FF Ard Fheis - Greatest challenges still ahead

LET us hope Taoiseach Brian Cowen and his cabinet enjoyed the mother’s-home-cooking comfort afforded by their party’s weekend conference. It may be at least a year before they find themselves again embraced by such uncritical and unflappable supporters.

As early as yesterday Mr Cowen found himself in a more challenging environment at an emergency meeting with his European counterparts in Brussels to discuss the economic crisis.

At the meeting European leaders stressed EU unity. However, calls from Hungary for a €180 billion aid package to rescue east European economies whose currencies have been battered in the economic downturn were rejected. All that was on offer was an acceleration of the process to expand the eurozone.

If this weekend’s domestic polls are a reasonably accurate indication of how June’s local and European elections — probably two by-elections as well — play out, then the next Fianna Fáil ard fheis may be more a sentimental reunion than what is now customary for the party more or less permanently in power.

Yesterday’s Sunday Business Post poll showed that support for the party has fallen to 23%, seven points behind Fine Gael and barely ahead of Labour. This represents a five-point fall in support in the past four weeks.

Another poll just last Friday recorded that just 10% of the population were happy with the Government. It is not unreasonable to assume all of those represented by that figure were at the ard fheis cheering and back slapping as if nothing had changed. If these figures are turned around in the 12 weeks leading to the elections then Lazarus will indeed be in the ha’penny place.

Though nearly all of the senior figures who spoke during the jamboree made references to the unavoidability of higher taxes, not one — not a single one — came up with anything, not one single idea or motivating phrase, that might even be described as inspiration lite. It was as if none of them had seen how President Barack Obama used the power of clear, uplifting communication to make the impossible seem attainable.

The higher-taxes softening-up process is well under way, even though the insistence that nothing will happen immediately persists. On one level, if the delay can be afforded, this may not be a bad thing as the realities of our income tax system imply that many people who are not taxed now will be. It may take time for this recognition to sink in or be accepted.

The figures are simple enough. Just 6% of the workforce earn more than €100,000 a year, yet they contribute 47% of the tax take. The top 1% — over €200,000 a year — pay 21% of the total tax take. At the same time, 40% of income earners pay nothing.

Irish workers don’t pay any tax, PRSI or the income levy if they earn less than €18,000. In Britain all income above €6,860 is subject to income tax at 20%. The British example is widespread in Europe while ours is not. Already Mr Cowen has raised the issue of whether the exclusion of so many workers from the tax net can be sustained. Though our EU partners can’t impose change, they may forcibly suggest that one model is more viable than the other.

How the unions react to any proposals to tax people on lower incomes will be one of the defining moments of this crisis. How Mr Cowen sells the idea is even more important.