McCreevy left alone to carry the burden of individualisation

Eating humble pie never comes easy. And when you are Charlie McCreevy there is a tendency for it to stick in the craw

Eating humble pie never comes easy. And when you are Charlie McCreevy there is a tendency for it to stick in the craw. In spite of that, the ebullient Minister for Finance gulped hard at Leinster House yesterday and forced down the unpalatable pastry.

He didn't have much option. Confronted by the stony faces of Fianna Fail TDs and senators who had been receiving desperate abuse over the treatment of stay-at-home wives for an entire week, it was a case of "Minister, save thyself". High-flown ambition of eventually leading the ail party went out the window as Mr McCreevy sought to make peace with his parliamentary colleagues and to buy time with a risen electorate.

Worst of all, from his point of view, was the prospect of this becoming the first of two forced-feeding exercises. Des Geraghty of SIPTU and representatives of ICTU were, even then, preparing to ram the requirements of the lowest-paid down his throat at a meeting of the social partners.

Under intense pressure, support for the Minister in Cabinet had ebbed like the tide going out. So Mr McCreevy faced his colleagues and sought to appease the anger of stay-at-home wives. And the Taoiseach spoke about the need to address the issue of taxation on low pay as part of a new national wage agreement.

READ MORE

Everything was in a state of flux. The cost of the biggest "give-away" Budget in the history of the State was still growing. And it was possible Mr McCreevy's three-year "individualisation" adventure would have to be shelved or abandoned, if the focus switched to reducing tax on the lowest paid.

The prospect was confirmed in the last paragraph of the Minister's statement. Because of the strong views expressed, he proposed to invite the social partners "to consider the future development of the individualisation process in the course of the current talks on a successor agreement to Partnership 2000".

In that context, it is a racing certainty trade union leaders will press to have people on the minimum wage - £4.40-an-hour from next April, or £170-a-week - removed from the tax net altogether over the lifetime of a new agreement. As things stand, a single person pays tax on income in excess of £110 a week. It may not be fiscally possible to raise that threshold to £170 while simultaneously reducing the percentage paying tax at the top rate to 17 per cent under the individualisation project.

There was a more immediate problem. Mr Geraghty had taken SIPTU out of wage negotiations on the basis that this Budget discriminated against the lowest-paid. Would he, like the Fianna Fail parliamentary party, demand some money up front before negotiating a new deal? And what would that do to budgetary costs?

But the Minister had a job to do. Mna na hEireann had to be pacified. So he produced a £3,000 tax allowance at the standard rate for the spouses of married one-income families who worked in the home "to care for children, the aged or handicapped persons".

It had always been intended to balance the tax relief measures announced in last week's Budget for two-income families, Mr McCreevy declared, and the new allowance would be of greater proportionate value to lower-income families.

It was a far cry from the Minister's gung-ho approach to single earners and double-income families during the previous week. Even so, the climbdown was as badly managed. The Minister was still in the Fianna Fail party rooms trying to calm and reassure worried colleagues when details of the changes became known.

The upshot of it was that Michael Noonan got a free run on the RTE news. And didn't the Fine Gael spokesman enjoy himself? Acting as both announcer of the terms of the Government's climbdown and critic of change, he rubbished the Government's response as cheap and inadequate; something that created an artificial division between the deserving and undeserving stay-at-home wife.

The concession may have mollified most Fianna Fail backbenchers. But, within minutes of the announcement, angry women took to the airwaves to express their grievances over efforts to "buy them off", without redressing the original discrimination.

Mr McCreevy was in a no-win situation. The issue of individualisation had generated such a charged emotional atmosphere that nothing short of abolition would satisfy some people. The party had taken serious flak at both local and national level. A total of 508 furious telephone calls had been logged to Fianna Fail over two days. It was unprecedented and could not be ignored.

The angrier the public, the more vigorous the response. And the Coalition did everything short of cartwheels when it sent Mr McCreevy out to shred key elements of his Budget.

Never in his wildest dreams had he imagined the kind of response his individualisation proposal would generate, the Minister confessed to journalists. And, while he remained committed to it, the future of the project was now a matter for discussion with the social partners. "Let's see how the debate develops," he advised.

Meanwhile, John Bruton was pointing to the prospect of the scheme costing the Exchequer an extra, unplanned £1,000 million. If women in the home were treated differently under the tax code, he said, then they might demand to be treated differently under health and social welfare regulations as well. The outcome could be a huge increase in the number of women who would be able to claim free medical care and spouses might also qualify on an individual basis for social welfare payments, he said.

Ruairi Quinn demanded that Mr McCreevy come in and tell the Dail all about it. But he got diverted into a heated argument with the LeasCeann Comhairle and wasted his time. On a day when the Government was on the run, he should have done better.

When the day ended, it was unclear if SIPTU was insisting on money up front, or whether the cost of industrial peace would be rolled into future budgets. What was certain was that Bertie Ahern is going to take a hands-on approach to future negotiations with the social partners. It was hardly a vote of confidence in his Minister.