Aoife Moore: Government flirtation faces €30bn economic stumbling block

Taoiseach Leo Varadkar. Picture: Leon Farrell/Photocall Ireland

The stark economic landscape for the next government has been laid bare for parties during government formation talks.

Talks between the Green Party, Fianna Fáil and Fine Gael, which kicked off in earnest on Monday, will have a dedicated focus on the economy and the state's finances over the next two days as Ireland attempts to move out of lockdown to our "new normal".

The government, which was previously touting a figure of €23bn as the expected deficit, has moved unceremoniously to €30bn, announced with little fanfare by the Taoiseach today.

The €30bn figure is certain to prove a major bump in the road for, already tentative, government formation talks which have so far covered justice and housing issues.

The Green Party’s desire for capital expenditure to provide a more sustainable Ireland will stand in total contrast to Fianna Fáil and Fine Gael’s promises to avoid cuts in welfare rates and ruling out of any increases in income tax and the Universal Social Charge.

A €30bn sized hole gives little room for manoeuvre and puts paid to any "blue sky thinking" that the Greens have been accused of by some within Fine Gael, who ironically, appear to have forgotten that their government signed up to a 7% emissions reduction with no plan of how to carry it out.

The much-debated 7% reduction in emissions targets may hang in the balance anyway, as Green policy objectives like retrofitting homes, investment in cycling and walking infrastructure and diverting already promised funds away from current capital spending projects like roads and motorways will not be considered a priority for either Fianna Fáil nor Fine Gael.

That is an outcome that would likely confirm to some Green members that Micheál Martin and Leo Varadkar's parties were never to be trusted in the first place.

Previous meetings between Fianna Fáil and the Greens in the early aftermath of the election did not spell optimism on the financial front either, with sources within Fianna Fáil lamenting that the Green TDs "were all pie in the sky", with lofty ambitions not backed by the numbers, whereas the Green Party TDs said it was hard to find common ground on the economy with the old guard who "could not see any other way of doing things".

It's unlikely that facing into a recession after once-in-a-lifetime global pandemic will help paper over these cracks.

The Taoiseach, who once said he had nothing to offer coalition partners but "disappointment", appeared to try and paint a rosier picture after dropping the €30bn bombshell, noting: "The dilemmas for the next government will be the same as they are for any government.

It's never possible to do everything you want to do in any one year.

He's correct, but the worry for the Green Party will be, will it be possible to do anything they want to do in five?