by Frank Schnittger
Wed Apr 27th, 2016 at 08:54:50 AM EST
In Political Paralysis in Ireland? I wrote about the inconclusive outcome to the Irish general election of February 2016 and predicted that we were in for a prolonged period of Kabuki theatre where the major parties, Fine Gael and Fianna Fail, would be dancing around each other without holding hands and with everyone else trying to force the unwilling couple to mate.
It is now over two months since that election, and I have revisited that diary on occasion to see if an update was required and concluded that no, nothing much new was really happening. Fianna Fail have been anxious to avoid the fate of minority partners in previous Irish coalition Governments which traditionally get hammered at the next election. So a straightforward coalition which would have provided a large working majority was out of the question.
In addition, the lack of an ideological distinction between Fine Gael and Fianna Fail only seemed to magnify the personality and trust issues between them. Fintan O'Toole, channeling Sigmund Freud, calls it the narcissism of minor difference.
Jonathan Swift, who got there before Freud, has a vicious conflict in Gulliverís Travels, between the Big-Endians, who break their boiled eggs at the larger point, and Little-Endians who break theirs at the smaller one.
Instead of a straightforward coalition, it now looks as if we are going to get a minority Fine Gael government with a small rag bag of Independent and small parties kept on life support by Fianna Fail abstaining on major votes of confidence. Whether this strategy succeeds in allowing Fianna Fail to escape the blame for unpopular Government decisions remains to be seen. I can see Sinn Fein and the other opposition parties and independents excoriating them at every turn for maintaining in office a widely unpopular Government with only a 25-30% base of support.
Things have come to this sorry pass because the only alternative was another General Election, a la Spain, with no guarantee of a very different outcome. This was the scenario feared by all because there was no way of telling whom the electorate might blame for the impasse. The last General election in February had resulted in a huge protest vote for all sorts of parties and independents few of whom had any intention of joining a Government as a minority partner.
It may surprise outsiders to learn that the alleged crunch presenting issue which has held up the formation of a Government for over two months was the issue of water charges. Given that these are ubiquitous throughout Europe, just what was the big deal? And the answer is: not a lot.
Historically the water production and waste treatment and distribution infrastructure has been the responsibility of 31 quite small local authorities. This has resulted in a huge duplication of administrative resources, chronic under-investment, the lack of an overall national strategic development plan, and poor outcomes in terms of water quality, leakage, and waste water disposal. In some instances the lack of any public charging infrastructure may also have led to the attitude that water was a free resource to be wasted at will.
Meanwhile, many more rural areas had no public water or waste water disposal services at all, and householders had to provide their own wells and septic tanks or pay into private water schemes (This writer being a case in point!).
The 2007-11 Fianna Fail led Government, under pressure from the EU and the Troika, had agreed to the introduction of water meters and usage based charges for all as a means of raising additional revenue in Ireland's then suddenly very straitened circumstances. This was naturally very unpopular with all who had been used to receiving water as a free service, and came on top of a lot of other austerity measures which were greatly squeezing household disposable incomes. There was also the rather unfortunate history of the privatisation of general household waste disposal services which had resulted in much higher charges for reduced services.
True to form, that Fianna Fail led Government procrastinated on the actual implementation of water metering and charges which meant that the Fine Gael led Government had to deal with the issue on coming into office in 2011. There was also the problem of poor water quality, widespread leakage from the often ancient piping systems, and the impossibly complex issue of upgrading an entire infrastructure managed by 31 different local authorities.
Logically enough, the Fine Gael Government sought to rationalise the whole system by consolidating the relevant local authority personnel into one national water authority "Irish Water" with a mandate to produce and implement a national infrastructural development plan to address the water quality and leakage issues. This was a slow and expensive process and was going to cost many Billions of Euros. It is now the common wisdom and unchallengeable assertion of all that this process was handled very badly. Precisely how it could have been handled otherwise has yet to be articulated by any expert body.
The agreement between Fine Gael and Fianna Fail to form a minority Fine Gael led government tolerated if not supported by Fianna Fail has yet to be published, but is said to include a suspension of water charges, a refund of charges already paid, the setting up of a Commission to examine how water services should be funded and delivered in the future, followed by referral to a Dail committee to examine the Commission report, and finally, perhaps, a parliamentary vote on how to proceed. In other words, the charges have been abolished for the lifetime of this Government, at the very least, as there is no way that this Parliament, the majority of whose members have been elected on an anti-water charges platform, is ever going to support their introduction.
Fianna Fail, which was actually in power when the water charges were agreed, will have led the charge for their abolition and hope that the electorate will have forgotten about their prior role in introducing them by the time the next general election comes around. Sinn Fein, which also initially supported the principle of metering and charging for water, will also have succeeded in shifting the burden of blame onto both Fianna Fail and Fine Gael. Meanwhile, it is unclear how the current problems with water quality and leakage will be addressed. Perhaps it can be characterised as an Irish solution to an Irish problem, as former (corrupt) Taoiseach Charles Haughey said when making contraceptives available in Ireland only under medical prescription.
We should be clear however, that the Irish Water debacle was not a case of privatising a public utility and resource. Irish Water was always going to be a state owned utility. The issue was how it should be structured and funded: whether a scarce and expensive resource could be better managed and conserved by charging at the point of use, with charges proportionate to usage after the provision of an initial free entitlement. Of course the creation of Irish Water might have facilitated a future government to increase charges and/or privatise the utility, and perhaps that was what some of the public anxiety was about. Political assurances don't count for much these days.
But there are also many other difficult issues facing the incoming Government, which will now probably be composed from a relatively small talent pool of 50 Fine Gael TD's and a few independents. Chief among these are growing international economic uncertainty, the possibility of Brexit, and many public sector and public utility workers threatening strike action for pay increases or the restoration of pay cuts incurred during the Troika years. There may well be good strategic and career protection reasons why so many elected politicians do not want to be in Government right now. There is nothing like a public transport or teachers strike to the raise the temperature on all sides.
The truth is, however, that the Irish economy has made a remarkable recovery since 2012. Growth last year was 8% of GDP and is projected to be c. 5% this year and 4% next year. Unemployment is down from 15.1% to 8.6% currently and projected to decline further. The debt/GDP ration is down from 120% at the height of the crisis to 100% last year and a projected 88% this year. The headline budget deficit was down to 2% last year and a projected 1% this year - well inside the European Growth and Stability Pact limits. There is thus considerable scope for any new Government to restore cuts to public services, invest in infrastructural development, and agree rises in public sector pay levels.
The question is, will any government survive long enough to do so? I would expect acting Taoiseach Enda Kenny to retire soon, followed, perhaps, by Finance Minister Michael Noonan after the next budget. A new generation of Fine Gael politicians will take the helm less encumbered by the unpopularity of past decisions. Fianna Fail cannot afford any Fine Gael Government to get too popular, and will be itching to pull the trigger before any of this can happen. Perhaps to pre-empt this, a new Fine Gael leader may call a general election sooner rather than later in the hope of gaining a more substantial mandate. The suspension of water charges gets not just Fianna Fail, but also Fine Gael off the hook, and deprives the opposition of their main issue in hammering the Government.
Perhaps, in the next election, when it happens, people will actually vote for a government rather than a vast majority of opposition protest politicians. You really only appreciate having a government when you don't have one, or one without much power to do anything for lack of a consensus in the Dail or in the country as a whole.