No USC abolition; more spending; pressure on banks . . . and another water quango

The deal between Fine Gael and Fianna Fáil will, we must presume, provide the key details of the next government's programme. This could change a bit after talks with the independents, but much of the key groundwork is there. Here are the main points from the programme in terms of business and the economy.

1. Not surprisingly there is a commitment to meet EU budget rules and, in line with the election campaign, there will be a split in spare budgert resources of 2 to 1 between extra spending and tax cuts.

This priority on spending means the plan to take an axe to the USC for all but the highest earners is being quietly shelved. The document refers to introducing USC cuts “on a fair basis” with the emphasis on helping low and middle earners.

There is reference to establishing a "rainy day fund" – putting away some spare resources to guard against future shocks, but no detail of this. There is the usual platitudinous reference to maintaining our 12.5 per cent corporate tax rate, and an oblique reference to the international talks to tighten up corporate tax rules in which we are told Ireland will "engage constructively" but guarding against things not in our interests.

2. There are a lot of commitments to spend more money, and no mention anywhere of savings. Public pay is dealt with via a commitment to the Landsdowne Road agreement and a new public pay commission to examine what happens after that.

We are told the emergency legislation to cut public pay during the crisis will be gradually repealed. In other spending areas there will be a five-year health plan, a suite of measures on housing including a hike in rent supplement of up to 15 per cent and commitments to regional development, infrastructure spending in health, broadband, education and flood defences, new measures to cut childcare costs and tackle child poverty, more gardaí and more spending on areas such as exclusion problems and mental health.

It is a list likely to consume the “ fiscal space” – the spare resources available on budget day – a few times over.

3. Pressure will remain on the banks on a number of fronts. The document commits to: "Take all necessary action to tackle high variable interest rates." Davy stockbrokers say that, despite reluctance by the Central Bank to move aggressively on this issue, this political focus will keep the downward pressure on mortgage rates.

With increased competition for switcher mortgages in the market anyway, this will keep bank margins under pressure, it says. The deal also promises to retain mortgage interest relief on a tapered basis beyond the current end date of 2017, to increase rent supplement by up to 15 per cent and to work to provide new solutions for people in long-term arrears.

Despite promises in this area in the past, progress has been slow. There is also a promise to provide greater protection for those whose mortgage loans are sold to vulture funds.

4. On Irish Water, yet another quango is added to the mix. There is to be an "external advisory body" which will look at Irish Water's operations and how it is conducting its business.

This is despite the fact that Irish Water is already under the control of the Energy Regulator, who looks at many of the same issues. If charges are eventually abolished, whether Irish Water will remain under the control of a regulator is questionable.

This new external advisory body will report quarterly to an Oireachtas committee. This committee will also be reported to by a separate “ expert commission” who will advise on the future charging structure. This Oireachtas committee will, in turn, report to the Dáil.

Confused? Well you should be, as it is an organisational farce. We also still have the boards of Irish Water and its parent Ervia. Charges will be suspended - and so will the water conservation grant, ending the pretence that they were two unconnected things.

5. Of course, the document contains the usual "motherhood and apple pie" which Irish government agreements can never avoid.

We are told that the new government will “reform the public sector to ensure more accessible public services,” that it will “ maintain a humane approach for discretionary medical card provision”, it will “ tackle child poverty,” cut primary school class sizes, and “ seek to alleviate pressures affecting household budgets across energy, childcare, medical and insurance costs. It will even “ increase investment in the Irish language”.