John Bruton

Opinions & Ideas

Category: Fianna Fail

PARTY RHETORIC, AND MANIFESTO SPECIFICS, TOLD VERY DIFFERENT STORIES………

irish-flagLITTLE REAL DIFFERENCE ON SPENDING AND TAX

The economist Jim O’Leary has circulated a postscript on the Irish General Election.
It is very good, says something new, and I am republishing it here so it gets a wider readership.
It shows that the description of the relative economic and fiscal policy positions of the two main parties, as set out in their manifestos, is completely different from the characterization of their policy stances during the campaign by the media and by one another.
It would appear that neither the media, nor the politicians themselves read, and added up the cost of, their own, and opposing party, manifestoes!
Here is what Jim wrote:
………………………………………………………………………………………………………………………..
“I’ve just been doing a bit of digging into the election manifestoes of our two largest political parties in order to get a handle on how difficult it might be to bridge the ideological chasm between them. After all, Fine Gael is a party that sits firmly on the right of the spectrum and wants to slash taxes even if it means compromising standards of public service provision, while Fianna Fail has reinvented itself as a social democratic party with a more measured approach to reducing taxes and a much stronger commitment to the public sector. Or, at least, that’s how the narrative of the last few weeks would have it.

Well, the thrust of that narrative receives some slender support from the respective parties’ plans for government current spending.

FF proposed to devote €4.8bn to raising current spending over the next five years; the corresponding FG figure is €4.2bn. The difference between them hardly amounts to a whole hill of beans however, equating as it does to just about 1% of the current expenditure base. (Indeed, by this standard, the Sinn Fein plan to raise current spending by €6bn by 2021 doesn’t look dramatically out of kilter.)

On the other hand, FG is the more ambitious party in relation to investment spending having proposed an extra €4bn for the capital budget for the 2017-21 period, compared with FF’s €2.7bn.

So, if we just add current and capital together (and ignore their differential impact on the dreaded ‘fiscal space’), FG’s plans would result in higher public spending than FF’s. A slightly surprising conclusion when set against the prevailing narrative.
Much more surprising (indeed ‘surprising’ is an understatement of how it struck me when I discovered it a few days ago) is the comparison of the cost of the two parties’ proposals in relation to taxation.

The cost of the FF proposals? Just over €2.9bn.

And FG’s? A bit less than €2.5bn.

In other words, FF was proposing to devote almost €0.5bn more to tax cuts over the next five years than FG. If you don’t believe me, check the two sets of numbers in their respective manifestoes.

So much for FG being the ‘tax slashers’. The cost of their commitment to abolish USC, at  almost €3.5bn over the 2017-21 period, was to be offset by a net €1bn of increases elsewhere, including a 5% levy on incomes over €100k, a range of base-broadening measures for high earners, a steep hike in cigarette duties and a new tax on sugar-sweetened drinks. In contrast, FF’s more modest plans in respect of USC, costing €2.6bn, were to be accompanied by a net €300m of tax reductions in other areas.

It seems to me that FG’s proposal in relation to a single tax, the USC, was adopted as shorthand for its overall position on taxation (and was taken as emblematic of its attitude towards public service provision), and the rest of its tax platform was pretty well ignored.

Lazy analysis perhaps, but what else would one expect from hard-pressed(!) political commentators (not to mention political opponents).

What is bewildering is that FG made no serious attempt during the election campaign to counter what proved to be a damaging narrative.

Not once did a FG spokesperson say; ‘Hold on folks, Fianna Fail are actually proposing to cut taxes by more than we are!’ Or am I missing something?  “

COALITION EXPERIENCE IN IRELAND…………WHAT WORKS?

In this article I would like, on the basis of my personal experience of working in coalition governments in Ireland, to put forward some ideas that may be useful in other countries.

But first it is necessary, for international readers, to say a word about the party political landscape in Ireland during the period of my political career, 1969 to 2004.

During  this time, there were five major parties in Irish politics, all of whom had some involvement in coalition governments at different times. 

These were, in declining order of size
  • Fianna Fail (a traditional nationalist party, which until 1989 had  refused to take part in coalitions on principle), 
  • Fine Gael (a centrist party in the European Christian Democrat tradition),
  • the Labour Party (social democrat party with trade union links),
  • the Democratic Left (a socialist party since merged with the Labour party) and
  • the Progressive Democrat party( a party that espoused liberal economics which has since been wound up).


I served in four different coalition governments, 1973-1977, 1981-2, 1983-87, and 1994-1997.

In addition to the coalitions in which I served during this period, there also have been a Fianna Fail/Labour coalition(1992/94), and a Fianna Fail/Progressive Democrat coalitions (1989/92 and 1987/2002).

Fine Gael and Labour had also participated together in coalitions in the 1940’s and 1950’s.

I was a junior Minister in  the 1973/77 coalition governments involving Fine Gael and Labour, a full Cabinet Minister in the second and third(1981/2), and Taoiseach (Prime Minister) in the fourth one(1994/7).

All the coalitions in which I served involved my party, Fine Gael, as the largest party, and the Irish Labour party the second largest. There was also a third party, Democratic Left, in the 1994-1997 Government. 

I will headline below the lessons I have derived from my experience.

HAVING A PARLIAMENTARY MAJORITY IS A BIG HELP !

The parties in the 1981-2 Government did not make up a majority in the Dail (parliament), hence the government’s short life.

While it did obtain a majority vote for an emergency budget shortly after taking office in 1981, it could not persuade a majority to vote for its more comprehensive budgetary proposals in 1982. The result was a General Election, which the parties lost. They were succeeded by a minority Fianna Fail Government, which introduced a budget almost identical to the one they had voted against in order to bring down the previous coalition.

The reason having a majority is particularly important to coalition governments is that internal negations between the coalition parties themselves will tend to be difficult enough, without the added complication of negotiating with individual deputies, or parties outside the government, to ensure a majority to pass individual measures one by one

All the other coalitions, apart from the 1981/82 one, had a working majorities for all business on which the parties could agree, but the 1983-87 coalition broke up because the parties could not agree between themselves on policy for the 1987 budget.


A THIRD PARTY IN GOVERNMENT CAN MITIGATE TENSIONS.

The 1994-1997 coalition of three parties, which I led as Taoiseach, was the only three party Government in Irish history, and the only one to be formed in the middle of a parliamentary term, without a General Election.

A realignment of parties to form that new government without a General Election was made possible by bye election victories for parties in opposition earlier in the parliamentary term. It was also necessitated by a breakdown in trust between the Labour Party and Fianna Fail, with whom Labour had formed a coalition after the 1992 General Election. 

My personal opinion is that the dynamic of a three party coalition is easier to manage than that of a two party coalition. This is because, if there is a difference between two of the parties, the third one can often be the catalyst for compromise. The presence of three party  in the coalition can avoids  binary conflicts on a given issue, where one or other of only two  parties has to lose face.

THE DYNAMIC OF COALITIONS WILL VARY, DEPENDING ON HOW THEY CAME ABOUT ………….

The parties in the 1973-77 and 1994-7 governments remained united and faced the General Elections of 1977 and 1997 respectively, seeking re election on a joint programme. This is a testament to good relations between the coalition parties, In the other cases, the outgoing coalition parties contested the elections separately. To date, however, no coalition government of the same parties has been re elected.
The internal dynamic of each of the four coalitions in which I was involved was different. The personalities involved were different, and personality traits are very important in politics. 
But the circumstances of their election, and the relativity in size of the parties and economic conditions also made a big difference.

A coalition that had already agreed a joint programme before the election from which it emerged, as was the case with the1973/77 coalition, probably has a better chance of staying together for it full term, and seeking subsequent re election on a joint programme, than has a coalition that is not negotiated and formed until after the election from which it emerged.

This is so for the following reason. If parties have fought an election on different and competing programmes, and subsequently have to negotiate a joint programme involving the inevitable sacrifice of points on which they had fought the election, this will make the subsequent life of the government more difficult. Such parties are more likely to be accused of “broken promises”. But agreeing a joint programme before an election, in which coalition parties will still be competing for votes with one another, is not easy either.

…………………………..ON THE RELATIVE SIZE OF PARTIES’ REPRESENTATION

The 1973-1977 Fine Gael/ Labour Government was first elected in 1973 on the basis of an agreed platform, which encouraged electoral cooperation between them and maximised their seats. The leaders of the two parties had experienced the frustration of opposition, having served in parliament for a long time, mostly out of power, and this made them personally determined to hold the government together, notwithstanding the substantial differences in interest between their support bases. Labour had a strong influence on the taxation policies of this government, which reflected the number of seats they had.
In the parliaments of the 1981/2 and 1983/7 periods, the Fine Gael party was numerically stronger relative to Labour, than it had been in the 1973/77 period, and this had to be reflected in the content of the government’s economic policy. Economic conditions were difficult because of international circumstances, and framing fiscal policy was thus a hard task .Labour influence was exercised to resist reductions in public spending, which inevitably increased the overall tax burden.

……………………………ON ECONOMIC CIRCUMSTANCES

The three party coalition of the 1994/97 period served in more benign economic times. 
Economic growth accelerated rapidly during the term of office of the government, which made the framing of fiscal policy easier than it had been in the 1980’s.

While Fine Gael was the bigger party, Labour had more parliamentary strength than it had  had in the parliaments of the 1980’s, and this additional strength was reflected in the fact that Labour, although still the smaller party, held the Finance Ministry, a post that the bigger party had always held in  previous coalitions. This ensured that there was a better sharing of responsibility for fiscal policy between the parties than may have been the case before. This reduced tension. The Democratic Left also played a key role in facilitating compromise as indicated earlier.

……………………………ON SYSTEMS FOR MANAGING INEVITABLE DIFFERENCES

The 1994/1997 government also benefitted from having a more structured system for resolving policy differences between parties and ministries than had been the case in earlier coalitions.

Ministers from all three parties each had two advisors who were political appointees. 
One was a “Programme Manager”, whose job it was to work with his/her own Minister and the other Programme Managers, to ensure that the agreed programme of the three parties was implemented across Government. 
The other appointee was a conventional political advisor who looked after his/her Minister’s political interests, relations with his party etc.

In my view, the Programme Manager system was particularly effective in ironing out technical disputes on politically sensitive issues that had absorbed too much time and emotional energy at cabinet meetings of previous coalitions.

As a general rule, as Taoiseach, I did not take an issue to cabinet unless differences had first been ironed out, or simplified, by the Programme Managers, or in discussion between the three party leaders.

……………………..AND ON UNDERSTANDING A SMALLER PARTY’S DIFFICULT ROLE.

The relationship between a bigger and a smaller party in a coalition is a sensitive one because experience in Ireland has been that the smaller party tends to get more of the blame, and the bigger party more of the credit, for what the coalition does in government. Thus the smaller party runs the risk of doing relatively less well in the subsequent election.

Dealing with this problem is a primary responsibility of the leader of the bigger party, the Taoiseach of the day. To this end in the 1994/7, I minimised, to some extent, my own media appearances to allow attention to be taken by other Ministers, including Labour Ministers.

I also arranged for regular separate meetings of Fine Gael Ministers where we discussed issues that might be coming up well ahead of time, with a view to identifying ways to manage any of them that might otherwise cause friction between the parties at the cabinet table. 

Argument at cabinet should be a last resort!

THE IRISH GENERAL ELECTION, February 25 2011

I have been doing quite a bit of work in the Irish General Election on behalf of the party of which I have been a member since I was 18 years of age, Fine Gael.
As I see it, the election is about how best Ireland can regain its national economic freedom of action. Under the EU/IMF programme, without which our state could not now function, all decisions ,that have a significant economic cost or which depart from the programme agreed with EU/IMF, will have to have the consent of those bodies.
Ireland finds itself in this position because of foolish decisions of Irish banks, of some of their customers , and of those(mostly foreign banks) who lent to them. I believe the responsibility is widely shared, as I outlined in my recent letter to President Barroso of the European Commission, which is published elsewhere on this site. There is a valid argument that the Irish taxpayer is bearing a disproportionate share of what is, in effect , a necessary programme to rescue non Irish as well as Irish banks.
But even if the burden is more fairly distributed, there is still a huge burden that necessarily has to be borne by Irish taxpayers and by recipients of Irish Government services. One way or another, taxes will rise and services will diminish.
The two basic choices voters have to make in the election are
1. Whether to straighten out our finances quickly or slowly, in other words, whether to string the pain out over a long period, or over a shorter one,
2. Whether to elect a Government that will be able to do the job according to a single coherent plan, for which it takes full political responsibility, or whether it is to try to get the finances right on the basis of a compromise between the differing plans of a number of different parties negotiated after the election is over.
On the first point, I favour doing the job quickly rather than slowly. We need to get our economic freedom of action back as quickly as possible. It really is not good for Irish democracy to prolong the period in which we have to get EU/IMF permission to make decisions. In the future, interest rates will go up rather than down. The United States Federal Government has huge deficits which it is doing nothing about. This year it will borrow 1.3 billion dollars on behalf of it 300 million people, whereas EU Government will ONLY borrow 1 trillion dollars on behalf of their 500 million people. The cost of retiring baby boomers will be added to all these liabilities. These factors will combine to make it more expensive for Ireland to go on borrowing. Things are not going to get easier, so the sooner Ireland gets its economic independence back the better.
On the second point, in normal times, I would see little or no difficulty with electing a Dail in which a coalition of two or more parties would be the only way to form a Government. But, naturally, coalition Governments always consist of parties some of whose objectives will conflict , and who remain political rivals. When economic times are difficult, and tough decisions have to be made, that leads to problems when there is a coalition. We saw that in 1987 with the FG/Labour coalition, and again this year with the FF/Green coalition.
This is why I argue that, objectively, a single party Government would be the most effective outcome to this General Election, and the best way to put the country on a path towards regaining its economic independence quickly.
A single party Government could make decisions more quickly and minimise wasteful and expensive delays. It would operate to a single internally consistent programme, rather than on the basis of compromises negotiated under time pressure, in the short period between polling day and the first meeting of the new Dail. With a decisive mandate from the people, it would be best placed to negotiate with the EU and the IMF.
I believe these arguments will resonate with a significant share of votes who would have supported Fianna Fail in previous General Elections, but who are now looking for a change.
Fianna Fail supporters have always valued national economic independence. They have always put great store on patriotism. They have often voted Fianna Fail in the past because they wanted strong and stable, and if possible, single party Government . They did so because they were convinced that was for the good of the country.
Now , their old party, for various reasons, in not in a position to provide any of these things. But Fine Gael is.
Fine Gael is now best placed to provide what Fianna Fail voters looked for in the past.
The logical vote in this election, for people who subscribe to these traditional Fianna Fail values , is a vote for Fine Gael.

COPYRIGHT JOHN BRUTON & CONTENT

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