should have gone into more detail as to how they think things stand, and why. It is one of the advantages of being in government that ministers' opinion on the state of the economy and the public finances is better-informed than those of the opposition. If it is delivered reasonably realistically, it can set parameters for a campaign which are difficult for opponents to challenge.

The coalition, with the authority of inside information, portrayed the next five years as being as good as could possibly be. It's not actually a forecast. There is no detailed medium term forecast based on implementation of manifestos, just assumptions as the baseline for policy.

Two immediate difficulties were that it the assumptions were hard to believe and, even if believed, their use as a benchmark meant no party had to offer choices to the electorate.

Wisely or unwisely, intentionally or otherwise, the Government levelled the playing field for everybody.

Another narrative could have been offered, which portrays the next five years as very tricky indeed.

I will leave the electoral wisdom of such a stance to the forensic analysts doing election post-mortems. But from the facts as we know them, the tricky scenario is more plausible than the blissful half decade portrayed.

Many made that point, but it is not just about the next five years. Optimism about the economy is not the only problem - perhaps not even the main problem. A greater difficulty is that no framework has been set for the overall goals of Irish policy. Lots of desirable objectives, yes, but very little sign of priorities or of the actions required to achieve these objectives.

In critical ways the election has even damaged the existing framework. The strategic canvas is alarmingly blank, which will be particularly unfortunate if there is difficulty forming a new government.

The most notable example has been the attack on USC (now "social charge"), even though it has been a goal of policy since well before the troika to broaden the income tax base - a goal which became a necessity after the Crash.

It would have been the work of a few hours to incorporate the USC into a broader three, or even four, band income tax system, but ill-defined claims about "fairness" took precedence.

We could still get there by accident, with the plans for a higher tax rate for six-figure earners. But that is unlikely to last - if it happens at all - precisely because it is not part of a properly thought-out tax policy.

Such a policy would have included property tax and the role of charges for public services but both were presented as nothing more than unfortunate actions needed to clear up the Fianna Fáil mess.

As a result, property tax withered on the vine from the beginning and the case for charges is already lost.

One of the great mysteries of Irish life is the desire of the public and officialdom to return to the way things used to be - even though the way things used to be has rarely been much good. This ingrained attitude dooms most attempts to change things to cope with what will be a very different future. There are worrying signs that the political class has decided that it is hardly worth the effort.

To take one, big example: the inevitable costs of ageing - from pensions to cancer treatment - are not even on the menu, although it is indisputable that the present tax base cannot fund the former and the health service cannot deliver the latter.

A few squeaks appear at the end of manifestos about things like this which really matter. Fine Gael would transfer the management - but only the management - of under-performing hospitals to outside contractors.

Fianna Fáil would actually move poor managers but does not have even a squeak of doubt on the cornucopia it offers to the swelling ranks of pensioners. Labour, too, seems coolly untroubled by the actuarial deficit looming up for the country and an expensive health service which cannot cope well with even a young population - although its stance on pensions at least qualifies as a policy of sorts.

At one time, optimists (or cynics) might have said that such matters can be left out of election campaigns and dealt with afterwards in government.

Modern communications mean that the electoral spotlight never really switches off. Governments don't get a quiet few years to work on broader, longer-term strategies which will not be all that popular.

There is less chance of that in the next few years, even if there is a solid government, and real difficulty if there is not. The new European rules give very little "fiscal space" before 2019.

Some analysts think budgets may actually have to be tightened over the next two years. Some ministers themselves seemed taken unawares when the implications of these rules were raised during the campaign.

There is a lot about those rules which can be criticised. But one of the worst outcomes would be if governments start blaming them for all the unpleasant stuff while portraying themselves as the thwarted purveyors of gifts.

There is already a crisis of confidence across the democratic world, including Ireland, based on the apparent powerlessness of governments in the face of global capital and the consequences of global trade.

Europe, it goes without saying this week, has issues of its own. Solutions are not easy to come by, but they certainly do not include politicians further abandoning their responsibilities to govern with serious intent.

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