It was fortunate for Micheál Martin that on the morning after the sacking of Barry Cowen the General Court of the European Union made a decision in the Apple tax case which was critical for this country's international reputation and indeed for the future prosperity of its people.
The repercussions of the Apple case and the Government’s decision to postpone lifting some of the Covid restrictions swept the Cowen sacking and its fallout from the headlines. The Taoiseach now has a chance to put his uncertain first few weeks in office behind him and move on to dealing with the issues that really matter.
The ominous thing for Martin is that the early days of Fianna Fáil’s return to office were beginning to look like the final days of its last stint in power. The shambolic last phase of Brian Cowen’s government in January and February 2011 is something that threatened to destroy for good Fianna Fáil’s reputation as a serious party of power.
Martin has presided over the steady recovery of the party's reputation since then though a combination of patience and firm leadership. While the failure to become the biggest party in the general election was a serious disappointment the fact that Fianna Fáil made it back to power through the unprecedented coalition with Fine Gael offered hope of a new phase in the party's history.
The return to political chaos immediately after taking office is something the Taoiseach brought on his own head. First there was the inexplicable decision not to appoint his deputy leader Dara Calleary to the Cabinet, then the outbreak of wailing and gnashing of teeth by a variety of TDs disappointed at not getting ministerial office, followed by the embarrassing Cowen episode.
If Martin doesn’t manage to draw a line under it and get his party focused on the challenges of governing in a time of a pandemic, his time in office will be short-lived. The Apple case has provided a breather and he needs to take advantage of it.
The silver lining of the Cowen episode is that the three-party coalition remained solid in the face of the pressure. Neither Fine Gael nor the Greens made any effort to capitalise on what was an internal Fianna Fáil matter and that is a hopeful sign for the prospects of a cohesive government in the coming years.
That is why the decision by the EU court in the Apple case was so important. The comprehensive nature of the decision in Ireland’s favour should help to ensure that the country remains an attractive location for foreign direct investment in the years ahead, regardless of the inevitable changes that are likely to take place in the international corporate tax regime.
This country's reputation as a democracy committed to the rule of law was threatened by the claim promoted by EU commissioner Margrethe Vestager that Ireland had provided Apple with a sweetheart tax deal that breached EU state aid rules. If upheld it would have done enormous damage and fuelled the unfounded claim that the country is nothing more than a tax haven.
Fine Gael and Fianna Fáil need to be more robust in defending foreign investment's role in creating prosperity
The focus on the allegation that €13 billion was owed to the Irish exchequer has obscured the fact that last year alone corporation tax contributed €11 billion to the exchequer. The rising contribution from the multinational sector is helping to offset the reduction in other taxes due to the Covid crisis and points up again how much the Irish economy depends on international trade.
Attacks on the multinational sector from a range of sources have obscured the vital contribution it makes to the country’s prosperity. Sinn Féin and the hard left TDs are not alone in promoting the narrative that the multinationals are some kind of parasites using Ireland only to evade tax and avoid their responsibilities in other countries.
The two centre parties, Fine Gael and Fianna Fáil, need to be far more robust in defending and explaining the central role foreign investment plays in creating prosperity for society as a whole. The massive improvement in living standards in this country over the past half century happened only because Ireland got over the misguided notion that it could survive in self-sufficient isolation and instead opted to join the international trading order.
That process was initiated by two vital decisions taken by Fine Gael and Labour when they were in government in the late 1940s and 1950s. The first was the establishment of the Industrial Development Authority and the second was the introduction of export tax relief which later morphed into the 12.5 per cent corporate tax rate. Fianna Fáil under Seán Lemass in the 1960s followed up on those initiatives which ultimately led to membership of the EEC.
The inimitable Conor Cruise O’Brien once outlined why he and other Labour TDs favoured EEC membership in 1972 in spite of his party’s official opposition to it. “There were quite a few people who, in their hearts, were frightened at the idea of being locked up alone in the cold, clammy dark with Cathleen Ni Houlihan and her memories of the dead.” Unless our mainstream parties start explaining the facts of economic life to the electorate in a coherent fashion that is precisely where we will return in the years ahead.