Daniel McConnell: Pandemic brings a focus to negotiations

Last Wednesday afternoon, while the country remained gripped by the Covid-19 crisis, a small group of TDs from Fine Gael and Fianna Fáil gathered in a spacious room on the second floor of Agriculture House on Kildare Street.
Daniel McConnell: Pandemic brings a focus to negotiations
Finance Minister Paschal Donohoe: helping lead Fine Gael into government formation negotiations

Last Wednesday afternoon, while the country remained gripped by the Covid-19 crisis, a small group of TDs from Fine Gael and Fianna Fáil gathered in a spacious room on the second floor of Agriculture House on Kildare Street.

None of them arrived through the front door, opting instead for the back entrance which is accessible from within the Leinster House complex to allow them avoid any unwanted media attention.

Despite the sides agreeing that the talks should remain strictly confidential, extensive details about the discussions have come to hand and as to why these talks are a world away from the bitter and hostile talks of 2016, when Confidence and Supply was agreed.

Present for Fine Gael, was Tánaiste Simon Coveney; Finance Minister Paschal Donohoe; Business Minister Heather Humphreys; and Galway TD Hildegarde Naughton.

For Fianna Fáil, deputy leader, Dara Calleary, led the way and he was joined by finance spokesman, Michael McGrath; public expenditure spokesman, Barry Cowen; education spokesman, Thomas Byrne; and children’s affairs spokeswoman, Anne Rabbitte.

The two party leaders, Leo Varadkar and Micheál Martin, were not in the room but key advisors John Carroll for Fine Gael (Varadkar’s Special Adviser and Head of Policy) and Martin’s Chef-De-Cabinet, Deirdre Gillane, were also present to monitor and to take notes of proceedings.

Carroll was designated by Varadkar as his own Chief of Staff, Brian Murphy, is focusing on the response to the Covid-19 crisis.

Earlier meetings between the two sides were more cautious and tentative, especially as initially Fine Gael had made it clear it was heading into Opposition.

However, last Wednesday the mood was different and Fine Gael is ready to step up to the plate.

“When the election happened two months ago, the view of my party, Fine Gael, was that we would go into opposition,” Varadkar told me.

However, he said the failure of other parties, such as Sinn Féin, to form a government means he is now willing to return to power.

“Since then, the other parties have been unable to form a government. And as a consequence of that, we feel we can’t leave the country down. And that’s why we are willing to consider participating in government again,” he said.

So in the room on Wednesday, there was a positive mood, according to sources who were there.

“It’s pretty relaxed in terms of tone but it is certainly focused. There is none of the hostility that was palpable during the talks in 2016. The personalities know each other pretty well now, having negotiated four budgets together,” said one source.

While Martin and Varadkar have tasked their teams to produce a joint paper that could become the basis for a programme for government with other parties, the impact of the Covid-19 pandemic has drastically altered the landscape facing the incoming government.

Gone are the budget surpluses, the full employment and rosy economic landscapes — suddenly replaced with record unemployment, significant increases in government spending, rafts of emergency payments and the prospect of austerity budgets looming again.

What is weighing heavily on the minds, particularly on the Fine Gael side, is just how are all those emergency payments going to be unwound and removed.

What sort of government can do that?

How long can a government continue to seek to keep the economy afloat?

At the start of each meeting, as there is no formal chairperson, Coveney and Calleary, as team leads, introduce proceedings and set the tone for the day’s discussions. Coveney tends, according to sources, to talk for too long compared to his Fianna Fáil counterpart, who is said to eschew long-winded speeches.

Once such introductions conclude, the money men in the room — Donohoe, McGrath and Cowen, come in and discuss the financial implications of various proposals.

As finace minister, Donohoe has sought to restate the financial realities, particularly in light of the devastating impact the Covid-19 is having on the economy.

According to sources, Donohoe has sought to emphasise the temporary nature of the several billions euro worth of emergency payments and the need for their eventual withdrawal.

Another key area of discussion is that in light of the looming deep recession, the country cannot make the mistake the mistake of a decade ago and sacrifice capital spending commitments in order to lessen the impact of current day-to-day spending.

There has been a broad agreement between the sides that such spending must be retained and protected, sources tell me.

While many issues remain outstanding to be agreed, there was agreement in the room that given the scale of the challenge facing the country, a minority government made up of just the two parties is “not tenable”. Neither is a government that is reliant on the support of a range of independent TDs.

“How do you begin unwinding all these additional supports in a minority government or one that is reliant on just independents? You can’t. That is why we need at least another party,” said one senior source.

I’m firmly of the view, that if Fine Gael is going to participate in the next government, we need a third party.

"We can absolutely work with independents as we did for the past four years, and very successfully. But a government that relies on nine or 10 independents, support from the government on every crucial vote isn’t one that’s going to be stable isn’t one that will be able to make the tough decisions and hard calls that have to be made in the next couple of years isn’t one that will last until 2024 or 2025,” Varadkar told me.

“So we’re totally up for working with independents, including independents from the regional independent group, some very good people there,” the Taoiseach said.

Unlike 2016, when Fianna Fáil demanded the suspension of water charges as the price for a deal, sources have said no such big ask has yet been tabled.

“I think it won’t come to that. The circumstances are completely different this time around. There have been no red lines set down by Paschal or Micheál and I think both sides hope it won’t come to that,” my ‘mole’ tells me.

For example, one of the big issues the last government had to put on the long finger was the review of the Local Property Tax (LPT) which has remained frozen since 2013.

The last government did not have the numbers to push through much-needed reforms and in addition to the unwinding of the emergency Covid payments, the introduction of a new LPT is one of the major issues facing an incoming government.

That issue has not yet been raised formally but the sides will meet again on Monday as one of several planned meetings next week to try to finalise the joint policy paper.

“It is a broad-based agreement document as opposed to a program for government which would contain specific promises and timelines,” a source said.

So if a third wheel is needed, just who is it likely to be?

Even though they have so far ruled themselves out, sources have said that there is likely to be a fresh campaign to “love-bomb” the Green Party, as their bloc of 12 votes is a far more attractive prospect than tackling a large group of independents.

Whereas four years ago, a deal was done through gritted teeth amid much distrust and suspicion, now Fine Gael and Fianna Fáil need each other and that has made all the difference.

All has changed, changed utterly.

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