Friday 30 September 2016

Same old ways of doing things will not work in the future

Published 31/03/2016 | 02:30

IT is a sign of how far politics has fallen that the new-found enthusiasm for Dáil reform was greeted with near universal cynicism. Yet a genuine change to the way things are done in the national parliament may be the only chance of getting through the next few years without serious economic and political damage.

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Fine Gael's big new idea is the widening of the Irish Fiscal Advisory Council (IFAC) into an Independent Fiscal and Budget Office (IFBO) which, among other things, would cost budget proposals and election manifestos from all political parties.

On the face of it, this is very big of Fine Gael. As well as causing a rumpus over the 2016 Budget, IFAC may well have played a key role in the party's election manifesto coming off the rails, when it queried the original €12bn "fiscal space" contained in that document.

Perhaps the Fine Gael plan comes in a spirit of repentance. Perhaps, if IFBO ever came to pass, we should find the usual small clause deep in the legislation which effectively negates the independence of supposed independent bodies.

That's the cynicism. The track record of the last several governments fostered the idea that the real desire of politicians (and always of the civil servants) is that things should as they are stay as much as possible. Yet any rational observer must conclude that things are not going to stay as they are and it would be folly to try to keep Irish systems as they were before.

It is an accident of history that there was a "two and a half" party system in Ireland, despite PR voting. Even if the Labour Party recovers - as it has so often in the past - the old semi-stable system will probably not return.

It could be making a big mistake to assume that the thoroughly hung Dáil is an unusual state of affairs, to be fixed at the next election.

One hundred years on, it is time to ditch another bit of British inheritance; the idea of all-powerful governments and, within government, all-powerful prime ministers and Taoisigh.

Actually, the British already have; quietly bringing in the major constitutional change of fixed-term parliaments.

It is still a Taoiseach's prerogative to dissolve a Dáil and we can already see the threat to economic stability in the present impasse and the risk of an early election. I leave it to the constitutional lawyers as to whether the president has the power to refuse a dissolution to Mr Kenny, since a grand coalition could be formed but, if it comes to it, I hope Mr Higgins will give it a try.

The immediate question is whether the 32nd Dáil, without the constraints of a fixed term, can accept its responsibility, not only to avert a snap election, but to pass the mixture of bold, sometimes unpopular, policies which will be required over the next few years.

And they will be required.

Ireland is entering the really difficult phase of a credit and public finance bust - if you judge difficulty by lack of success. There are few instances of countries achieving a steady return to full solvency after such busts. More often, there is a second crisis and, sometimes, no final success at all. Ireland post-1987 is one of the few successes, but conditions were extremely favourable.

That is not the case now - apart from low interest rates for governments. The sudden threat of widespread industrial unrest is what one might expect at this stage of the adjustment process, as people grow weary of the drop in living standards caused by the crash and seek to recover lost income.

Despite appearances, it is unlikely that the economy can grow fast enough to restore those incomes quickly, as it did from 1990. Upon closer inspection, the spectacular growth figures for the last quarter of 2015 were not nearly as spectacular as they looked.

The domestic economy may still just be on the rebound from the 2011 floor and there is not much on the international scene to propel it further when that process is complete - and plenty which could knock it off course.

At the same time, the country has pressing needs beyond the restoration of incomes. Housing is the major challenge. It is as bad a case of market failure as could be imagined and significant government funds will be required to deal with it.

The budget crisis left already shoddy public assets and equipment even shoddier. Greater investment is urgently needed. It should go without saying (but usually doesn't) that the more that goes on incomes, the less will go on public facilities, including staff.

This is not the stuff minority governments are made of. Nor is it the stuff popular governments are made of. If the old rules still apply, a grand coalition will lose its grandeur very fast.

Of course, one cannot expect all TDs to work together on the same policies, whatever the rules. It probably wouldn't be a good idea anyway. One is entitled to expect that all of them take matters seriously and back up fine words with a few buttered parsnips. For that to happen, though, the rules of the game must change. An obvious place to start is the preparations for the Budget, which should be under way soon. Michael Noonan has warned that the Government may miss the deadline to submit the "stability programme update", which contains key economic forecasts, to the EU Commission next month.

So be it, but the new government should not respond by doing a rush job on the 2017 budget. Quite the opposite. Whether it is a grand coalition or a distinctly minority administration, it should broaden and expand the reforms to the process which are already in place.

These include a "spring statement" for public discussion and last July's "National Economic Dialogue in which the Government had pre-budget talks with unions, employers and opposition.

The usual cynicism prevailed, but it is abundantly clear that more dialogue between unions and employers is a priority. Social partnership may have failed before but it will have to be tried again, and fail better.

Whatever the cynicism, circumstances may make it unavoidable to have more effective Dáil participation in the process. This could even include another Fine Gael idea, where the independent fiscal body would provide information and analysis directly to backbench TDs.

One danger of a grand coalition is that, instead, all this will be done behind closed doors between the parties, before going through more closed doors in Brussels.

A minority government will be forced into more transparency and dialogue.

The old ways of doing things were failing even before the upheavals of this decade. They seem bound to fail in any likely new political landscape.

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