IRELAND: WHERE WE ARE AT 1611(2) XCV (2)

IRELAND: WHERE WE ARE AT

To recap. Last February’s general election produced no clear winner, with Fine Gael, the largest party, winning less than a third of the seats (FG 50, FF 44, SF 23, Lab 7, Others 34). Taoiseach Enda Kenny was eventually re-elected after concluding a “Confidence and Supply” arrangement with Fianna Fail under which it agreed to abstain on major issues provided its specified interests were taken into account.

While this was criticised at the time as inherently unstable, the Kenny government in early October successfully negotiated its first signposted hurdle – the 2017 budget.  With little change in the opinion polls and no enthusiasm among the major parties for another election, some pundits are talking about the possibility that the government will last the three budgets foreseen in the arrangement.

The arguments in favour, apart from nobody wanting an election, are that the economy is still performing at least as well as could be expected, that there is wide acknowledgement  that there are no magic bullets to solve at a stroke the housing and health issues which dominate domestic politics and that an election is unlikely to change much.

Others are less sanguine. The bookies are giving odds on an election next year with the next government a grand coalition of the two main parties. Certainly there are major issues pending.

The slow burner, which only arose after the May agreement, is the effect of Brexit, now looming ever larger. The first tangible outcome has been the significant fall in the value of sterling, making Irish goods and services more expensive in what is by far the largest market for Irish indigenous industries. And already the-canary-in-the-coal-mine has sounded, with several of Ireland’s mushroom producers, dependent on the UK market, closed down.  There are fears of, if not a tsunami, then substantial job losses and business closures as Irish firms are priced out. Sterling’s fall has also heralded a return of the cross border shopping effect with southern shoppers heading north, as in the past, to take advantage of cheaper prices, and not just on high excise items like alcohol. And Ireland is now more expensive for British visitors, our largest tourist market.

Still unquantifiable, and likely to remain so for some time, is the effect of Brexit on the Common Travel Area between Britain and Ireland, with all the possible implications for relations between the two parts of the island. Given the centrality of the issue of migration into Britain in the Brexit vote, there is increasing concern over where Britain will situate its border controls. It is hardly going to allow unrestricted access from Ireland into the North or via ship or plane to Britain if this provides a back door for third country nationals to enter. The alternatives are to position border controls on the border with the south – which, however organised, will greatly inhibit and discommode cross border movement of Irish people – or require Dublin to impose additional border controls at Irish ports of entry. Neither is very palatable to politicians here, with the additional possibility of a large pool of wannabe migrants to Britain congregating in the south.

It will be mid-2019 at the earliest before Brexit becomes a reality. In the meantime there are more clear and present dangers. Ireland has bounced back well from the Crash. Always a good indicator, registration of new private cars in 2015, at 121,110, was up 30% on 2014 and heading towards the pre-bust record figure. The population is increasing, the economic indicators are generally good and the only damper on house sales are the Central Bank’s restrictions on credit, introduced to prevent  a repetition of the disastrous property bubble of the Noughties. Whether the politicians will continue to hold the line on this in the face of increasing public demand for relaxing the rules remains to be seen. While there is no quick fix to the housing shortage, public opinion is fickle. The government could well be wrong-footed on the issue, particularly if Fianna Fail were to embrace it as an election issue.

As I write, the government is facing a slow revolt over public sector pay, with a winter of discontent expected. Pay in the public sector was cut during the Recession, as a quid pro quo for maintaining existing jobs, but with the fatal promise that the cuts would be restored when the economy recovered. Cue the recovery. A cave-in to the (private sector) Luas tram drivers last summer demanding  a pay increase was followed by another cave-in, this time to the ( arguably more deserving) state sector bus drivers. Predictably the queue of state employees seeking restoration of cuts is mounting, with, as I write, the Government facing an unprecedented strike by the Gardai, with all that that implies, in November.

This is a tricky one. There IS a formula for restoring cuts in full, over time as the economy improves and finances permit.  Most of the public sector unions have bought in, so what to do about those who haven’t?  What about those who want more than just restoration? And where should public sector employees, regarded with resentment as having guaranteed jobs for life, come in the queue for restoring other cuts imposed during the recession, including some of the cruel cuts in health and welfare services? All this is negotiable, given luck and no economic setbacks or another worldwide recession. It could go right, but it could go horribly wrong.

One area where the government will definitely run out of wiggle room is that of Irish Water. The issue of paying for water is politically toxic, yet Fine Gael seem unable to grasp this and have saddled themselves – and the country – with another year of wrangling.  To preserve the government the can was kicked down the road last summer with the establishment of an “Expert Commission” to examine all aspects of water in Ireland and report back to a special committee of parliamentarians early in 2017, with a further delay before definite proposals are put to the Dail in mid-2017!

Since Fianna Fail subsequently came out in favour of abolishing charges the issue now is simple: either Fine Gael caves in next year or the government falls. This would be laughable were it not also serious. And waiting in the wings is the issue of increased charges for garbage collection, postponed for a year until July next. Well might a friend remark to me that the country is becoming all but ungovernable, while another friend added more caustically that the country is ungoverned!

As if this were not enough the Abortion issue has slunk back in with increased demands for a referendum to repeal the Eight Amendment outlawing abortion.  A “Citizens’ Assembly” – another delaying device – is to report back on options by mid- 2017. While there is considerable public support for abortion in the case of fatal foetal abnormalities, the small print has yet to be worked out. The battle lines are already drawn and a nasty and emotional debate can be foreseen. One thing is certain. It will not be a shoe-in like last year’s vote on same sex marriage.

All told then, an interesting few months lies ahead.

25/10/16

 

 

 

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