Harney has lost all the big battles, so why is she still clinging to office?

MARY HARNEY has been described as a principled politician many times, and with good reason. Few of even her sternest political enemies would deny her intention to do what she sees as good, even if they would disagree fundamentally with the eventual outcome she seeks or her way of doing it.

But she is also the most pragmatic politician when it comes to hanging on to power. That’s a polite way of saying it now seems she’ll put up with almost anything as long as she keeps her job as minister.

The recent budget reversed everything it seemed Harney had stood for as a politician. She has subscribed publicly, loudly and regularly to a policy of putting low tax on income to provide an incentive to work. She maintained this was necessary for the economic betterment of the country and that there should be a policy bias towards those who were in gainful employment as a reward for their endeavour.

The recent budget shattered that principle in one fell swoop. All of the extra income levies and health levies had the effect of adding 9% in income tax to people on the top rate, had it been possible to implement the tax changes in that way. Many workers fall into this category, even at modest incomes. It was the instant reversal of a decade of income tax rate reductions, even if it was presented in a different way by the use of levies. It was a budget that chose deliberately to target the compliant taxpayer while not addressing excessive public spending that can no longer be afforded no matter how much we might like to able to do so.

Harney can argue all she likes that what happened in the budget was unavoidable. The Government had no option but to try to close the gap between spending and revenues by whatever amount it could, given that borrowing up to e25 billion in a year is an extraordinary figure and will take ages to repay.

That’s fair enough. But given her track record, you might think Harney would have decided the way to do so would be to emphasise spending cuts rather than tax increases.

She must be aware of all the international economic studies that show spending cuts rather than tax increases are far more effective and act far faster in returning an economy to good health. Heck, she must know that from her time in politics during the 1980s when she was involved in the establishment of the PDs to establish that very point. People should remember the stated rationale behind the existence of the PDs. It was supposedly to assist in the economic reform of the country.

Prominent PD members denied angrily that this was a fig leaf to disguise the real purpose, which was to derail the leadership of Fianna Fáil held by Charles Haughey in protest at his disgraceful treatment of Des O’Malley. It espoused policies that Haughey then took on board on returning to government in 1987 as a minority administration. When he returned to power after another general election, but this time in the company of the PDs, it was another opportunity for reform of public spending and an attempt to lower taxes.

While the PDs were out of office between 1992 and 1997, Harney’s influence was manifest when she returned to office as Minister for Enterprise, Trade and Employment and Tánaiste in 1997.

She was closer to Charlie McCreevy, who once considered joining the PDs, than she was to Bertie Ahern, but they made up the triumvirate that led the government until 2004. And it imposed economic policies, at least until 2001, that in the main contributed to a sustainable boom because they tried to reduce the tax burden.

Of course, the PDs are no more, at just the time when a voice from its corner of political life arguably is needed most.

In retrospect, Harney should have gone when McCreevy did. Ahern’s decision to move the government to a populist high spending position was one that must have been alien to her instincts. It also sowed the seeds of our economic destruction, as the Government’s finances became overly reliant on the transitory construction boom.

On budget night, Harney told me she had argued against the “narrowness” of the tax base that the Government indulged. This “narrowness” meant it did not have enough sources of income and was too reliant on property-related taxes. Well, she can’t escape the collective responsibility of being part of the Government. It was her fault too when the Government could not cope with a reliance on tax revenues from an economy that became 20% dependent on construction, as it did in 2007. If she felt that strongly about things, she could have quit.

As she didn’t, we have to believe she agreed with the Government’s ill-fated, half-baked and myopic belief that we were heading for a so-called soft landing. There has been talk many times that Harney has been on the verge of giving it up, that she had become weary of the pressure of being a minister.

However, the comment that John Gormley said she made to him during coalition negotiations — that even the worst day in power is better than the best day in opposition — suggests she is wedded to being in government. Just as I believe she has been motivated always by the desire to serve the national interest, I suspect she has grown rather attached to the trappings of office. When the PDs disintegrated she had no real interest in saving the party; she was fine because Brian Cowen wanted her to remain in government.

Of course she had little or no time for the Mickey Mouse politics of the PDs when she had the behemoth of the health service to confront. Her intention — to reform the outdated work practices of the HSE and its waste, and therefore improve the delivery of services — was a noble one but unfortunately, it has been a failure.

She sat in cabinet when Bertie Ahern handicapped the HSE as it was created by failing to use the amalgamation of the old health boards to streamline staffing and introduce new working arrangements. She then went to the job with great intentions to reform.

THE revelations by this newspaper on Monday of the extraordinary number of sick days taken by HSE staff is yet another implied condemnation of Harney’s inability to effect change to working cultures that she promised to implement. At over 100,000 sick days in the month of January, the average days sick taken by HSE employees is double the national average, even if there are some mitigating factors. Now the HSE is trying to reduce its 111,000 workforce by about 1% and is caught up already in massive rows as to how it will do it.

What sort of monster does Harney oversee? It was the knowledge of how difficult it is to effect change that brought out the pragmatist in Harney during budget negotiations. She knows it can be too difficult to do what might be the best thing because public servants can refuse wage reductions and are in a stronger position than anyone in the private sector to fight redundancies. When I interviewed her on budget night, she also admitted the money raised from the doubling of the health levy would not all go to funding health but would go into the general pot.

She admitted this will have to change in the next budget, that there will have to be a more transparent tax system that does not rely so heavily on levies. That implies a top tax rate of somewhere between 55% and 60%. Harney would pay that herself as a minister. If she were to stick to her old principles she would do so as a mere TD.