REPRESENTATIVES OF Fine Gael and the Labour Party, who set out their respective and divergent positions in advance of the December budget have been called to heel by their party leaders. Cuts in healthcare services, to keep within spending limits agreed last year, brought an outbreak of recriminations.
Labour Party chairman Colm Keaveney complained they had not received advance notice of the proposed changes and talked vaguely of a general election. He was bluntly told to behave more maturely by Fine Gael’s Lucinda Creighton who, in turn, proposed a renegotiation of the Croke Park deal. The exchanges followed a similar pattern to last year when Ministers argued over policy differences and financial allocations.
Back then, they were asked by Taoiseach Enda Kenny to do their talking in Cabinet. Yesterday, he declared a truce and said the silly season was over. Few bets will be taken on that, after the harsh things that were said. The political dust may settle but, because of the yawning gap that exists between exchequer income and expenditure and the pre-election commitments of both parties, it can only be a matter of time before bickering resumes, and in public. We are entering a period when the mettle of the coalition is going to be tested to the core.
As economic growth fails to meet expectations, the Government will not be able to deliver the savings necessary to keep the troika happy while, at the same time, maintaining social welfare and income tax rates and protecting public sector pay and allowances. Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin have insisted the demands of the State’s creditors will take precedence over political commitments. How that works out in practice will test the political abilities of both Mr Kenny and of Tánaiste Eamon Gilmore. Pressure within Government is likely to intensify. The €130 million in cuts announced by the Health Service Executive last week was in response to a budget overrun. It had nothing to do with a fresh round of economies being planned in the December budget. That process will involve a further €2.25 billion in cuts and €1.25 billion in taxes when options are already severely curtailed.
As if the economic situation is not sufficiently challenging, the Government will also have to prepare for a referendum on children’s rights; deal with the recommendations of an expert group on abortion and consider the issue of same-sex marriages. There are indications that difficult decisions are being postponed, so as to minimise disruption.This is as true of public service allowances as it is of consultants’ pay and the terms of a property tax. In addition, demands are being made to reform and “incentivise” the welfare system, even as an increase in PRSI contributions is resisted. Earlier this year, Mr Kenny said the coming budget would be “tough but fair”. It will certainly be tough, and needs to be. But difficult decisions will be required to ensure it is fair. The last budget failed the fairness test when low-income groups were affected disproportionately. That should not be allowed to happen again.