Much done: little thanks. During four difficult years in office, this Government has cut unemployment levels, reduced the deficit, and created the circumstances for long-term economic growth. In the process, pre-election promises were broken while austerity measures and additional taxes ground their way through society.
Four years ago, Ireland was an economic basket-case, surviving on huge EU/IMF loans. Its banking and construction sectors were in tatters, unemployment exceeded 14 per cent and expenditure outstripped revenue by €18 billion a year. Only by looking back can the progress made be appreciated. Unemployment now stands at 10 per cent; the deficit has been cut to €6 billion and the economy grew by five per cent last year. Voters live in the present, however, and respond to immediate and personal concerns. On that basis – and in spite of improving circumstances – the Government remains deeply unpopular.
Parallels with the Greek situation exist. Before the election, the Fine Gael and Labour parties campaigned on the basis of renegotiating the terms of the EU/IMF bailout, burning bondholders and securing interest rate cuts. But Irish Ministers received harsh fiscal treatment and were bullied and criticised when they went to Europe.
Eventually, interest rate concessions and other measures were made available while financial constraints imposed by the bailout programme remained. Since then, the Government has travelled a hard and unforgiving road: broadening the tax base, cutting services and expenditure and raiding pension funds for money to generate employment.
Major failures of political judgement and in inter-party communications occurred. Cuts in ministerial pay and conditions, along with Dail reform were well received. But internal disagreements, leading to delays in the introduction of water charges, a property tax and wage-setting mechanisms caused serious tensions.
Promised reform of health services was stymied by shortages in funding, resistance by vested interests and political incompetence. Along the way, a decision to withdraw discretionary medical cards brought uproar, defeat in local elections and a humiliating climbdown. Those setbacks were minor, however, when compared to the public fury the mishandling of water charges generated.
Economic recovery remains fragile. But it has allowed Taoiseach Enda Kenny and Tanaiste Joan Burton to reassure voters that living standards will rise and there will be no additional taxes or charges. With less than a year to the election, Mr Kenny was particularly anxious to assure self-employed and small business owners that they will be looked after in the October Budget.
Before that happens, the Government will publish plans for the economy and an expansion of public services, linked to a cap on spending below the economic growth rate. Switching the focus to the future makes sense, but it may not save this Government.