The Trib (9 page)

The reality is that Argentina defaulted in 2001 – setting the terms of its restructuring in 2005 – and nearly a decade on, the only international loan it has received is from Hugo Chavez's Venezuela at 11 per cent interest. It has relied largely on domestic savings to fund government spending, which is not an option in Ireland.

That hardly sounds like the model we want to follow. If you think the current credit crunch is bad, just imagine what it would be like if the Irish sovereign and our banks are shut out of international finance. Bank loan books would have to be reduced to the size of domestic deposits and that's making the very optimistic assumption that there would be no fleeing of depositors in the event of a default and a revoking of our bank guarantee.

In the piece, Munchau argued the government should assess its solvency on the basis of an estimate of nominal economic growth ‘of no more than 1 per cent per year for the rest of the decade'.

If we do end up with nominal growth of just 1 per cent a year then we definitely will be screwed. But, given how the Irish economy's fate is so tied to global growth, presumably all the other peripheral Eurozone nations will be screwed too.

If we are to end up defaulting, surely it would be preferable to do so collectively with a number of our euro allies than for little Ireland to be the only guinea pig in what would be a hugely risky economic experiment where nobody has a clue what will happen apart from utter ‘havoc' being created? For now at least, there is little choice but to go with the EU/IMF plan. If Patrick Honohan is right – and there are no more black holes in the banks – and if the economy can grow close to the rates set out in the plan, then our interest payments (which will account for between 25 and 28 per cent of total tax revenue) should be just about manageable.

Of course, they are two pretty big ‘ifs' and it would be stupid to believe otherwise. But there is no potential solution to the current crisis – however alluring it might seem – that doesn't involve a whole raft of what ifs and maybes. We're long past the point of doing the right thing. It's now about taking the least wrong option.

2 January 2011

T
here's no question that the next general election will be seismic in terms of its impact on the political landscape. But for all that, there has never been an election where there has been so little doubt about the make-up of the next government.

Opinion polls only really began properly in the early 1980s, so before that point, predicting the outcome of an election was the political equivalent of pinning the tail on the donkey.

Even with access to polls, the outcome has generally remained in doubt up to polling day and often far beyond that, as various government formations were contemplated.

The three elections in eighteen months in 1981 and 1982 were very close affairs, although the November ‘82 campaign could be clearly seen to be slipping away from Fianna Fáil from the off. In 1987, it was felt that Fianna Fáil would win an overall majority, but that didn't happen. Ditto two years later when a totally unanticipated Fianna Fáil-PD coalition emerged. The 1992 election could have led to the formation of various governments (and ended up producing two different coalitions).

The 1997 contest was, to borrow a phrase from Dan Rather, tighter than a ‘too-small bathing suit on a too-long ride home from the beach'. The Rainbow coalition should have won but didn't.

Fine Gael was obviously facing meltdown in the run-up to 2002, but there was doubt as to whether the next government would be a Fianna Fáil overall majority or a combination of Fianna Fáil with the PDs or the Labour Party (with most analysts plumping for the latter). Five years later most of the same analysts were predicting a Fine Gael-Labour-Green Rainbow.

But this time around is different. Unless something truly extraordinary happens between now and March (and even then it probably wouldn't matter), the next government will be made up of Fine Gael and Labour. The only questions are: how huge will their majority be? And what will the break-down of seats be between the two parties?

As of now, it looks as if they will have 100-plus seats between them and that Fine Gael will have at least a 60:40 advantage – although both these assumptions could change significantly in the course of a campaign.

But what won't change is the enormous prize on offer for the two parties. If they play their cards right, they have the potential to be in power for at least ten years (the best either has managed before is four and a half) and relegate Fianna Fáil forever from its status as the ‘natural party of government'.

However, to do that they must avoid the mistakes of the past, most notably their disastrous coalition of the mid-1980s. For four interminable and depressing years, divisions between Fine Gael and Labour meant that tough decisions were shirked and the already awful public finances continued to decline.

Labour was the chief culprit that time around, refusing to countenance cuts in spending that were clearly unavoidable. But Fine Gael was not blameless either. A repeat performance a quarter of a century later simply cannot be countenanced, for their sake and for the country.

Ideally, the long and tortuous, on-off programme for government negotiations between the two parties post polling day would be truncated. Certainly, what we don't need right now is a programme for government long on aspirational and esoteric platitudes and short on the brutal economic realities.

Of course, political realities will dictate that we will have the charade of the programme for government negotiations. Fair enough. But after that, the new government needs to quickly show that it means business. It's about the economy, stupid, and it's pretty obvious what needs to be done and most of it is not pretty.

Right now there are large policy differences between the two would-be coalition partners, particularly on the speed in which the budget deficit needs to be addressed and the breakdown between tax increases and spending.

These differences definitely won't stop Fine Gael and Labour putting together a programme for government. But they do have the potential to lead to paralysis in government at a later date.

In that regard, the choice of finance minister is critical. He or she will have to be both politically skilful and tough – with the latter characteristic more important than the former.

In opposition you can wax lyrical about eliminating waste and taxing the rich. In government the reality is that spending is dominated by social welfare and public sector pay and the majority of tax revenue comes from the great mass of workers. Unfortunately, if you want to make savings, they're the areas you have to hit.

The common perception is that Labour will insist on the finance portfolio in the new coalition. But there is also a view within Labour that it should not do so because of what holding the job will entail. If that view prevails, then Michael Noonan will be the next finance minister and there is little doubt he understands what needs to be done.

Whether the same will hold true for the electorate and the government backbenchers is likely to prove much trickier. As US voters found after Barack Obama replaced George Bush, a new administration does not suddenly make everything alright. The ABFF (anybody but Fianna Fáil) sentiment that exists at the moment will help propel Fine Gael and Labour to power but it won't ensure their popularity for long when they have to make painful decisions.

And that could be difficult for government TDs to accept, particularly when up to half of them could be first-time deputies, unused to the rough and tumble of national politics. With such a large majority, the temptation for backbenchers to rebel against unpopular measures will be enormous.

It's difficult to know what, if anything, Fine Gael and Labour can do to head off such dissent. Ideally, it would seek to manage expectations between now and polling day as to what will be possible (or, more relevantly, impossible) when it comes to power.

With both parties striving for ascendency in the new government, that is probably wishful thinking. But that doesn't alter the reality for Enda Kenny and Eamon Gilmore that winning the election is going to be the easy bit. The big challenges will come after that.

18 July 2010

F
lying into our capital city over Howth and Bull Island, the natural beauty of Dublin Bay never ceases to amaze. In its own way, it's as spectacular as San Francisco Bay, yet nowhere near as lauded.

Part of the reason for that is we've never made the most of this extraordinary asset. Instead of having a beautiful harbour development, we have a huge area of brown-field development that is home to a major working port, an ESB power station and a sewage plant. In case that wasn't enough, there will soon be an incinerator there.

One of the biggest mistakes of the past forty years is that while Dublin expanded ever westwards, the opportunity to build a new city a mile or two from O'Connell Street was squandered.

If some government had had the vision and the cojones to shift Dublin Port twenty miles or so up the coast and redevelop the area with high density, urban living – serviced by high-speed rail links and restaurants and shops – the impact on the capital would have been amazing. Think Sydney Harbour or even a much bigger version of Dublin's stunning Grand Canal Quay.

To be fair, the much maligned PDs did trumpet the concept five years ago but nobody was listening. No surprise there as planning, urban or rural, has never been of huge importance in Ireland. Unless of course, it's about people demanding their right to build their 4,000 sq ft house wherever they want regardless of whether the land is suitable for a septic tank.

Corruption has played a large role in devaluing planning, but it goes much deeper than that. There are 440,000 septic tanks in Ireland compared to 100,000 in Scotland, which has a bigger population. That statistic speaks volumes about the respect we give to good planning here.

But amidst all the bad planning and chaotic decision making over the past fifty years, Sean Dublin Bay Loftus, who sadly passed away last weekend, stood like a beacon of light.

Loftus was an extraordinary man and an extraordinary politician for a number of reasons. He was Ireland's first environmentalist public representative. Without him, Dublin Bay – under-utilised as it is – would be far, far worse.

Loftus, who lectured in planning law, was one of the few politicians who understood town planning. He campaigned over many decades to protect the bay from the same kind of thinking that bulldozed Georgian Dublin.

At various stages, he fought plans for an oil refinery, a landfill to allow the expansion of the port and a motorway across Dublin Bay. All those crusades, mercifully, were successful and for that Loftus deserves much of the credit. He was a tireless campaigner and was light years ahead of his time in his use of PR. His decision to change his name by deed poll to incorporate the campaigns he was fighting was pure genius. When he finally won his Dáil seat in 1981 he was called Sean Alderman Dublin Bay Rockall Loftus.

His campaign literature with his face imposed on a bulldog always featured the tagline ‘tenacity' and ‘integrity'. Those two words summed him up. His integrity and sense of honour were beyond question – Loftus was a gentleman to his fingertips.

But it was his tenacity that will probably live longest in the memory. One of the things that is most annoying about the lazy dismissal of politicians that is so prevalent today, is that it ignores the sheer guts it takes to put yourself before the people and have them judge you. Sean Loftus did that on literally dozens of occasions in local, general and European elections.

He fought thirteen general elections, despite only being successful once. Undaunted, he kept campaigning, he kept fighting the good fight, he kept doing what he believed in. That tenacity deservedly got its reward when he served as Lord Mayor of Dublin from 1995 to 1996. No one has ever deserved the position more.