Fine Gael sticks with plan to phase out USC

The real talks begin next week. What we’ve heard until now about government formation will mean nothing once the two leaders of Fine Gael and Fianna Fáil sit down face to face next week for the first time.

That was the assessment yesterday of Fianna Fáil sources, who are now fuming that Fine Gael has ruled out hopes of forming a minority government. Many though, believe that Fianna Fáil’s dream was always pie in the sky stuff.

Taoiseach Enda Kenny had been pressing to meet Micheál Martin yesterday, but this was dropped as talks continued with the Independents. The two are now expected to sit down on Wednesday, after a fresh but pointless vote for taoiseach in the Dáil, and begin discussing the mechanics of operating a minority government.

This has been the main beef of Independents for days, who, upon exiting Government Buildings, have been dodging questions about their commitments and instead pointing the fingers at Mr Kenny and Mr Martin.

But if the Independent Alliance, the non-aligned rural TDs, and others abstain from a vote or do not support either on Wednesday, that will also leave in doubt the sustainability of a minority government, when it remains unclear which TDs will prop up a new administration.

Mr Kenny took the initiative to call a snap press conference yesterday to try and win the end-of-week initiative. This followed talks led by Finance Minister Michael Noonan, who outlined to the Independents yesterday how Fine Gael still wants to phase out the Universal Social Charge (USC). Proposals to scrap the charge would instead be put before the Oireachtas, Mr Noonan said.

Improved tax compliance, a sugar tax, extra duty from cigarettes, and other tax reforms would help fill the huge hole in the exchequer left open by abolishing USC, a document said.

Mr Noonan also said that, while spending would be tight next year, that extra cash could be available for projects and taxation changes.

This latter point is encouraging for Fianna Fáil, who last night suggested that this increased amount could give both sides breathing space on their spending wishes. Furthermore, more positive exchequer returns expected next week would open up the coffers even more on issues such as Irish Water and housing projects over the coming years, say party sources.

It also emerged yesterday that Mr Kenny and Mr Martin held a second phone call on Thursday night after a farcical situation where there was disagreement over what was said during their first one.

It is now expected that Fine Gael will have a document with a list of priorities for government by Wednesday, with 15 main headings. We can expect this to be put on the table in front of Mr Martin. What happens next is the question.

Fianna Fáil sources say talks with Independents can expect to be finished on both sides by next Wednesday. It will just come down to the two leaders, plus their negotiation teams.

“Everything that’s been talked about over the last few weeks will be redundant. None of that shite will matter.

“The substantial engagement will be between the two of them,” said a source.

Fianna Fáil will raise the issues of health, justice, finance, and housing when it holds its talks on Monday. Fine Gael plans to pick up where it left off with Independents later that day.

But Mr Kenny was not giving much away yesterday, at an impromptu press conference. He said: “I don’t want to raise expectations here to be quite honest with you, the formation of government is a really serious business, we have been really serious about business with Independents and smaller parties over the past five days. I cannot give you the outcome of when this will be finalised but I hope to work and continue to work at it diligently and constructively.

“I do hope the Fianna Fáil party who said that they would be responsible in this matter will do so.”