Testing times ahead as it gets harder to blame FF

ANALYSIS:The Government will have been in office six months. But as Ministers and backbenchers return after the holidays, is it also the end of their honeymoon?

AS TAOISEACH, Enda Kenny’s primary promise to the people was to tell the truth. That was why, in his first speech after being elected in March, he didn’t hold back in describing the terror of ordinary people in the face of economic calamity.

“People are frightened of losing their homes,” Kenny told the Dáil on that historic day.

“Parents are rendered speechless at the sight of their children boarding planes to countries where spring is autumn, and our today is their tomorrow.

“Employers are traumatised by laying off staff and shutting down businesses. Workers pray for invisibility as they queue for the dole. Families worry that the neighbours might see the Vincent de Paul calling to their door. Dreading the postman: dropping bills like stealth bombs into the hall.”

If it was true then, is it true now six months on?

The mood may be different, but the figures speak for themselves.

The Live Register has just risen for the fourth month in a row; the seasonally adjusted figure now stands at 449,600 compared to 442,100 in March.

The number of homeowners in mortgage arrears has also continued to grow, although actual repossessions remain at a low level. Almost 55,000 mortgages were in arrears of 90 days or more at the end of June, compared to over 49,000 in March.

An estimated 300,000 gas and electricity customers have fallen into arrears on their bills.

Up-to-date emigration figures are not available, but forecasts suggest the numbers leaving the country will stay at levels not seen since the 1980s.

So the causes of the fear and dread referred to by the Taoiseach in March are still very much around. But what about that other “battle front” for the Government, identified by Tánaiste Eamon Gilmore on its 100-day anniversary – the crisis in the public finances?

As Michael Noonan again warned last week, we’re still spending far more than we raise in taxes. Spending in some areas is actually increasing, for example on welfare payments for the army of new unemployed.

Aside from cutting their own pay, Ministers have made few inroads into waste and overspending in the public service. The really hard decisions have been put off until the completion of a “comprehensive spending review” this month.

By the time the €2.1 billion in cuts needed next year under the EU-IMF deal are implemented, goodwill for the Government will have ebbed away and the time for blaming Fianna Fáil will be long past.

Not that there aren’t glimmers of hope. The restructuring of the banking sector has been largely completed. The agreement reached in July at the European Council to cut Irish interest rates on borrowing from the EU to around 3.5 per cent was good for Ireland and should save us €10-€15 billion over the lifetime of the loans. Ten-year bond interest rates have dropped from a high of over 14 per cent to under 9 per cent – for now. The cost to the exchequer of winding up Anglo Irish Bank looks like being less than earlier forecast, and private investors have saved the State the bother of investing further money in Bank of Ireland.

Meanwhile, while we have moved to the top of the bailout class, the widening European financial crisis makes us look less a basket case and more an early victim of the flagging euro.

Both the Taoiseach and the Tánaiste have pledged not to raise income tax or cut social welfare benefits, thereby seriously reducing their freedom of manoeuvre in December’s budget.

Yet, in addition to the cuts which must be implemented, an extra €1.5 billion in taxes must be raised next year to satisfy our international creditors.

The real revelation of the Government’s first six months has been the performance of Kenny. The Taoiseach’s relentless optimism has been welcomed by an electorate bowed by years of bad news, and his handling of the feel-good visits of Queen Elizabeth and Barack Obama were deservedly praised. In the Dáil he has coped comfortably in debate with Opposition leaders.

Things only got better in the summer, particularly with his nail-on-the-head response to the Cloyne report on clerical sex abuse and the long-sought achievement of a reduction to our bailout interest rate.

In contrast, Gilmore has struggled to make an impact. Just a year ago he was the most popular leader of the most popular political party, but in Government he has yet to find his feet. More experienced Ministers such as Ruairí Quinn or Brendan Howlin have packed a greater punch, while the Labour leader looks ill at ease in the foreign affairs brief.

The Government has been content to leave many of those responsible for our economic catastrophe in their posts or still drawing generous retirement benefits. The political class has had its sails trimmed, but not nearly enough. Despite the political revolution of last February, there is an undeniable continuity with the previous Fianna Fáil-Green government – same basic economic plan, same Nama, even the same advisers working for some Ministers.

So, despite some of the rhetoric, this is not a radical administration, but it could be argued that this is what the voters wanted by favouring the Fine Gael-Labour option. Yet even devoted Labour supporters must have flinched to see so many women passed over for Cabinet posts, or to hear Quinn defend the appointment of a (Fine Gael) woman as Minister for Children by arguing that “women know more about children than men, because they spend more time with them”. Quinn, one of the more active Ministers, has also defended the €100 million a year subvention of private schools.

The cut in the minimum wage has been restored because, in the words of Gilmore, the Government wanted to honour a “threshold of decency”. But wage controls in many low-paid sectors have been abolished and Labour backbenchers, after some co-ordinated harrumphing, seem assuaged by Richard Bruton’s promise of legislation in the area.

While the honeymoon continues, the mismatch between what needs to be done and the electorate’s capacity to swallow the prescribed medicine continues to grow. You don’t have to be a daily listener to Liveline to know how much economic pain and suffering is out there, and how ill-equipped many people are to cope with further hardship.

With so many hard decisions to be made, the next three months will tell us much more about the worth of this Government than the last six.