The 'least worst' government is best we can hope for in new political landscape
Published 21/04/2016 | 02:30
Progress is finally being made this week in the formation of a new government. Weeks of posturing, shadow boxing and endless analysis of the Dail numbers might finally come to an end.
But when it comes to economic policy, what sort of government might we end up with? So much of the post-election analysis has been around the make-up of any new government and relatively little has been discussed about its future direction.
The simplistic narrative is that Fine Gael and Labour did some things well but lost touch with the electorate on issues like public services, the housing crisis, and spreading any benefits of recovery around the regions. They generally just fooled themselves into thinking things were going better than they actually were for many people.
The more they emphasised how the economy was improving, the greater the expectations people had about tax cuts, public sector pay rises and restoring public services.
The problem is that all of those things require money and so far, there doesn't appear to be enough of it to go round.
Enda Kenny and his Fine Gael colleagues have been forced to eat a lot of humble pie to stay in power. Fianna Fail, the ultimate pragmatists, know which way the wind is blowing and are prepared to go with it.
There is a real danger that any new government emerging from this current process will blow some of the hard-earned economic gains by trying to please all of the people all of the time.
Here are five big mistakes this new government must not make:
1 Upending Irish Water or water charges: The introduction of Irish Water was a mess. From a political point of view it was "wombat thick". The mistakes included: tens of millions on consultancy fees, threats to cut non-payers water supply to a trickle, insisting on customers supplying RSI numbers, staff bonus payments, pricing, poor communication of its aims and installing meters too quickly.
However, the need for a single, dedicated, separately financed water utility remains. The mistakes have either been rectified or have already been made. The consultants got the money. Slashing charges now won't bring that money back. The pricing has been changed so if anything we are paying too little. The threats to cut supply have been lifted.
Reducing charges or increasing allowances too much will leave the utility's finances hamstrung. Wrapping Irish Water into a new super quango will paralyse the organisation and its aims. It needs to spend €5.5bn on drinking water quality and wastewater infrastructure by 2021 and a further €8bn after that. We have to reduce leaks from 49pc of the system. Underinvestment in this area has been costly but will become a lot more costly if it is neglected.
A complex quango water agency will see its investment cut as soon as new pressures come on exchequer funding.
2 Merging the Department of Public Expenditure back into Finance: There has been speculation this department might merge back with the Department of Finance to facilitate the creation of a new Minister for Housing or Rural Affairs.
Having a virtually standalone Department of Public Expenditure was one of the best things the last government did. Having a separate Cabinet minister in charge of spending, managed to keep a tight grip on it.
Brendan Howlin received relatively little praise for holding the line on government spending throughout much of the austerity years. The troika were breathing down his neck and while the spending reins were loosened when the troika left town, as a model it worked.
The immediate fiscal crisis may be over, but it would be foolish to dismantle a genuinely new political innovation as soon as the IMF heads off.
3 A new Minister for Rural Affairs without a defined role: Momentum has grown around the idea of a rural ministry. Notwithstanding the fact that we had a Minister for State in this role in the last government, people need to be clear about what they want from this possible new Cabinet position.
What is rural for a start? Is it farming country, small post office land or does it include large towns like Athlone, Longford or Letterkenny? What happens in Letterkenny or Athlone, affects a massive rural hinterland as these urban centres are huge drivers of local rural economies.
Rural Ireland is changing rapidly, some of it for the better, some not so much. As someone living in a rural part of Co Donegal, I would love to see some of the challenges resolved.
But there have already been reports commissioned into these issues, like the CEDRA report, but basically ignored. The National Spatial Strategy was effectively abandoned. A new "Minister for keeping post offices open" won't actually solve much.
Some towns and villages have been destroyed by bad planning in the past, emigration or migration to cities, and an erosion of community services, from health to policing. How do you make these places attractive for people to return to or not to leave in the first place?
It would be patronising and wasteful to have an entire new ministry that becomes a lightning rod for rural grievances from broadband to the farmers' milk price, but doesn't know what it wants to achieve.
4 A new Minister for Housing: Housing has become one of the biggest single problems in Ireland in 2016. The last government sleep-walked into the crisis and has paid a price at the polls for failing miserably to address it.
On that basis, having a dedicated minister tackling the problem seems like a good idea. However, we all know what the solutions are. It is about getting more houses up and quickly, while protecting tenants already renting.
The problem is that achieving results will mean saying "no" to vested interest groups, such as landowners, landlords, developers and others. It will also involve incentivising some of these groups at the same time.
The powers needed to really tackle the crisis currently reside with several departments including the Department of the Environment and the Department of Finance.
Will these departments cede power to this new ministry or will the new minister have to try and convince his/her colleagues at every turn? The pressure on any new Minister for Housing will be immense.
He/she could spend half their time firefighting on radio and the other half rushing through the wrong solutions because they might yield some quick points over the bar.
5 Placating Independents in government and Fianna Fail in opposition: A coalition government which includes a sizeable number of Independents will use up enormous political energy keeping many disparate views on side. To lose one Independent might be seen as misfortune but to lose five will look like carelessness! Never has any Irish government had to watch its own back as much as this one will.
Fine Gael will need an entire internal communications infrastructure in place to take constant discreet soundings from Independents and Fianna Fail. The most obvious pitfall is where the government panders to too many constituency pet projects of government-supporting Independents.
We may get a new government from this current round of discussions. But I can't help but feel we are aiming for the least worst political outcome from this election rather than something genuinely new.