BEYOND THE TIPPING POINT 1408 LXVI

BEYOND THE TIPPING POINT

Operation Stable Door has begun. The last few weeks have seen the Government  attempt to rebrand itself in the wake of dismal local election results in May. The Government hopes for some “bounce” from its attempted makeover as a first step in recovery. Two hard questions arise:  is it realistic and  will it work.

First up was Labour, the major loser in May, which, as expected, elected Joan Burton as its new leader. There followed  a week of negotiations between Taoiseach Enda Kenny and  Burton, now installed as Tanaiste (Deputy Leader) , following which a major Cabinet reshuffle was announced. Out went three of the five Labour old guard while Fine Gael for its part promoted two newcomers as well as effecting a round of musical chairs among  surviving Ministers.

The chief move of interest was the kicking sideways of the accident prone Health Minister James  Reilly, who is succeeded  by one of the party’s Young Turks, Leo Varadkar. What Varadkar will do with the poisoned chalice of Health remains to be seen. He will not have much time but the popular view is that he can scarcely do any worse than his predecessor. The other  feature of the new cabinet is that four of its fifteen members are women, though Fine Gael failed to follow up, and has been criticised,  when appointing ten male only junior ministers several days later.

Simultaneously the Government  launched a ten page “ Statement of Priorities” as a road map for its remaining (maximum) 21 months in office. This in an attempt to redefine priorities, building on the (64 page) Programme for National Recovery published when it took office in 2011. The new document is modest on specific deliverables, concentrating  on  refining and re-targeting many of the elements in the 2011 document.

The main 2014 deliverables announced are promises to begin reducing the tax burden on low and middle income taxpayers ( a process to be spread over several years), some help with water charges for those on lower incomes, a programme of social housing and another tinkering with medical entitlements – this time extending free GP care to those over 70 not already in receipt of it. There is also  a stated commitment “ to the full retention of the Free Travel Scheme” – an inclusion which tells volumes about the Coalition’s apprehensions about next facing the electorate.

For the rest the Priorities Statement is a less than inspiring brochure of aspiration. It consists for the most part of announcements to follow through on previous commitments,  with projected targets in many areas to be achieved later in or at the end of the decade, well after the looming general election. There is renewed emphasis on “rebuilding trust  in politics and public institutions” which seems designed to counter criticism of the slow rate of reform to date in areas such as public appointments, local government funding and transparency and accountability in the public sector.

The Statement is gung ho on the economy and future economic growth, with little reference to the still parlous state of the public finances, mentioning only that “significant challenges remain” to achieve the 2015 budget deficit target of 3%.  There is the first rub. Whatever about the recent upturn in the economy, and however the figures are interpreted, some adjustment – for which read spending cuts or tax increases – will be necessary in October’s budget to hit the 3%. It may be a billion rather than two but even that figure will be hard achieved, given what has been taken in recent years. Factoring in even a modest amount for the promised tax cuts and hand-outs will further complicate the issue. From here the budget seems likely to be an exercise with mirrors, cuts in capital spending, more increases in excise on alcohol, fuel, and cigarettes and a balancing figure based on pious hopes for “ revenue buoyancy.”

There is considerable doubt whether the  new strategy is economically realistic. It has been excoriated by Colm McCarthy, one of the country’s leading economists, with a reputation for plain speaking. As he put it, succinctly, no sooner was the Troika gone than it was back to “ the core business of Irish politics” – buying votes. He described the new measures as “ominous,” and threatening to worsen the state’s finances by using what could be  a temporary rise in tax revenues to finance a permanent reduction in direct taxes. Meanwhile, of course, government  borrowing goes on, adding to the national debt.

Ominous also  is the prospect that  the once-off ( or twice-off, if the Coalition survives that long) “ soft”  budget, with giveaways, coming from the Government which preached and practiced prudent economic management to restore the country’s finances, will open the floodgates to  a general election bidding war, with the main parties striving to outdo each other with unrealistic election promises.  Forget for a moment the 2011 election, fought against the sombre background of the Troika presence, and think back to 2007, before the deluge, when the then opposition parties made ever more extravagant promises in an attempt to dislodge Fianna Fail. Sobering.

Whether the rebranding will work politically is also doubtful. Labour has fallen a long way and will be hard put even to regain its traditional core support of around 10%. Fine Gael also has much ground to make up. And time is short. From 1 August the current Dail will have a maximum of less than 600 days left; it must adjourn no later than 9 March 2016, with an election to follow by 3 April. If the trend for banana skins shown over the past year were to continue apace, the chances of  the government lasting that long cannot be great. The whole health area is a morass, with both the medical card issue, now well and truly thrown open, and the need to exert some form of meaningful control over health spending, carrying potential for further trouble.

One  major trouble  looming  is water. The issue has been badly handled from the outset, and even this late in the day the cost to be levied for what was once free is still not known. The government appears to be pinning its hopes on  the benign scenario of an average annual charge of $350 per household proving palatable. But if the government thinks its problems over what many feel has been the tipping point are in the past, wait till the water bills arrive in voters’ houses from January next.

Hard pounding, Gentlemen!

As a footnote, I’ve just finished reviewing “ Obama Power” about Obama’s 2012 re-election, something that appeared improbable after the 2010 Congressional election results. The authors attribute Obama’s victory  to his success in rebranding himself and in succeeding in stretching the “narrative arc” of his message so that, instead of being judged on his first term his stated goals would be stretched to encompass achievement before the end of his second term. Such a strategy would have appeal to the beleaguered Government here. But then this Government does not  have the witless Tea Party or the gaffe-prone Mitch Romney to help restore its fortunes.

19/07

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