So, what happens next?

First day back for the Dáil, and no end of issues for the Government and the Opposition to confront. For the former the big ticket item is the Budget. So expect all messages to be shaped towards that end for the next two months. But of course there’s more, there’s political positioning, both between the government parties and between them individually and collectively and the opposition.

What will be interesting will be whether secondary and tertiary issues – in the sense of as compared to the Budget – of which much has been made of in the media will also get a look in, either as a form of political cover or something else entirely. As Pat Leahy noted in the SBP:

There are several political squalls in prospect for the Dáil term, which begins on Tuesday and continues until after the budget in December. Abortion. Drink (advertising thereof). The Seanad (future thereof). But the big storm will undoubtedly come from the vexing question of how to find €3.5 billion in December’s budget.

So a lot there for them to try to deal with and – as we saw with the most recent X Case debate, the divisions within the Government parties are profound.

To be honest the sheer unreality of the Fiscal Council’s advice for deeper expenditure cuts is demonstrated by the necessity of the Government to find €3.5bn at the budget as it stands. The idea that more could be found is quite bizarre and speaks of a detachment from the actuality of Irish life that doesn’t bode well for future advice. That the Government has to go back to the well for Budget 2014 and Budget 2015 and… well that doesn’t bode well for its prospects for re-election.

Leahy made the good point that:

The government has committed to its troika target of a €3.5 billion budget, and it would be a political earthquake if it failed to achieve this.
So the question is not so much whether the government will hit its target, but rather how it manages to do it and how much political damage the administration will sustain in the process. At the moment, following a few weeks in which loose lips staked out territory and some of the players unspooled their kites, the potential damage looks significant.

And Leahy notes that because there are now agreed cash limits on department spending for three years there’s a sense of how bad things are going to get.

Take the Department of Social Protection, the biggest spender, which pays unemployment assistance, old age pensions, child benefit and a host of other welfare payments. This year, its budget was cut by €475 million to just over €20.5 billion. Next year, its cash spend is limited to €19.9 billion, so it needs north of €500 million in new cuts, in addition to the half a billion euro it cut in last year’s budget.

And he points to a most intriguing thought:

Where might it find them? Well, the documents also mention that, in 2013 and 2014, it will look at cuts in the area of children and families (€250-400 million), “people of working age” – ie unemployment benefit – of between €350-600 million, and “retired and older people” (€150-€300 million). These are colossal sums.
Remember last week, Labour backbenchers were on the warpath over cuts to disabled budgets of just €10 million – what are they going to make of many multiples of that number?

I think we’re all curious as to the answer to that question. Leahy notes that Eamon Gilmore is very fond of the line that we’re now 3/4 way through the ‘adjustment’. But Leahy finds that vastly over-optimistic:

Ireland has a budget deficit of some €13 billion this year. This year’s €3.5 billion budget will be followed by at least two more that will take comparable sums in tax and cuts. The IMF points out that, of a total of 5 per cent of GDP in cuts which have to be achieved since the crisis began, 3 per cent has to be done between 2013 and 2015.

The squeeze on spending is going to be savage for most of the remainder of this government’s term. However you spin it, the politics of that are extremely difficult – especially for Labour.

Of course, particularly when Labour has signed up to policy approaches – particularly in relation to the weighting of cuts to tax increases that favours the latter over the former.

Leahy notes the areas where expenditure cuts can be made (though tellingly note the rather different emphasis he gives to tax increases):

They are: public pay, public service pensions, old age pensions, household benefits, medical cards, child benefit and college fees. The body also made several recommendations on tax increases and changes, among which it was most vocal on the advisability of a property tax.
This is simply the IMF’s advice, rather than its prescriptions. But you can be pretty sure they constitute the unpalatable menu ministers and officials are currently considering.

But another intriguing thought:

Politics can’t ignore economics; but neither can economic decisions be blind to political reality. Much of the shape-throwing of recent weeks has been about different interests trying to define the limits of what is politically possible in the budget.

That’s where the Opposition comes in. For the next while the Opposition can simply oppose. This can be a stance positioned in principle, opportunism, self-preservation or some mix of all – and no doubt we can all ascribe those qualities to the various forces extant.

But the Opposition itself isn’t immune to troubles. The question marks over the nature of future of the ULA have – if anything – become more urgent and prominent since the events of recent months in relation to Clare Daly’s resignation from the SP. It will be fascinating to see the public dynamic extant in the ULA over the next month or two, and of course the same is true of constituent elements (and I’d add that although the poll ratings are remarkably good for the Independents/Others one wonders how at the local level those aforementioned events have and will play out). Linked to that is the fate of the CAHWT. I may be pessimistic, but it strikes me that trying to run that campaign up again after what seems to have been a significant break over the Summer and heading into Winter will be quite an effort.

Then there are the spats – minor, but not entirely unimportant – in regard to a number of Independent TDs and the Ceann Comhairle. And what of the wish of the government to impose a ‘dress code’ – of sorts – on TDs. These last few are most definitely tertiary issues in relation to importance, but as part of the mood music they may provide clues as to the future.

Fianna Fáil – having made no impact it would seem across the Summer must be wondering how they can claw back some more support. The Budget should offer them a platform to do so, but they’re divided themselves between populist and pro-orthodoxy instincts. Which wins out in the short term will be revealing – and particularly so as far as how they may attempt to campaign in the local elections.

For Sinn Féin this has to be yet another opportunity, as the Presidential Election was and as so many events appear to be, for it to make yet further incremental steps. One very obvious dynamic over the past year and an half has been how SF has managed to present itself as a vastly less anonymous entity than FF. This has real implications. FF hasn’t gone away, but it appears to have none of the cohesiveness of SF.

Granted all this is perception and largely subjective. But how else are most people to gain a sense of what is taking place in the political arena? And where will matters stand when we reach Christmas?

About these ads