Saturday 22 October 2016

The calm before the storm of Budget 2014

The finance minister is caught between the demands of austerity and expectation, writes John Drennan

Published 22/09/2013 | 05:00

LOOKING UP: from left, Fine Gael TDs Helen McEntee, Mary Mitchell O'Connor and Catherine Noone at the parliamentary party meeting in The Hermitage, Killenard, Co Laois, last week
LOOKING UP: from left, Fine Gael TDs Helen McEntee, Mary Mitchell O'Connor and Catherine Noone at the parliamentary party meeting in The Hermitage, Killenard, Co Laois, last week

Sinn Fein may be the Scientologists of Irish politics but at last week's Fine Gael think-in it was as though Fine Gael had robbed their clothes as effectively as Bertie in the good old days.

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Not since Enda Kenny's first glorious Ard Fheis has such a display of unity been paraded under the approving eyes of the 'Dear Leader'.

The air of respectable Mormon homogeneity was undoubtedly enhanced by the absence of the Reform Alliance and its aristocrat Whig allies such as the Deasys who remain, nominally, within the fold but are really Wild Geese in exile.

In the wake of the plucking of the bad political teeth, and as the new atmosphere of Prussian discipline allowed the Cabinet to feast upon power without challenge, last week represented the high tide of 'Dear Leader' Enda Kenny's position in the Irish power-game.

Last week, the deserted Panopticon that is Killenard represented the Shangri La of not-so-Cute Old Phil, Enda and the rest of the Pringle-jumper-loving Fine Gael golfing ministers.

Amid the marble, the bog oak, the enormous rooms of that gated paradise where all is neat and tidy and everyone knows their place without needing to have manners put on them, even Fine Gael rattled around like Protestant spinsters in the Big House after 1922, such is the scale of the place.

The TDs were happy, though, within the vast museum to FF-inspired Celtic Tiger excess, for possession is everything and FG is the original lost tribe of Irish politics which has finally inherited all that FF once owned. And like all lost tribes, now that they have taken possession, they will not be ejected easily.

Surprisingly, however, all is not perfect in the land of King Enda. It is strange that after a series of budgets that have removed over €26bn from the economy in tax and cuts, that the gentle zephyr of next month's budget could yet be the most dangerous of all.

There was scant evidence of any sense of danger at the Fine Gael 'think-in' last week as the finance minister sat contentedly at the bar, necklaced by adoring blondes.

However, despite the absence of scarifying kite-flying, our maestro of illusion Michael Noonan may have to perform his most delicate series of tricks yet.

And despite his sunny disposition, Noonan knows that Budget 2014 may have to be 'the most clever, the most cunning the most devious of them all'.

Ironically, one of the difficulties Noonan faces is that he is paying the price of the paper success of the politics of austerity.

When the Grumpy Old Men came into office, the slightest breath of fiscal wind would have quenched the last frail flames of the living economy. Now we are at the cusp of that wondrous scenario where a zephyr of growth and job creation would set the economy on fire.

The Government knows all too acutely that we are living in potentially great times where King Enda may follow (modestly of course) in the footsteps of Michael Collins by waving goodbye to the Troika oppressors.

But whilst Enda may already be practising his own version of De Valera's "that Ireland which we dreamed of" speech, the economic situation is still equivocal.

Paddy, finally, after the humiliating submission of the bailout, has one hand on the economic tiller.

And as he bravely attempts to steer the ship on his own, the hand of the castor oil-dispensing Troika nurses is becoming ever looser.

However, the accountancy-led triumph of austerity means Noonan is going to have to deal with the difficulty of elevated expectations.

The problem, though, is that if Noonan loosens the reins of austerity too swiftly, the more the bond markets think about such a prospect, the charier they may get about loaning to poor Paddy if they suspect he is on the fiscal skive.

Ireland may be at the cusp of a Troika exit but the mathematics of a state that is still borrowing a billion euro a month to pay the bills are not good. And should the market herd start to think that now that the Troika has gone, Paddy is sloping off from the righteous path of austerity, the political consequences would be disastrous.

If Paddy, or rather Michael Noonan, was forced to go back to the Troika wringing his cap and apologising, the fiscal credibility of the Government would collapse and the reputation of a finance minister who is the heartbeat of this administration would be damaged beyond repair.

King Enda may be in the vision of Micheal Martin 'The Great Dictator' (a role ironically made famous by Charlie Chaplin as distinct to Genghis Khan) but the credibility of his finance minister is the rock upon which this administration is precariously perched.

Were the acutely political Noonan to have his way, there is little doubt that the Government would stick with the €3.1bn figure on the wise principle that this would, were any small zephyr of growth to arrive, fill and kill the austerity agenda.

One of the few core beliefs within the Coalition is the somewhat self-pitying notion that their role in politics is to clean up the mess bequeathed to them by Fianna Fail before being roundly unforgiven by an electorate who promptly returned the FF good ole boys to power so the process would start again.

The central theme of Michael Noonan's fiscal strategy has consisted of the somewhat hopeful desire that at the next general election, for once, when it comes to a Coalition of Fine Gael and Labour, the political and economic cycle will be in the same beneficial stage.

The Holy Grail, therefore, of the finance minister's strategy is that if Fine Gael or the Government can make the final push of €3.1bn, the Irish age of austerity will essentially be over.

And, glad tidings above glad tidings, this will mean that a Government that has already secured industrial peace until 2016 will have the opportunity to put together two, if not giveaway, then at least mildly Keynesian budgets in 2014 and 2015.

Should that occur, the Coalition would be into the enchanting vista of replacing the current corrosive "ah Labour, ye broke your promises" narrative with the story of how this Government, after great travail and little faith, kept its promises.

Finally, all those years after Brian Lenihan famously claimed we have turned the corner, a Government would be able to convincingly say "our plan is working".

Sadly, the €3.1bn horse has, in the wake of a series of slaps on its ever-sensitive rump by Fine Gael and Labour, galloped out the stable gates.

This, alas, is not the only variable, as Michael Noonan also has to manage feuds between Fine Gael and Labour within the Cabinet and, more astonishing still, within the Labour Cabinet ministers.

In war, that point where it is believed 'one last push' will secure victory is generally the most dangerous moment since, as with the French after Verdun in 1917, this often coincides with a rising tide of discontent within your own troops.

In this administration, Labour increasingly believes the country and, more important still, the party, have been bled white by austerity and are at the point of mutiny.

Noonan will also have to closely watch the battles between the backbench mice for the clashes between Labour's 'not a red cent extra in austerity' gang and Fine Gael's Cappuccino Kids represents a genuine ideological war that could spin dangerously out of control.

The dangerous nature of the current political landscape is intensified by the overweening arrogance of the Fine Gael elite and the growing paranoia of its Labour counterparts which was epitomised by last week's 'all too clever for its own good' campaign against Joan Burton.

So could Budget 2014 be the Gordian knot that sinks the Coalition at the very point of egress from its Troika gang-masters?

It would take an astonishing level of political mismanagement for that to happen; which means it is not entirely improbable.

Oh, and in passing, if you are wondering, a Panopticon is a prison with glass walls where the benevolent but improving chief warden can see everything.

Many would believe such a construct represents the perfect description of the soul of Fine Gael, and parts of Ireland too, under the 'gentle' rule of 'Dear Leader' Enda.

Sunday Independent

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