Wednesday 21 August 2019

Kevin Doyle: 'Prudent Paschal in danger of becoming Delusional Donohoe'


Under pressure: Finance Minister Paschal Donohoe is not his usual chipper self, say colleagues. Photo: Mark Condren
Under pressure: Finance Minister Paschal Donohoe is not his usual chipper self, say colleagues. Photo: Mark Condren
Kevin Doyle

Kevin Doyle

For many, the nickname 'Prudent Paschal' would have been taken as a slight. It suggests a boring person who is slow to reach for their wallet.

But when that person is the finance minister in a country recently ravaged by recession, it's a compliment.

Paschal Donohoe was more than comfortable with his public image as a shrewd and cautious operator.

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But events of recent months have caused the halo to slip and, according to his colleagues, the minister is visibly feeling the heat.

Pressure has been mounting from a variety of sources. The United Nations accused the Government of facilitating the "financialisation of housing". Cost overruns at the National Children's Hospital have proved impossible to defend. The broadband debate became all about money rather than internet speeds.

Small businesses are outraged about the slow pace of reform in the insurance sector.

Demands for pay increases in the public sector are continuously growing.

Brexit sits like a threatening cloud on the horizon of even the sunniest day.

And this week the Irish Fiscal Advisory Council (IFAC) warned the Government's medium-term projections for the public finances are "not credible".

It would be easy for the minister to think that the walls are closing in around him.

The Irish Independent spoke to a variety of his colleagues over recent days who said the normally chipper minister was under strain.

"You can just tell. It's been one thing after another," a minister said.

The Opposition is keen to exploit any whiff of weakness from the Government's central defender.

Fianna Fáil's Barry Cowen said the idea that Fine Gael was a safe pair of hands with the economy now had "mythical status". "It is delusional for Donohoe to claim that there is any control over Government spending at the moment."

Cowen, who will be negotiating this year's Budget with the minister under Confidence and Supply, said he "has to stop lecturing about financial prudence and start controlling the overspending that is being allowed happen in a few government departments".

Donohoe's predecessor in the Department of Public Expenditure and Reform (DPER), Brendan Howlin, is even more scathing.

He believes Taoiseach Leo Varadkar was "foolish" to remarry Finance and DPER.

"There are good reasons why we need a separate government department dedicated to keeping an eye on public spending across all departments, which Paschal Donohoe has clearly failed to do," he says.

The minister's woes are far from infinite though. A spokesperson said this Government's stewardship of the economy "means that there are now more people at work than ever before, we have an unemployment rate of just 4.4pc, and the books have been balanced for the first time in a decade".

"Wages are steadily rising, inequality is falling and we are investing in the homes, schools and health services our people need for an improved standard of living."

But Fine Gael is losing control of the narrative. Before he became Taoiseach, Leo Varadkar had a reputation as a straight-talker.

Bit by bit, Micheál Martin has managed to turn 'straight-talking' into the 'spin'.

Fianna Fáil is now trying to do something similar to Donohoe's credibility. It wants to transform 'Prudent Paschal' into 'Delusional' or 'Dangerous Donohoe'.

Those close to the minister can see the problem but they are struggling to stem the tide.

The week started with IFAC's report. By Wednesday, we heard the children's hospital could need yet another bailout costing "tens of millions".

And as the weekend drew in, radio shows were debating why €5m was being given to an airport with no commercial flights.

After Tuesday's Cabinet meeting, Donohoe called the media to the courtyard in Government Buildings to argue his case.

He noted that the European Commission - the gatekeeper for the fiscal rules - judged his budgets to be sensible.

The Government, he noted, has doubled capital expenditure in order to address infrastructural issues in housing, transport and other areas.

And while IFAC warned we are now overly reliant on corporation tax income, Donohoe was ahead of them in commissioning a report on the topic.

He landed one strong punch: "It's worth emphasis that when Fianna Fáil talks about not wanting to repeat the mistakes of the past, it's its past it is referring to."

Everything that happens in Leinster House at the minute occurs with one eye on a general election. As Fine Gael's director of organisation, Donohoe knows this better than most. He is inundated with demands from TDs who want to beef up their local credentials.

Sources say he sometimes feels Taoiseach Leo Varadkar doesn't fully appreciate the efforts he makes to keep everybody happy and the books balanced.

Labour leader Howlin claims the Government has been "blasé" about IFAC's criticism. "There is more than just echoes of the Celtic Tiger period in all of this," he said.

But sources close to the minister say he genuinely worries about their reports.

The Department looks at the health of the economy using a theory of 'the four Cs': current expenditure, capital spending, credit, and competency.

Current expenditure is growing at a slower rate than the economy, which the minister says is a solid approach.

There are problems in the area of capital. The sums just don't add up at the minute and the minister will have to either inject more cash or curtail projects in the near future.

Credit, which played a major role in the last bust, is under control. But even that has consequences, as the Government is getting blamed for young couples who can't get mortgages.

We're definitely in a boom but it's no party for Paschal.

Irish Independent

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