Economy

Sinn Féin in power: Are its policies achievable and would they work?

With the party riding high in the polls, it’s time to put its stated goals under scrutiny

Sinn Féin president Mary Lou McDonald. Photograph: Tom Honan

Eoin Burke-Kennedy's face
Eoin Burke-Kennedy
Fri Mar 11 2022 - 05:13

Populist, unprincipled, a threat to enterprise: just some of the barbs thrown at Sinn Féin in recent months. It’s said that the flak gets more intense the closer you get to the target. If the target is government, Sinn Féin has never been closer.

It won the largest share of first-preference votes (24.5 per cent) at the last general election, effectively smashing the civil war duopoly that has presided since the foundation of the State, and is tracking 10-15 points ahead of Fianna Fáil and Fine Gael in the polls.

That level of support, if translated into votes, would put the party in pole position to form the next government, a prospect that strikes fear in certain segments of Irish society. Its proximity to power has raised the political temperature. Taoiseach Micheál Martin and Sinn Féin leader Mary Lou McDonald had perhaps their most venomous exchange in the Dáil last week.

In its pre-election manifesto from 2020, the party promises tax cuts for all workers except the top 3 per cent of earners while pledging not to increase VAT as it hits poorer households harder

“You corrupted the moral code of our country in our society, by the murder and mayhem that you perpetrated – and that you still endorse,” Martin said in response to repeated taunts about his party’s involvement in past financial scandals.

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And yet Fianna Fáil is seen as the more likely coalition partner for the party next time around. Sinn Féin’s nationalist, republican agenda only brought it so far. Its high standing in the polls stems from a wider appeal to younger voters, less alienated by the party’s former paramilitary links, and middle-ground voters who feel left behind in a supposedly booming economy or on the wrong side of the State’s increasingly wide property divide.

The party presents itself as a radical alternative to the establishment, but just how alternative and how radical is it? Do its policies on tax, housing and health diverge significantly from those espoused by the other parties? And how will these policies stand the litmus test of government? Here’s a look at some of the party’s key policies in the key areas of housing, tax, education, health and climate.

The housing poles

We haven’t had the anti-globalisation politics seen in other countries, the reversion to nation-state rhetoric nor the anti-immigrant politics but the inequality agenda – the “no stake in society” narrative – has taken hold and its chief inflexion point is housing. It is perhaps the area Sinn Féin has made most ground politically.

According to its alternative budget 2022 document, the party advocates a doubling of the Government’s annual spend on social and affordable housing – from €1.5 billion to €3 billion – which, it says, would deliver up to 20,000 public homes, a mix of social, affordable-rental and affordable-purchase. This is significantly above the Government’s target of 10,000-11,000.

The investment would be funded through additional taxation measures and extra borrowing. On rents, the party has called for a complete ban on rent increases across the board for at least three years and a €1,500 refundable tax credit for hard-pressed renters.

Finance spokesman Pearse Doherty. Photograph: Gareth Chaney/Collins

At a recent event, the party's finance spokesman Pearse Doherty, also called for investment funds – or so-called cuckoo funds – to be stripped of their tax advantages; they are currently exempt from paying corporation tax on rental income and from capital gains tax (CGT) when disposing of assets. He described as "worrying"the fact that one in six renters here was now leasing from a fund while suggesting "the financial firepower" of these entities was fuelling prices.

None of these policies would particularly alienate a population increasingly weary of housing debacles and the seeming lack of solutions. Critics, however, say Sinn Féin in government would be stumped by the same roadblocks as the current administration, namely the speed of delivery and affordability.

This is because the lion’s share of housing output – even under its policies – would still come from the private sector, which can’t simply be directed to build at certain rates or within specific price ranges. The party insists, however, that a doubling of public sector housing output would significantly lessen this reliance and, according to its housing spokesman Eoin Ó Broin, “deliver affordable housing at the scale required to address the housing crisis”.

Housing spokesman Eoin Ó Broin. Photograph: Nick Bradshaw

Wealth tax

In its pre-election manifesto from 2020, the party promises tax cuts for all workers except the top 3 per cent of earners while pledging not to increase VAT as it hits poorer households harder. Reducing the relatively high rates of income tax here is an objective shared by most political parties.

Where Sinn Féin deviates from the others is in its support for wealth taxes, which are vehemently opposed by those on the upper rungs of the economic ladder, who claim they pay enough tax. Business groups also complain that high tax rates here make us uncompetitive in terms of attracting talent, particularly in the context of the ending of the State’s 12.5 per cent corporation tax.

Sinn Féin favours imposing a 3 per cent “solidarity tax” on people earning more than €140,000. Revenue estimates that the annual yield from a third rate of income tax of 43 per cent – the current top rate is 40 per cent – on earnings above €120,000 would be about €352 million.

Sinn Féin, like the other parties, supports reforming the system via Sláintecare and the move to a more universal structure, with private care gradually removed from public hospitals

Sinn Féin’s proposal on incomes above €140,000 would presumably yield less. So while such a measure will play well with a certain cohort it’s unlikely to help fund the State to any meaningful degree. Taxes are notoriously difficult to design. They have to strike a balance between revenue generation, not dampening activity and not alienating those who pay them.

Sinn Féin also opposes the local property tax (LPT), which some argue is – more or less – a wealth tax as most of the nation's wealth is tied up in property, which puts it at odds with other left-wing parties in Europe. McDonald emotively refers to LPT as a "tax on the family home". Her chief criticism is that low and moderate-income households fall into the net, with many already struggling with high mortgage repayments.

In its October 2019 pre-budget submission, the party said it would phase out the LPT and replace it with a wealth tax that would levy a 1 per cent tax on net assets over €1 million, albeit with exclusions for working farms and other employment-generating assets.

Again, while likely to play well with certain groups, the yield from such a measure is unlikely to be big – nothing near what the LPT currently brings in – and wealthy people have traditionally been clever at avoiding a call on their assets through the use of trusts and other vehicles.

Education

Sinn Féin’s pledge to scrap State funding – worth €111 million a year – to private schools, which is a long-standing party position – has re-emerged in recent weeks as a potential flashpoint. The private schools in the crosshairs of the policy say fees would increase from about €7,000-€8,000 to about €15,000 on the back of such a move. A Sinn Féin spokesman confirmed it was the party’s policy to “phase out State subsidies to fee-paying schools over a number of years”.

The party insists these schools are a potent symbol of inequality in Irish society and one of its drivers. Students of fee-paying schools typically have better college and job prospects. The state subvention to private schools goes primarily to paying teachers’ salaries.

Advocates say its removal would create an even more elitist system for fewer people and ultimately impose additional costs on the State as the cost of schooling for those unable to pay the higher fees would fall back on the State. The private schools issue is small beer in the context of an €11 billion education budget.

“Free education is a myth, a concept alone. In practice, education is expensive from primary level right up to third level. That needs to change,” Sinn Féin said in its pre-election manifesto, but the document is light on detail when it comes to how all these costs, including third-level fees, can be removed and absorbed by the State.

Government insiders also note that the lion’s share of the education budget goes on teachers’ salaries, which are fiercely defended by three strong teacher unions, and that Sinn Féin in government, like previous administrations, would find implementing change a challenge.

Health spokesman David Cullinane. Photograph: Alan Betson

Health check

According to the party's health spokesman, David Cullinane, the key priorities are tackling "dangerously high" waiting lists; reducing the overall cost of healthcare; and bringing more staff into the public system.

He says the party wants to offer all health graduates – nurses and doctors – a job guarantee, claiming the Government’s bed targets are being undone by the inability to recruit the necessary staff. In Budget 2021, there was a commitment to fund 1,141 additional acute inpatient beds, of which only 669 have been delivered. “The reason why is we don’t have the staff,” says Cullinane.

Sinn Féin, like the other parties, supports reforming the system via Sláintecare and the move to a more universal structure, with private care gradually removed from public hospitals. The party is no more vague than the Government on the additional resources needed to achieve this transformation or how it will fund the healthcare needs of an ageing population into the future.

The €21 billion health budget is perhaps the most difficult spending channel to rein in, largely because the demands on it are increasing all the time. Fine Gael has been accused by the Irish Fiscal Advisory Council of using bumper corporation tax receipts to paper over cracks in its health budgets, receipts that may soon disappear under changes being made at a global level.

Changing climate

Climate is perhaps an unlikely area for Sinn Féin to clash with the Government given the consensus that now exists around the State’s objectives. The party supported the Government’s Climate Action Plan, which ties the country into a multi-year programme of carbon budgeting.

However, it's now pushing a Dáil motion to scrap proposed increases in carbon taxes, insisting they will not impact the State's target to reduce carbon emissions by 51 per cent by 2030 but will disproportionately affect poorer people in rural Ireland who rely on diesel or petrol cars for transport and home-heating oil to fuel their homes. Fuel prices are now a huge issue given the hikes in the past fortnight in the price of oil and gas globally following Russian's invasion of Ukraine.

Sinn Féin said the Government’s reduction in excise duties this week didn’t go far enough.

The increase in tax for home-heating fuels is due to come into effect on May 1st, while the tax on transport fuels will increase on October 12th.

The party is not perceived to be strong on climate. Green Party TD Steven Matthews, chair of the Oireachtas housing committee, said the motion by Sinn Féin illustrated an absence of any meaningful policies on climate action.

Sinn Féin has also taken aim at the Government’s retrofitting programme, noting it would require many thousands of poorer home owners to put up €25,000 towards retrofitting. “A Sinn Féin government would make transition to a low carbon emission society affordable and accessible,” it said in its election manifesto, the emphasis more on making the transition affordable rather than achievable.

International view

The prospect of Sinn Féin in government came up at a recent webinar hosted by rating agency S&P. The “base case assumption” is that the Republic’s openness to trade, flexible labour market and commitment to put its high public debt levels “on a downward trajectory” will remain in place “regardless of the election outcome in 2025, or if anything happens before”, said S&P sovereign ratings analyst Rémy Carasse. Getting the imprimatur of a rating agency is perhaps a mixed blessing for Sinn Féin.

While it assuages business concerns, it suggests the party and its policies are not viewed, internationally at least, as a radical departure from what we’ve had up to now.

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