FF/Greens in cynical 'new' deal for power

In one of the most cynical exercises in government to date, Fianna Fail has agreed to the demands of the Green Party in a manner which makes nonsense of promises made to cut public spending to secure national recovery.

In a breathtaking contradiction, in order to stay in power at all costs, Fianna Fail has simultaneously promised to cut public spending while increasing the number of jobs in the public sector.

Fianna Fail has conceded to row back on already agreed cuts to the education budget, and to avoid other proposed education cuts, by committing to 500 new teaching posts as well as other jobs in education over the next three years.

This is somehow to be done at a time when the Government has resolved to cut public spending by €4bn a year for each of the next three years in order to reduce a budget deficit which will hit €25bn by the end of this year.

Despite promises by Finance Minister Brian Lenihan not to increase taxes in the next Budget, a raft of new taxes are to be introduced, such as a carbon tax and water charges.

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The coalition partners have also decided to cut tax relief on private pension contributions which have already been decimated in the economic crisis.

But perhaps the most stunning aspect of the "renewed" Programme for Government was the manner in which the deal was stage-managed for a special Green Party Conference at the RDS yesterday.

If two-thirds of the Greens membership had voted against the deal, the Government would have fallen. Predictably, the Greens' membership overwhelming backed the programme by an 84 per cent to 16 per cent majority. They also supported the National Asset Management Agency (Nama) by a vote of 69 per cent to 31 per cent.

But the document's publication, laden with rhetoric relating to Green Party principles, was choreographed to maximise the likelihood that it would be passed.

After eight days of deliberation and despite an acknowledgement by Social Affairs Minister Mary Hanafin that everything was tantamount to being "done and dusted" by lunchtime Friday, Fianna Fail only officially caved in in time for the Nine O'Clock News on RTE that night.

Crucially the "renewed" Programme for Government, apart from a few selectively leaked Green-friendly details, was not released in time for critical analysis by the media prior to the convention.

"It's all about staying in power," a senior Government figure acknowledged to the Sunday Independent.

Welcoming the Green Party decision, Minister Lenihan said: "There is now a real momentum for action in this country and the Programme for Government will be implemented within the financial framework set by the Government. We will proceed with the second stage of Nama this week in the process of creating confidence in our economy on world markets."

Any analysis of the document could only concur that it relies heavily on the Government's already published Smart economy and Green economy aspirational policies. But the extent of Fianna Fail's concession to the Greens is contained in the detail of the document, specifically in relation to spending in the public sector and taxation.

Last night Fine Gael spokesman Brian Hayes claimed the programme would send education "down the toilet", and said it was "clear" Education Minister Batt O'Keeffe should resign.

Mr O'Keeffe said the resignation call was "totally ridiculous" and said the "net result" was that more money would be spent on education. "What Minister wouldn't be happy with that," a spokesman for Mr O'Keeffe said yesterday.

As well as the plan to hire 500 new primary and secondary teachers over the next three years, the "renewed" programme rules out the reintroduction of third-level education fees; will immediately provide funding for 28 additional psychologists and commits the Government to no further increase in the pupil-teacher ratio in primary and secondary schools.

The Government also commits to taking on 1,000 third-and fourth-level graduates to work in the public service and in Government departments as interns.

The programme reveals that the Government has decided to press ahead with a range of new taxation measures. It commits to incorporating into the income tax system the various levies introduced over the past 12 months, thereby significantly raising income tax bands. It will also introduce a single 30 per cent rate for tax relief on private pensions, and the employee PRSI ceiling is to be abolished.

Carbon tax will be introduced next year and a new "Site Valuation Tax" for non-agriculture land will also be imposed. Under the headline "Local Taxation & Charges", the programme commits to introducing a new system for financing local government, which will include the introduction of water charges.

On the critical issue of reform of the public sector, the Government is less specific to the point of ambivalence: value for money "reviews" on all large capital projects are promised, as is a "full review" of the expenses system for the public service.

But the programme is silent on the critical issue of cuts to public sector pay and on a reduction in the number of employees in the public sector, the total wage bill for which is costing the exchequer a massive €20bn every year.

Speaking to the Sunday Independent yesterday, economist Eddie Hobbs said: "Where in the negotiations was there anything about public sector pay cuts?

"That is the single thing separating us from getting a huge increase in our international borrowing costs. If they flaunt that in December, we're all economic history."