Is a half-embrace at a funeral a sign that Sinn Féin and Fianna Fáil will cosy up together?

First week of the year and two front page stories in this week’s Irish Times pointed towards two issues that will be important in our politics for more than just 2022.

On Wednesday's front page Sasko Lazarov's photo caught Bertie Ahern sharing a half embrace with Sinn Féin leader Mary Lou McDonald at a funeral in Phibsborough. They were paying their respects to Chris Wall, one of Ahern's oldest pals and leading member of the group of luminaries that surrounded Ahern in his heyday and used to be called "the Drumcondra Mafia".

To say the picture put tongues a-wagging would be an understatement. “Ah come on, it’s only a funeral,” was one view in the party.

“It is in my arse only a funeral,” was the more common one.

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Of course on one level, Mary Lou was being a good constituency TD. But we all know there’s more to it than that. McDonald was making a public gesture and she knew it. And Ahern was accepting it. You don’t spend more than a decade as taoiseach and four decades at the forefront of politics without a feel for how these things work, or how they are perceived.

Sinn Féin knows that for all the talk about a left-wing coalition that includes neither Fine Gael nor Fianna Fáil, the numbers may not add up for that option

This presages a debate that is inevitable in Fianna Fáil about a possible future coalition with Sinn Féin. At the 2020 election Martin forcefully ruled out Sinn Féin as a potential coalition partner before and during the campaign – well, more forcefully than he ruled out Fine Gael, anyway.

At that time, Martin – citing the murder of Co Armagh teenager Paul Quinn, beaten to death by a gang of men thought to be linked to republicans – grounded his refusal to talk to Sinn Féin in moral, as much as political, terms.

Whoever leads Fianna Fáil into the next election is unlikely to maintain that approach. Many of its TDs acknowledge this, and some are openly in favour of considering the Sinn Féin option.

Bertie himself said before the last election that a Fianna Fáil-Sinn Féin coalition would be talked about after the Dáil numbers became clear.

Option

Sinn Féin knows all this, of course. It also knows that for all the talk – and you’ll hear a lot more in coming years – about a left-wing coalition that includes neither Fine Gael nor Fianna Fáil, the numbers may not add up for that option. Just as they didn’t the last time. Just as the current polls suggest they wouldn’t if there was an election now.

So if you were Mary Lou McDonald you would be eyeing an alternative route to government just in case. You’d know that absent a workable left-wing majority, your obvious route to government for a social democratic and nationalist administration, dedicated to a redistributionist domestic programme and achieving unity with Northern Ireland through referendums in both jurisdictions, is through a coalition with Fianna Fáil.

And you might find yourself outside St Peter’s Church of a morning, mumbling “sorry for your troubles” to the Bert.

The second story of the week will concern McDonald mightily if she does make it to power after the next election – when she and her Ministers have to make real-world decisions about the extent of the State’s resources and how to use them.

Mary Lou's other intervention this week shows how much she and her colleagues are thinking about how they would work the levers of government

Year-end exchequer returns published by the Department of Finance showed the extent of the economic recovery last year, and the remarkable buoyancy of tax returns.

Despite the lockdown in the first half of the year, tax receipts increased by some 20 per cent over the previous year, driven principally by surges in income tax and corporation tax. Both of these are worth examining briefly because whatever any new government does, it will not want to endanger this conveyor belt of cash.

The income tax numbers increased by nearly €4 billion over the previous (albeit Covid-hit) year not just because people were able to work from home, but because lower-paid workers in areas such as hospitality which were clobbered by the lockdown pay only a small proportion of the income tax take.

Look at it another way – taxes on higher earners in the Irish system account for a much larger proportion than is typical in European countries. That doesn’t mean taxes can’t be increased on higher earners. But it does suggest they might get rather humpy about it.

Imbalanced

Similarly with corporation tax, which is even more imbalanced. While corporation tax rocketed by 29 per cent last year, the receipts hugely depend on a small number of multinational companies.

In 2020, the last year for which these numbers are available, just 10 firms paid 56 per cent of all corporation tax, meaning that these companies – thought to include Google, Microsoft, Apple, Pfizer, etc – are paying several hundred million euro each and some even more.

Any finance minister would consider himself or herself lucky to have taxpayers like this. But it also makes the State uncomfortably reliant on them. Whatever else an Irish government will do – this one, the next one, the one after that – it won’t want to endanger these revenues because if it does then it will either have to either raise the cash elsewhere or cut its spending.

Mary Lou’s other intervention this week shows how much she and her colleagues are thinking about how they would work the levers of government. She warned in an interview with the Examiner that Sinn Féin would apply laxatives to the “constipated” civil service to ensure it implements the party’s programme.

You can be sure she is thinking about how that government would be financed too. The multinationals would be very welcome in Sinn Féin’s new Ireland – a far cry from when Gerry Adams used to promise to tax them to the hilt and nationalise the banks. Change works both ways, I suppose.