Ireland's new Government established - What's the plan to save the country?
By: John Spain | Published Wednesday, August 24, 2011, 2:50 PM | Updated Friday, September 9, 2011, 10:31 PM
I had a teacher many years ago who was forever using the French phrase “plus ca change, plus c'est la meme chose.” In Ireland's second official language, it means the more things change, the more they stay the same.
My old teacher and his catchphrase kept coming to mind over the past week as the dust settled after the election and it became clear how desperately eager Fine Gael and the Labor Party are to grasp the reins of power.
They're so eager they could not even put on a show of disagreement and brinkmanship as they held talks to hammer out an agreed program for governing the country over the next five years.
Given the wide differences between the policy platforms they campaigned on during the election, you would have thought that the negotiations between them would have been extremely difficult. But not a bit of it.
Their negotiating teams wrapped the talks up in a couple of days and the agreed program was approved by the two parties last weekend, in plenty of time for the first meeting of the new Dail (Parliament) this Wednesday.
After so many long years in the wilderness, nothing was going to stop these guys. This is their chance.
Most of the senior figures in both Fine Gael and Labor are on the wrong side of 50, or even 60, so this may well be their last chance. And they are grasping it with unseemly haste.
All that talk of reforming politics and doing things differently, and all those radical proposals for saving the economy and the country and standing up to the EU and the International Monetary Fund (IMF), you can forget all that right now.
That stuff was good for the election campaign and it worked. But the election is over and it's back to reality now.
And the reality is that things are going to carry on much as before, except that it's a different team of middle aged men (and it's almost all men) in suits who will be running the show.
Radical? Original? Different? Don't make me laugh.
More competent, more effective, more honest? Time will tell.
The only thing that has become clear over the past few days is that the Fine Gael and Labor guys can't wait to get their bums on the ministerial seats. And they intend to stay there for the long haul.
That's why Fine Gael did not even bother to talk to the independents who could have supported a minority Fine Gael government. They wanted the massive majority that a Fine Gael-Labor deal provides so they can be sure of staying in power even when the going gets tough.
All the promises of radical change that Fine Gael and Labor made during the election, well, that's all vanishing like the proverbial puff of smoke.
In fact the election was barely over when the Taoiseach (Prime Minister) in waiting Enda Kenny was moderating the Fine Gael rhetoric about forcing the bondholders to share Ireland's pain, whether the EU liked it or not.
Ditto with Labor. The bould Eamon Gilmore, who made election headlines with his hard-hitting speech that it would be Labor's way, not Frankfurt's way (code for burning the bondholders) has gone all coy and quiet.
Suddenly, the threat is gone.
Now they are talking about "putting our case to our EU partners," about convincing the EU that there should be "burden sharing" and an EU wide solution to the problems of the weaker countries like Ireland, Greece and Portugal.
In other words, they have shifted to the position where they are no longer advocating a revolt by Ireland, but are now saying there must be an EU-wide change in the bailout mechanism. And that's a very different approach.
On the brink of power, Kenny and Gilmore are now confronted with the reality that the real power here is no longer in the Dail, but in the offices of the EU and the IMF.
They are confronted with the appalling vista of the Irish banks and the Irish economy and the fact that there is virtually no money to change anything unless it comes from the EU and the IMF.
They now have to face up to the fact that rhetoric does not put bread on the table, and that our very survival as a financially sovereign state depends on the support of the EU/IMF.
So after all the talk about a major renegotiation of the bailout deal secured from the EU/IMF by the Fianna Fail led government, it turns out that Fine Gael and Labor are going to continue with the deal after all.
It should not be a surprise because there is no alternative, but the realization has still come as a huge shock to many voters who believed what they were being told during the election.
There will be some finessing around the edges of the deal, of course, to make it look better, but the truth is that the incoming Fine Gael-Labor government will be continuing with Fianna Fail's four year plan of cutbacks and tax hikes to close the budget deficit.
They are sticking with the target of reaching a 3% deficit, although now that is to be achieved by 2015 rather than 2014. The only problem with this is that the 2014 target was part of the bailout agreement with the EU, and so far we don't know whether "our EU partners" will agree with the extension.
The signs from the EU heads are that they probably will, and also that they will give us a slight reduction in the interest rate on the bailout cash. But these new terms will also be available to any other country which needs EU support, and they will be the result of an EU reappraisal of how the euro zone can best be supported rather than of any special pleading by Ireland's new leaders.
My guess is that the new government will continue to front load most of cutbacks that have to be made to keep our EU/IMF "partners" happy, and that the change in target date won't really make much difference to the pain to be borne by the Irish people.
It's also a fact that a small interest rate reduction and a one-year extension of the time given to us to get our deficit down to 3% will result in much the same level of cutbacks that will be necessary here over the period.
Plus the EU chiefs have also hinted that for us to get new terms for our deal may require us to give something in return -- maybe like an increase in our very low corporation tax level, which Germany and other EU countries do not like.
So it's business as usual on the main challenge facing us. It's also business as usual on many of the other issues facing us.
A look through the 64-page program for government agreed by Fine Gael and Labor (it's on the RTE website) makes that clear. It reveals that most of the promises that Fine Gael and Labor made during the election have been fudged or long-fingered.
But of course they have a ready-made excuse --the financial situation is even worse than Fianna Fail had been saying. Plus we have to await the new assessment of the banks due in a few weeks to see how deep that black hole really is.
It's worth reading the program for government to see for yourself just how vague it actually is. Previous radical policy proposals have now been fudged, and the absence of a time frame for many of the changes is striking.
The most worrying thing is that the program lacks the coherence that a single party government could have offered at a time when the country desperately needs absolute clarity about where we are heading.
Instead we have bits of Fine Gael and Labor policy lumped in together and the big decisions on the three Bs (bailout, banks and bondholders) have been kicked down the road.
One indication of how Fine Gael and Labor have put their parties before the country is the decision to split the minister for finance role into two jobs. At any time finance is a key ministry, and at present it is critical.
But to avoid a dispute about who was to get finance, Fine Gael and Labor have divided it up between them. Fine Gael will keep the main role with control of the budget and economic policy. But control of the public sector, which eats up so much of state spending, is to go to a Labor minister.
And who are the main supporters of Labor? The public sector unions -- they will now have a stranglehold on the attempt to reduce the number of state sector workers and the huge state sector wage bill which is essential to get the deficit under control.
Even the Fine Gael proposal to cut the size of the Dail is now being hedged, just one example of what is going on. Fine Gael had promised to cut the number of Dail deputies by 20. But there is no number mentioned in the program, just a commitment to look at it after the results of the 2011 census are published.
Kenny said he would abolish the Senate, which got him huge publicity. Now it seems that this may take a very long time because there has to be a referendum.
It's the same compromise stuff throughout the program, whether it's on the proposed cuts in welfare or the increases in tax. We needed a clear vision.
What we've got is a contradictory plan so vague it leaves us in a fog of uncertainty.