Cliff Taylor: A new government has golden opportunity to tackle problems

Current economic factors offer a chance to repair some damage. But we must act now

Labour leader Joan Burton at the count at Phibblestown community centre, Dublin. ‘We stand on the brink of a potentially exciting economic and social programme for a new government. However, the talk is not of this, but of party political advantage.’ Photograph: Brian Lawless/PA
Labour leader Joan Burton at the count at Phibblestown community centre, Dublin. ‘We stand on the brink of a potentially exciting economic and social programme for a new government. However, the talk is not of this, but of party political advantage.’ Photograph: Brian Lawless/PA

Is it really that toxic being in an Irish government? Following the Coalition’s electoral mauling we now, as one observer put it to me this week, see 158 TDs with more than 100 of them scrambling to do everything possible to avoid being in government. Isn’t it meant to work the other way around?

Not any more, it appears. Few are prepared to take a positive view of the possibility of being in government. Fine Gael realises that "keeping the recovery going" is not a message that resonated and will wonder what to do next if it is in office. The rest, for their own strategic reasons, would prefer to be in opposition.

Inside the Leinster House bubble, it is all gossip and intrigue. The rest of us, soon enough, will just want them to get on with it.

If this turns into an unstable mess, it will have an economic cost. The calm reaction of the financial markets so far should not be taken as a signal that investors don’t care. Business and consumer confidence has risen strongly in recent months, but remains fragile. The election results shows that many simply have not felt the recovery. There are also dangers ahead – notably the risk of Brexit – and it would be better to have a stable government to handle these.

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But there is also the possibility that growth remains strong, creating a real opportunity for the next government to actually do “stuff”. The latest US economic figures have been good. Here, tax revenues remain strong. What a pity if the opportunity this might create was frittered away, with a government looking over its shoulder all the time, being blown around by the demands of the day and knowing its days were numbered.

We all know the risks and uncertainties – and that economic forecasting is a mug's game. Yet the country faces what could be a short-lived opportunity to actually undo much of the damage done during the economic bust. For the moment the economy is growing and the latest exchequer returns show that tax continues to pile in. Interest rates are low, the European Central Bank is all but underwriting our government borrowing, and oil prices are low. It is an extraordinary grouping of positive factors which will not continue forever.

Repair the damage

It gives a new government the opportunity to do two things. One is to remove much of the risk from our economic future by cutting our deficit and debt burden. The other is to continue undoing the terrible damage of the crash and start rebuilding for the future, particularly by starting to reinvest in key areas of need – housing, health and, yes, even water.

It is a potentially exciting economic and social programme for a new government. Yet, so far, in the wake of the general election, the talk is not of this, but of party political advantage. A minority Fine Gael government propped up for a period by Fianna Fáil appears to be on the cards. It does not sound like a formula to address the complex policy agenda we now face. All the big issues – housing, health, water and so on – require a detailed programme and a long-term approach.You could see a minority Fine Gael government as being a "steady as she goes" administration at best, and an unstable mess at worst. But it won't be a reforming administration and it could well struggle to deal with the big issues.

Take water. We need investment in infrastructure. And we need to pay for it. This will either come from charges or from general taxation – or the investment won’t happen. It shouldn’t be beyond the next government to come up with some new arrangement. It won’t please everyone. It will still involve paying for water. It could involve an underpinning of Irish Water in public ownership. But please, spare us the pretence that you can change the game by putting a new name on the Irish Water doorplate, or having some fudge that there won’t be charges for a few years, but sure they might come back in future.

Even sorting this out now seems a stretch for our political system. How are we ever going to get to grips with the housing crisis, or the hospital queues ? No one wants to take any risk – at all – in the wake of the extraordinary election result. And going into government is seen as the biggest risk of all.

Looming unknowns

As

Labour

returns to power with a group of TDs that would fit in a suburban people carrier – it looked for a while like a saloon might do – maybe this is understandable.

But as well as potentially missing an opportunity, it could also be dangerous if events turn against us. Market and business confidence will both hold for as long as it appears there will be no big change in policy, and that there will be a government in place, able to react if something serious happens.

If, for example, government talks falter as the UK polls start to suggest Brexit is on the way then all bets are off. At a less dramatic level, a lengthy political hiatus would feed through to consequences for business and consumer confidence.

If the formation of the government is driven by parties positioning themselves ahead of the next election, then almost by definition it will fall apart sooner rather than later. If we are going to have another election, better to get it done quickly.

The risk is that an opportunity could slip past to not only “keep the recovery going” but to build on it.