The curious case of Leo the Leftie and the Giant Government Giveaway

A short quiz to begin this week. Which politician lambasted Fianna Fáil for a return to its profligate and reckless old ways in 2018, for "going around the country promising every interest group they will do everything they ask"?

Who accused Micheál Martin in the Dáil of forgetting the party’s previously disastrous management of the economy in these pungent terms: “I am keeping a record of all the promises his spokespersons are making as the weeks go by. Hundreds of millions in extra spending are being promised every week for every interest group and it is all being promised now. That is exactly the kind of philosophy that landed this country in the hole out of which we had to take it a number of years ago.”

Could it possibly be the same politician who this week promised a welfare package, increases to the fuel allowance, increases in capital and current spending, pay increases and a tax package in the coming budget?

Could it really be the same politician who once warned with conviction of the scourge of auction politics, but who now seems more than happy to buy his way out of political trouble? Indeed it could. Step forward... Leo Varadkar.

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The Tánaiste is a student of politics, and ruthlessly self-reflective. He analyses his own mistakes and tries to learn from them. Has he, like Fianna Fáil in its recent critique of its own failings, decided that he was too cautious, too prudent, too fiscally responsible in 2020, to his electoral detriment? Sometimes it looks like it.

I have lost count of the number of people, in all parties, who have asked me: what is going on with Leo? If there was one politician who observers might not have expected to be encouraging trade unions to look for bonus payments, it would have been Varadkar. But here we are.

Trumpeting

The emerging within-Government theory of Leo the Leftie was hardly undermined on Thursday night when he went to the Ibec dinner and made a speech that would not have been out of place at any Labour Party conference, trumpeting plans for statutory sick pay, flexible working and union recognition.

Jesus, muttered one civil servant after one of Varadkar's recent forays, every time he opens his mouth it costs us a couple of hundred million

He has been the most vocal supporter this week of the barmy idea of giving large swathes of the public service an extra two weeks’ holidays next year, insisting that not only health workers but also civil servants (?) should get the bonus. Senior union figures expressed bemusement to me at the rush by Government to give their members money that in many cases they haven’t asked for. Even in the health service, it’s only a minority of staff who worked above and beyond the call of duty.

Jesus, muttered one civil servant after one of Varadkar’s recent forays, every time he opens his mouth it costs us a couple of hundred million.

But it is Varadkar's interventions on the forthcoming budget that most clearly mark out the new territory. And it's hard to see his support for a massive budget package of welfare increases, capital and current spending hikes and tax cuts as anything other than risky. But don't take my word for it: ask the Irish Fiscal Advisory Council.

Shortly after the last time the country went over an economic cliff, the national consensus was that the political system needed new structures to discipline itself, reasoning with considerable foresight that the immediate memory of the human suffering caused by the crash would abate and its lessons would be forgotten. One of the measures introduced to ensure this could not happen again was the establishment of the fiscal council, whose gimlet-eyed scrutiny of economic and budgetary plans is now a regular thorn in the side of governments.

The perennial complaint of politicians – this crowd don’t have to get elected – is actually precisely the point. They don’t have to get elected. They don’t have to be popular. If you understand that the responsibility of government is to do what is right for the country rather than what is easy, then that should add authority to their criticisms, not diminish it.

Warning lights

As the chairman, Sebastian Barnes, made crystal clear during the week, the fiscal council is currently flashing warning lights about the emerging budgetary plans. Minister for Finance Paschal Donohoe confirmed on Thursday that the cash available for the budget day package was currently €4.7 billion. But at the rate giveaways are currently being promised, he will bust through the €5 billion mark, and then some.

You can do spending increases and welfare packages and tax cuts. But to do them all together at a time when the exchequer is still borrowing heavily for day-to-day spending, adding all the time to the monstrous debt pile, is a dicey budgetary strategy that cannot reasonably be described as prudent.

Varadkar has flourished in high office when confronted by defining challenges. He offered national leadership, a cool head and an ability to clearly communicate and directly connect with people during the nervous months of the Brexit negotiations, and the terrifying early days of the pandemic.

But his political project has stuttered. His party is unsure of how to face up to the fact that the electorate did not buy his offering in 2020, no matter how compelling it seemed to swooning FGers in 2017 and 2018. All going to plan, he will become taoiseach again in little over a year, but by then he will need to have figured out what his renewed mission is to be – for his new government, for his party, and for himself. Whatever that is, I can’t see it being a success if it is based on a risky fiscal approach that ducks hard decisions.

There's lots of talk at the moment about Fianna Fáil not knowing what it is for. But if Fine Gael can't offer prudent economic management, then what exactly is it for?