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Analysis/Comment Last Updated: May 27, 2014 - 9:10 AM


Ireland: Spin and spending will not save bewildered Coalition
By Michael Hennigan, Finfacts founder and editor
May 26, 2014 - 6:57 AM

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Enda Kenny, taoiseach, checking the time at the Luas stop on St. Stephen's Green, Dublin. 22 May, 2014

Ireland: The bewildered leaders of Ireland's governing Coalition will wake up Monday and maybe many more mornings wondering why an ungrateful people turned on them in the local and European Parliament elections and didn't reward them for their "valiant" efforts on returning the Irish economy to growth after a brutal recession.

They will not be alone as leaders wondering about the shifting sands under their feet and for the first time in modern history, neither Labour nor Conservatives have won a British national election - - the insurgent Ukip party topped the poll in Doncaster, the constituency of Ed Miliband, Labour Party leader.

The Guardian reports: "In a stunning warning to the established political parties, Ukip was on course to win as much as 28% of the national poll. That is a near doubling of the 16.5% it secured in the last European elections in 2009, when it came second to the Tories with 13 seats.

Twenty years ago, in its first European election, Ukip managed 1% of the vote."

In Ireland while the Labour Party, the junior party in the Coalition, in particular was expected to lose support because of austerity measures, its inept leadership had been exposed well before the February 2011 general election. Meanwhile in Fine Gael, currently the biggest party in the State, Enda Kenny as leader had revived the party after a disastrous performance in the 2002 general election, but it was evident that when it came to ideas or vision, that he was as much a blank slate as Eamonn Gilmore, the Labour Party leader.

The Irish Labour Party during the recession years has become associated with serving the interests of public service workers who are mainly unionised. However in the "Hidden Ireland,' 70% of Irish private sector employment is provided by SMEs (small and medium size firms up to 249 employees). The majority of the staff earn low pay, have no occupational pension and on losing jobs, statutory redundancy is the norm.

This is where most of the victims of austerity are to be found.

Beyond the leaders, most of the Cabinet have been uninspiring and the addiction to political spin is a corrosive legacy from Fianna Fáil led governments.

We have a situation where it would be naïve to accept most government statements on the economy at face value because of exaggerations related to distortions caused by the significant foreign-owned sector.

The Department of Finance's claim here [pdf; page 11] that a "continued competitiveness boost through reduction in unit labour costs with a 21% relative improvement forecast against the Eurozone average," is hugely misleading - - the average hourly labour cost covering all sectors of the economy other than 'Agriculture, forestry and fishing' was €25.03 in the first quarter (Q1) of 2008 and €25.30 in Q4 2013 [pdf].

The claimed huge drop in unit labour costs mainly results from corporate tax avoidance related services exports that will soon be valued at €50bn.

SEE: Finfacts 2014:

OECD BEPS Project: Ireland should embrace corporate tax reform

Irish Media Post-Economic Crash: "Don't interrupt the minister"

Celtic Tiger RIP: Change in conservative Ireland six years after crash

"For 'tis the sport to have the enginer / Hoist with his owne petar," William Shakespeare wrote in 'Hamlet' and even though Eamonn Gilmore has paid a high cost for promising before the 2011 general election that his party in government would reject measures demanded by the European Central Bank, he is now rumoured to want to switch jobs from foreign affairs and trade to enterprise, jobs and innovation -- in effect to become the minister for jobs announcements and chief propagandist of the Government.

Richard Bruton, the incumbent, runs a permanent publicity campaign, but when it comes to what time is left for policy, the results show him to be like a clone of recent predecessors: Batt O'Keeffe, Mary Coughlan and Micheál Martin.

SEE: Finfacts 2013:

Irish Innovation: Evidence of science policy failure mounts

Enda Kenny, taoiseach/ prime minister, was responsible for the biggest spin of the current Government when he claimed at the end June 2012 EU summit that there was a commitment to assume common responsibility for the €64bn in Irish sovereign support for failing banks.

Why has he not named even one leader who had made the commitment?  

In Opposition Enda Kenny's "big idea" that would usher in political reform was the abolition of the Seanad, the Irish Upper House of the Oireachtas (Parliament). Last year when a referendum was held on the issue, he didn't even campaign for the issue and the Government lost.  

In May 2010 at the nadir of the recession, Eamonn Gilmore’s “big idea” at the Labour Party conference was a fourth review of the Constitution in recent decades - - the most recent report was from 1996, produced by a committee chaired by TK Whitaker, the venerable former leader of Ireland's civil service.

Less than a year before the general election, Gilmore was good at attacking the record of the Government but he lacked a credible prospectus for governing. Enda Kenny wasn’t much better.

I wrote in May 2010:

For an aspiring taoiseach, against the backdrop of monumental governance failures leading up to the economic crash and a system of limited accountability dominated by vested interests, it was a depressing performance. 

In the aftermath of a severe recession, change is the mantra of every opposition political party in democratic countries and in Ireland; it will be a potent argument in the next general election.

However, while Irish political parties do not generally produce detailed policy documents and in the past, headline aspirations and tax inducements have sufficed, a party that is serious about reform needs to have detailed work done on the issue before an election.

Politicians are usually amateurs in areas in which they are given responsibility for and in the Irish system, commissioning a report or several from management consultants and the appointment of so-called task forces are part of the glacial process of policy making.”

It’s too late now for reinventions and with at least two-thirds of Labour TDs fearing the loss of their seats, it will be a period of strife and controversy that will be reflected in the national media ahead.

So the best that Gilmore can hope for is to hold onto the leadership of his party, become minister for jobs announcements and try and speed up decisions on spending the €6.8bn residue of the national pensions reserve.

SEE: Irish Government parties set for 2-year vote buying spending spree

However spin is losing its potency and the Government’s publicity machine was in full election mode in recent weeks. Last Thursday on the eve of polling, another ministerial press conference was held with the taoiseach and 3 ministers in attendance launching more schemes.

Why is the spin going to work now?

Deficit limits and debt will limit budgetary flexibility while the reported rise of 61,000 in jobs in 2013 is not making a big impact on tax revenues so far.

SEE: Irish Economy 2014: Did Ireland add 61,000 jobs in 2013?

For a party in power to lose public support or to be voted out of office is not a long-term calamity if it can claim a record of credible achievements.

Implementing only a bailout program that had been agreed before it assumed office, is a limp legacy.

There are also challenges for Opposition parties to develop credible policies that accounts for a reality that Ireland on its own would be nearer Belgrade than Berlin.

The real test at a time of low growth or stagnation despite the official Irish data, is to build an economy that creates durable jobs not just add more schemes not knowing which of the existing ones work or not, while claiming credit publicly for even 20 jobs over 3 years.

Modern economies are complicated and comprise vested interests, chunks of engaged and disengaged coupled with the people who do not count, while leaders are better at winning elections than governing.

Process is boring whether in Ireland, Germany, France or Italy but it's what matters long-term.

The current health reform in the US is potentially the greatest advance since former president Theodore Roosevelt advocated national health insurance in 1912 but while the Republicans have staged about 40 votes to strike down Obamacare, the biggest threat to the reform program has come from President Obama's lack of attention to execution and over-promising.

"We campaign in poetry, but when we’re elected we’re forced to govern in prose,” Mario Cuomo, New York governor, said in a speech at Yale University, in 1985.

Sometimes prose is preferable to poetry and certainly spin.

A government that is transparent about the challenges, that is honest and fair in its governance, that is truthful about economic data and does not give precedence to insiders over the rest of citizens, would be a start in this age of uncertainty and justified cynicism. 

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