Government figured out how to avoid public rebellion and backbench revolt
Why? Because they’re still standing, and although it is still too early to rule out trouble, there has been no backbench revolt so far. With the Dáil breaking for recess last Thursday, Brian Cowen and his cabinet have escaped for the Easter. Intact. They could be forgiven for breathing a small sigh of relief. It could have been a hell of a lot worse. What the week showed was that the Government learned from its mistakes last October. At the time, the coalition was only just coming to terms with the devastating collapse in the public finances. It decided to bring forward the December budget by two months in a bid to deal with the crisis. In advance of budget day on October 14, it attempted to sell to the public the message that harsh medicine was required. It didn’t do a very convincing job, however.
Worse still, Brian Cowen failed to sell the message to his own backbenchers. They were aware that “pain” would be administered in the budget, but weren’t made aware of the specifics. And when the specifics came, they were totally unprepared.
Put simply, the Government unwittingly laid landmines at every turn for the Fianna Fáil TDs who had to explain the harsh measures to their constituents.
The decision to abolish the over-70s’ automatic entitlement to a medical card was the one that caused the most damage. Fianna Fáil TD Joe Behan dramatically resigned from the party. Another Fianna Fáil TD Noel O’Flynn announced he wouldn’t vote for the move.
Fianna Fáil’s government partners, the Greens, expressed their “concerns” [a face-saving gesture given that their two ministers, John Gormley and Eamon Ryan, had agreed to the budget at the cabinet table]. For a brief moment, the Government looked under real threat. Mr Cowen was forced to defer an official visit to China to deal with the controversy. He staved off the rebellion by agreeing to amend the proposal significantly so that more of the over-70s would get to retain their cards. But his leadership had been badly damaged, and he couldn’t afford a rerun of the debacle.
For that reason, the Government was much better prepared when it came to delivering — and selling — this week’s emergency budget.
In the lead-up, the cabinet actually went out of its way to make the budget sound much worse than it actually proved. Different ministers mentioned a savings target of between €4.5bn and €6bn. In the end, when it was unveiled on Tuesday, Finance Minister Brian Lenihan announced a smaller target of €3.25bn. In addition, the harshest elements of the package were carefully leaked in advance to prepare the public — and most importantly, the backbenchers — for what was to come.
The doubling of the income levies — leaked in advance. The reduction and gradual phasing-out of the Early Childcare Supplement — leaked in advance. The “bad bank” plan under which a state agency would be established to take the toxic loans off the hands of the banks — leaked in advance. And so on. Not every single detail could be leaked, of course. There were still a few surprises when the budget was formally unveiled — for instance, the lowering of the thresholds at which the income levies would apply.
But the backbenchers took a careful look and seemed to decide they could live with it. The “bad bank” plan caused some concern, because the politicians knew it would be seen, rightly or wrongly, as Fianna Fáil bailing out the developers. The scrapping of the Christmas welfare bonus for social welfare recipients was also a worry. But while there was much public anger about the harshness of the budget, there was no single measure that appeared likely to draw protesters onto the street, as last October’s medical card manoeuvre had done. The backbenchers, therefore, remain on side — at least for the moment.
As for the Greens, the only thing that could be taken as a sign of unhappiness was party leader John Gormley’s body language at a cabinet press conference in the immediate wake of the budget speech. He looked bored and disinterested — but that was all. The Greens signed up for the budget because they believed they could live with it, too.
Of course, for many people, the real effects of the budget won’t be seen until they receive their May pay packets, because that is when many of the tax-raising measures take effect. The timing is dangerous for Fianna Fáil and the Greens, considering the local and European elections take place just a month later, on June 5.
But the Greens still believe they can escape serious damage because voters separate them from Fianna Fáil — a theory that will be severely tested on election day.
As for Fianna Fáil itself, the party had already braced itself for a backlash in these elections long before the budget. In preparation, party headquarters has installed a ruthless selection strategy in a bid to ensure weak candidates are weeded out and losses are minimised on election day.
Even if that strategy doesn’t work, local elections don’t matter a great deal in the scheme of things.
The general election is what counts, but the party doesn’t want one any time soon. If it can stave off the next general election for another couple of years at least, it can slowly rebuild support while hoping that the economy recovers in time for polling day. Therefore, what Brian Cowen and Brian Lenihan needed to do most in this budget was keep the backbenchers and the Greens in tow.
At this point in time, they look to have succeeded.
CAROLINE DOODY’S women’s wear shop, Promenade, is aimed at the 20-40 -year-old age bracket. Full of chic and funky clothes, new stock flew off her shelves a few years ago.
But things have changed in the past year and her once cash-rich shoppers are watching their pennies. Last Tuesday’s emergency budget did little to improve this, she says.
“There’s no two ways about it. There will be less spending money out there. It was tough enough already. It will be worse. Everybody’s budgets will be much tighter and new clothes will be a luxury that many people won’t be able to afford.”
RENA CULHANE’S school, like every other school in the country, has been severely affected by the massive government need to cut spending.
Her school had just six or seven children in each mild learning disability classroom but now that figure is up to 11 due to Minister Batt O’Keeffe’s crackdown on teacher/child ratios.
She admits, however, the school benefited hugely from the increased investment in education in recent years with teacher numbers rising from 11 to 20.
Ms Culhane expects September will be a tough month for parents as the Dell and Kostal layoffs will be completed by then. Parents will also be without the free book grant while the school won’t have a grant for disadvantage to help with extra curricular activities or equipment grants or library grants.
Speaking after the emergency budget, she said parents’ ability to pay for uniforms, books and equipment will be dented due to the doubling of levies.
“We really see difficulties for parents when September comes because that’s when school costs really hit,” she said.
DAVID O’DOHERTY’S biggest wish for the budget was that it would bring a sense of direction to the country so that people would stop feeling scared for the future. He believes fear is a hugely negative factor in this recession and that “there is still money out there but people won’t spend”.
Speaking after the budget, he said that there “will be a lot less disposable income out there”.
He fears most for those with one income and two or three children whom he believes “will be hit very hard by the levies, reduced child support and loss of mortgage interest relief, etc”. He does believe, however, that it was a serious attempt to put the country back on course and that should give people hope of an upturn. He has urged people to buy Irish so we can “jump-start” the economy.
THE most urgent issue for Colm O’Donovan is that the banks start lending again as he believes that only public servants are getting mortgages at present.
He welcomed the Government’s action on toxic debt and hopes “that will get the credit market back on its feet”.
“There will be pain felt by all but at least we know what that pain is now,” he said.
Mr O’Donovan said the impact of mortgage interest relief being cut after seven years will not be as stark if interest rates remain low.
DECLAN MURPHY tells me that he and his family are down nearly €6,000 a year because of this week’s budget. Before the budget, his big wish was that VAT on clothes would drop.
“The failure to reduce VAT is not good for retail but the country really is in an awful mess and so I couldn’t see really how they would manage to cut it,” he said. “I’m glad the budget is over because at least we can work off something now.
“I also believe the levy is a fair way of generating tax as the more wealthy are paying proportionately.” Mr Murphy is disappointed, however, that more excise duty wasn’t “piled on to cigarettes”.
SEAMUS CLEARY has a personal bugbear about the VAT being charged in this country and how it’s forcing shoppers across the border.
Naturally, like many others, he was disappointed but not surprised that this issue wasn’t tackled.
He was, however, “hugely relieved” to see alcohol escape any more excise duty. “It’s the likes of the person in their 30s with a mortgage and children who will suffer most because of this budget.
“They have big mortgages and now a lot higher taxes to pay. They will have a lot less money to play around with,” he said.
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