Saturday 14 December 2019

What kind of economy would we be Left with?

Protests over Irish Water don’t necessarily mean that voters will turn to the Left in the next general election. Pic. Tom Burke.
Protests over Irish Water don’t necessarily mean that voters will turn to the Left in the next general election. Pic. Tom Burke.
Richard Curran

Richard Curran

Headlines about "people power" and the rise of the left in Irish politics in recent months have combined with opinion polls to give the clear impression of a major shift in the political landscape.

Austerity fatigue and the Irish Water fiasco have combined to make people say they are going to vote differently at the next general election. Major government mistakes on water, medical cards and cronyism around state board appointments have all added petrol to their own pyre.

If the latest opinion polls were translated into actual results in the next general election, Labour would be reduced to a handful of seats, and Fine Gael might hold on to around 40 seats - a reduction of around 30.

Independents could be in line to land over 40, and maybe up to 50, seats as almost a third of voters said they would vote for independents or other non-party candidates. Sinn Fein would be tied with Fine Gael on 22pc of the vote. Fianna Fail would be somewhere below Fine Gael and Sinn Fein with 18pc.

What would such a political hodge podge mean for business in Ireland? Well that depends on who would step up and form a government.

It is an easy narrative to say that the Irish Water debacle has drawn up new battle lines along left/right lines. And therefore if the left were to dominate, it would be bad for business. But the Irish political landscape is a little more nuanced than that.

For example, protests like the one in Jobstown didn't force the climbdown on water charges. It was the catalogue of government errors identified by a large swathe of the population. Mass protests from people who might otherwise vote for Fine Gael, really forced the u-turn.

They weren't exactly the Googles, the Facebooks, or the Intels, engaging in mass protest, but many of them, I am sure, were small business people or professionals who work in large companies who were tired of that particular shambles. Some of them were people who might be very supportive of a pro-business agenda at government level, but just couldn't take any more when it came to Irish Water.

Yet, the victory for households on water may see businesses paying more.

If Sinn Fein for example, represents the left, there are small retailers, publicans or self-employed people who are happy to vote for Sinn Fein in their constitutency, even if the party's policies involve making business pay more. Mapping out the implications of this apparent new political dispensation for business might not be that straightforward.

The first question is whether we are seeing a shift towards a more left- wing politics? Yes. The left is gaining a stronger voice but perhaps not as strong as recent water protests and opinion polls might suggest. It is one thing to tell a pollster that you are sick of the government but another to exercise your vote in a certain way, following weeks of manifestos and election campaigns.

The second question is, with all of those people prepared to vote for independents, could we end up with a more unstable government? That is a possibility. But as far as business is concerned, not all of those independents are traditionally left wing and perhaps less supportive of business. A government with independents might not be that far to the left. It could be very right of centre.

Take Shane Ross, for example. He is vocal critic of cronyism, banks and businesses that do things that are wrong but he is hardly a raving socialist.

There are a raft of other independents and those no longer in the party whip, who would be highly supportive of a very pro-business agenda, from Peter Mathews and Lucinda Creighton to Stephen Donnelly.

Ross has identified a gap in the market. He can see the potential clout a new political group in the Dail could have. The difficulty is turning that into a viable political party. If that cannot be done, then perhaps, they reckon, a looser group with some shared policies and views would be enough.

Big businesses will want the preservation of the status quo in terms of the business environment. The economy has really begun to turn around again and companies can see it is working for them. They will want a government that simply doesn't blow it, in their opinion.

Small business owners are in a different position. The bigger ones, employing 50 to 200 people, will want to see very pro-business policies maintained in relation to corporation tax, other business taxes and management of the exchequer finances.

But the smaller guys, from the man with a van to the retailer employing 10 people, will have a lot of different views.

Business in general will want to see pro-business policies, but there is another serious risk that could be a factor in the future. Would a new government be able to get unpalatable and difficult measures through the Dail? Will it be able to restrain the pending clamour for more tax cuts and public sector wage increases?

The protest movement is now targeting the Universal Social Charge. They want it abolished.

But the income tax system has now become dependent on it. The tax took in nearly €4bn last year.

If international economic factors triggered the need for a new round of cuts, would the new government be able to get them past an electorate that has been buoyed up by the power of an Irish Water victory?

It might be very difficult. The Government has told the electorate that austerity is over. International investors, who continue to lend us around €150m per week, will be very interested in how the politics plays out.

If the economy continues on its current growth path, voters may feel confident enough to give the mainstream parties a good kicking in a general election.

If the economy continues to generate wealth, they may feel that a new broom would distribute it more fairly. What happens after that? If the economy falters, the changed political landscape might be too fragile for the challenge.

If that happens, the consequences of government mistakes on water, medical cards and McNulty, could prove very costly indeed.

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