Friday 28 October 2016

Even FG's election vows are looking ropey now

Shane Ross

Published 03/04/2016 | 02:30

INVASION: Some Independents make Joan Burton look like a pussy cat: Photo: David Conachy
INVASION: Some Independents make Joan Burton look like a pussy cat: Photo: David Conachy

One of the great compensations for Fine Gael in the election they lost is that they will never have to keep Labour's promises. Nor will they be weeping any tears of nostalgia for Labour leader Joan Burton and her loquacious style of government. It has not taken Joan long to turn her fire on her former partners.

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Joan Burton was an awkward ally at the best of times. Even Fine Gael is believed to have wriggled with pre-election rage when she promised that Labour would give €6,000 to all first-time buyers if her party was returned. The Labour leader compounded her generosity when she pledged increases in the state pension and decreed a rise in the minimum wage.

First-time buyers, the elderly and low-paid workers were wise enough to show their ingratitude by giving Labour the thumbs down. Auction politics was a loser in the February contest. Nobody believed the narrative. Fine Gael will be equally delighted that they will not have to deal with Joan's promise to repeal the Eighth Amendment to the Constitution.

Fine Gael may have dispensed with Joan's services as an ally but they are now reluctantly courting a group of Independents, creatures not traditionally noted for their shyness or appetite for fiscal rectitude. Last week, we Independents tip-toed gingerly around Fine Gael chiefs in government buildings, probing the potential of homes for the homeless, voices for the vulnerable, radical reform and new politics.

Some of the Independents invading the centre of power last week would make Joan Burton in full flow sound like a sea of tranquillity. The voice of one of the finest, Tipperary TD Mattie McGrath, would suffocate the squeals of a hyena in distress; Michael Healy-Rae and his brother Danny would charm the birds from the trees but could surely be heard the other end of Merrion Street; and Michael Fitzmaurice's thunder is believed to have already beaten many a lily-livered minister into premature submission. Alien forces had entered a political sanctuary. Joan Burton was a pussy cat compared with the latest candidates for becoming friends of Fine Gael.

We shall soon see how the chemistry works between the patrician Fine Gael bosses and the iconoclastic Independents. By now we have broken bread many times together. The two groups may have different tastes in cuisine, but the question on everybody's lips was how those who have never tasted power can combine to form a government with those - whether it be Fine Gael or Fianna Fail - who believe that it is their birthright.

Negotiations between the Independents and both big parties had been progressing reasonably well until Friday, when a national newspaper dropped a grenade right in the middle of the talks. The headline read "Election pledges at risk from spending time bomb". This time they were not referring to Labour's unrealistic "pledges". This time it was Fine Gael's.

Was there no money in the coffers? Perhaps we had arrived at the centre of power just when the downturn was beginning. Suddenly the economic news is far from ideal, but it will not deter us from accepting our responsibilities to help form a government, although it will make the prospect of change more challenging.

What has happened?

Well Ireland is not in trouble yet, but government departments have overspent. All the usual suspects are guilty. Once again this year the Health Service Executive (HSE) will need a bailout. The Department of Education is facing a severe overrun to meet pay bills and the Department of Justice is soaking up any remaining froth with the essential decision to recruit more gardai. Reliable sources estimate that the Department of Health alone will be under-provisioned by €1bn. Here we go again.

Suddenly Fine Gael's own election pledges are looking ropey. Will they be able to keep their promise to abolish the Universal Social Charge (USC)? What are they going to do with child benefit? Will they be forced to abandon their intention to build 25,000 houses a year to fix the housing shortage? Will they backtrack on their commitment to increase the inheritance tax threshold to €500,000? Will the promised teachers' vacancies vanish and the pupil teacher ratio rise rather than fall? The rosy prospects could unravel.

It is strange how the dark economic clouds always seem to gather after an election. We are already being conditioned to blaming external factors. The word "China" has begun to trip off acting ministers' lips in recent weeks as they soften us up for a world recession, blowing across the globe from the Far East. Ireland is helpless in the face of such hostile foreign winds.

The threat of Brexit is another external danger to Ireland's prosperity. Suddenly we are being spooked by the prospect as polling day approaches. Of course the UK has not yet left (and may never leave) the European Union. But if it does, there is no doubt that its exit will be a big blow to our economy. If our largest trading partner departs, our exports will suffer. The government will seize on it as a ready-made excuse for home- grown problems.

Funnily enough, they will probably be partially right. Yet they will never admit that the "recovery", which they insist we have enjoyed in recent years, has been mostly due to the same external factors.

Take a few examples: the fall in unemployment is mainly due to two external factors, emigration and the continued boom in foreign multinationals settling here. Second, we are hugely fortunate that the euro has weakened against the currencies of our two biggest trading partners, the US and the UK. An export boom has followed.

Finally interest rates, again set externally by the European Central Bank, are at record lows. Events outside our control have been good to us.

Yet our permanent problems are still with us. The HSE remains an insatiable monster. Despite appearances, the domestic banks, the rotting centre of our economic collapse, are far from fixed. Their balance sheets are a fiction, their foreign rivals have fled Ireland leaving an ominous lack of competition. AIB and Bank of Ireland are soon set to be totally free of the state shareholdings, allowing them to go gouging their customers with penal variable mortgage rates. Mortgage arrears are still out of hand. Vulture funds are buying up bundles of loans and forcing repossessions. Small businesses are unable to raise funds because the same banks are refusing to lend. The State seems helpless, once again resuming the role of underdog in the tense relationship between banker and politician.

Was this the picture painted for us by the outgoing government at the recent election? Far from it. Money was appearing from nowhere. Even the Department of Finance could not explain a freak spike in revenue last autumn. Happily it was timed to arrive just in time for polling date.

A "spending time bomb" is not the most desirable gift for the next government to inherit.

At the government formation talks on Friday the media reported that Minister for Finance Michael Noonan acknowledged the post-election reality when he suggested that new projects might not be affordable in year one or year two of a Fine Gael-Independent government. First casualty, the commitment to abolish the USC. Labour's promises will not be the only ones adjusted within weeks.

Sunday Independent

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