All the measures in the annual Budget introduced by the Irish Government are expected to get parliamentary approval, despite the fact that the current administration has only a minority of seats in Dáil Éireann. The reason is that the main opposition party, Fianna Fáil, is unlikely to vote against any Budget-related motion put forward by the Fine Gael-led government, although it may well abstain.
This does not mean that the party led by Micheál Martin has suddenly been overwhelmed with kindness towards its long-time political rivals and opponents. No, the determining factor is that there is no guarantee, if a general election took place in the near future, that Fianna Fáil would win sufficient support to oust the present regime. Indeed, Martin’s party suffered a sharp drop of seven percent in a recent Irish Times/Ipsos MRBI opinion poll, leaving it on a par with Fine Gael at 26 percent support.
There were few surprises in the budget announced in the Dáil by Finance Minister Michael Noonan and his Fine Gael colleague, Public Expenditure Minister Paschal Donohoe. The main elements include the following:
Modest reductions of 0.5 percent in the lowest rates for the Universal Social Charge, a much-resented tax on gross income which was introduced in 2010 to help deal with the financial crisis at the time. Originally believed to be an emergency measure that would be in place for a short period, it now looks like a permanent feature of the Irish political landscape.
The state pension paid to persons aged 66 years and over is to be increased by €5 to €227 ($250) per week from March 2017. The demand for this increase was originally issued last August by Fianna Fáil’s Social Protection Spokesman, Willie O’Dea, but in the lead-up to the budget there was speculation that it would not take effect until June and that the money saved in this way would be awarded to other welfare categories.
This gave rise to suggestions that Fianna Fáil would feel obliged to vote against the budget and a general election would then be called in short order. However, the choice of March as the date for the increase is seen as an adequate compromise. All other social welfare payments will also be increased by €5 a week.
Ireland is suffering from a serious housing shortage and an income tax rebate of a maximum €20,000 ($22000) for purchasers of new homes costing up to €600,000 ($670,000) is supposed to assist in addressing the problem.
Other measures include an increase to 85 percent in the Christmas bonus for social welfare recipients; employment of 2,400 additional teachers and 800 new members of the Garda Síochána, Ireland’s police force; a rise of 50 cent in the excise duty on a pack of 20 cigarettes; a special tax credit for people in the fishing industry; and a proposal for a tax on sugar-sweetened drinks by 2018.
Introducing what is generally considered to be a cautious budget, Finance Minister Noonan said that, “now is not the time to move away from the prudent and sensible fiscal policy we have been following, which are obviously yielding very positive results.”
Fianna Fáil Finance Spokesman Michael McGrath told the Dáil: "While we did not write this budget, from the outside, we influenced it as best we could in the direction of a fairer and more decent Ireland, and we make no apologies for that.”
When Michael Noonan and Michael McGrath had finished their initial Dáil contributions, Finance Spokesman for Sinn Féin, Pearse Doherty said: “The only thing we have been missing for the past two hours is the two Michaels crossing the floor and giving each other a big hug, so much was the love-in between Fine Gael and Fianna Fáil.”
Compared to the picture emerging from the presidential election in the US, Irish politics looks placid, predictable and very civilized indeed. But the situation that exists in Ireland is also highly unusual in historical terms.
In the last general election in February of this year, the outgoing coalition between Fine Gael and Labour got a ferocious hammering. These two parties had stormed to power five years earlier with a total of 133 Dáil deputies between them, 76 from Fine Gael and 37 from Labour, but when the dust settled after the vote in February there were only 50 Fine Gael and a mere seven Labour TDs out of a total of 158.
It took ten weeks of negotiations before a government could be formed. Despite much speculation that Fianna Fáil would sufficiently overcome its distaste for Fine Gael to establish a “national” government, this did not come about.
The two parties trace their roots back to the Irish Civil War of 1922-3: Fine Gael was initially the party of the professional classes and big farmers while Fianna Fáil relied upon the workers and small farmers, but in recent decades there has been considerable convergence in their respective support-bases.
If a government of some kind had not been formed after last February’s vote, there would have been another general election in the very short term with no guarantee that the result would be substantially different. Fianna Fáil had won 44 seats this time, compared with only 20 in 2011, but that was still six fewer than Fine Gael.
Following protracted negotiations, a “confidence and supply” arrangement was made, whereby Fianna Fáil would remain in opposition but would not vote to bring down the minority government led by Fine Gael, provided certain conditions were met.
At the same time, Fine Gael secured the support of a number of Independent TDs, some of whom were given ministerial positions. Sinn Féin, which won 23 Dáil seats in February, was not involved in any of these deals and now portrays itself as the real leader of the opposition.
Meanwhile Enda Kenny has announced that he intends to stand in the next general election although he has previously declared that he will not be leader of Fine Gael when that comes about. However he hopes to still be Taoiseach at the time of next year's Budget.