INSIDE POLITICS - THE LATEST POLL

I haven't posted anything since December 21. That's a fair gap, or a hiatus as we call it in my new place of employ.
Since then a a lot of water has passed under the bridge
Or as Terry Flanagan might put it, a lot of water has passed under the bridge.
Well it hasn't really.
I signed off with Bertie back then and am - surprise, surprise - locking back in with Bertie.
The Sunday Business Post poll findings on his Tribunal evidence was enough to completely wilt that surge (well the slight increase of one percent)in Fianna Fail's support levels.
Fifty three per cent don't believe Ahern's evidence. Half of those surveyed no longer trust him to run the country. And if he is found to have lied to the Tribunal, seven out of ten think that will merit the walking of the political plank.
Earlier this week, I did a piece on Fianna Fail's grassroots. Unsurprisingly, they are all four square (110 percent as they all say) behind him, irrespective of how deep or how suppurating the slurry he has to wade through.
They reminded me of the final scene in 'Some Like it Hot' with Jack Lemmon (still in drag) and the the little fellow who has fallen for his female persona. Jack Lemmon , tries to break it him gently, giving a list of reasons why they can't marry.
Finally, he says: "I can never have children", to which the suitor cheerily responds: "I don't care."
Damn it all, says Lemmon in exasperation as he rips of the wig, I'm a man.
To which the suitor replies cheerily: "I don't care."
And that's how loyal the FF grassroots are!
We have written endlessly here about the longevity of the anorak.
But the 30 grand to Celia; the melding of political donations with personal cash... all that is potentially more damaging than the dig-out loans and the eight grand from Manchester.
For the first time we sense that this remarkable political journey will reach an end sooner than marked out on the itinerary. The land that Charlie McCreevy got after the locals in 2004, will be given this time to the giver of the land. There will be no Inchdoney strategy this time round. It's an exit strategy and it will be timed for sometime around the local elections next year.

INSIDE POLITICS - DOOM AND GLOOM?

I DON’T know about you, but early on Wednesday morning I assumed the worst.


The moment I got into work I sat down at my desk, crouched forward, put my head between my knees and assumed crash position.

That guy Cowen, I reasoned. He didn’t know what the hell he was talking about. Do you remember when he was going on about a soft landing in the property market last year?


A soft landing? Viewing the ruins of the property market this winter was like looking at London after the German bombing campaign of 1941.

Cowen had taken a chomp out of a reality sandwich since then. In the run-up to the budget he painted a picture of the economic landscape that reminded me of another time and place. Let’s go for a nostalgic trip down memory lane. Let me bring you back to the early 1980s when teenagers sported mullets and flecked trousers and they all bought one-way tickets on the Supabus to London or on Ryanair to Germany.

The buzz phrase that has defined the past decade has been the ridiculous Celtic Tiger. Well the one that defined the early 1980s was less ridiculous but boy was it grim. And if I’m not mistaken the words first formed on the lips of Charles J Haughey. It was: “doom and gloom”.

For weeks and weeks before the budget, Cowen was incapable of uttering anything that didn’t smack of doom and gloom. Granted, he wasn’t quite phrasing it in such desperate language. But the message was clear. After years of quaffing champagne with Charlie we’d have to slum it by drinking Dutch Gold with Cowen.

But then an amazing thing happened. As we absorbed the hour-long speech on Wednesday, we searched in vain for pain. There was little to be found. Sure if you were a chain-smoking Porsche driver who happened to purchase an expensive house a month ago, you were on a loser. But the rest of us walked away from what we thought was a crash without even a scratch. Tactically, Cowen was clever in the run-up to his fourth budget. He dampened expectations, accentuated the negative, reminded all and sundry that the property market was contracting; that growth had slowed; that the public service was in bad need of reform; and that the days of double-digit increases in current spending had come to an end.

Fianna Fáil had also learned from the dog’s dinner it made of the 2002 election promises. This time around, Fianna Fáil had promised dozens of goodies. But at the end of each press conference during the election campaign, Cowen would remind people that terms and conditions applied. Everything was predicated on growth rates of 4.5% or more. When that didn’t happen, Cowen was able to go to fallback position without sounding like a hypocrite. He could deny tax cuts, PRSI cuts, extra teachers and extra guards because they would only be granted if the boom had continued. His default commitments were to the National Development Plan and to health and education. Still, if money was too tight to mention, why did we get no pain in the budget? Well there were a few stealth taxes here and there (motor tax and medical charges).

It was all made possible by two cavalier decisions by Cowen that reminded you of the swagger of the Charlie McCreevy era. One was his U-turn on stamp duty. He came up with one of the ugliest phrases I have ever heard to explain why he did this. It was, he said, a “countercyclical measure”. In ordinary parlance, that’s a 180-degree turn. But he will get away with it because people’s cynicism over FF completely changing its mind on stamp duty in six months will be trumped by the positive vibes it will have for home owners.

The other bold gamble Cowen took was to borrow heavily for the first time in a decade. Fine Gael rightly pointed out the €5 billion of borrowing next year represents a whopping €7.2bn turnaround in fortunes between 2006 and 2008. The Tánaiste described it as “modest” but it is more than that. The national debt will increase 50% over the next three years. It may just pay off, though the creep in the unemployment figures and the fall-off in job creation are both worrying. But if both gambles fail, we will all too soon find ourselves crash landing back into the 1980s landscape of “doom and gloom” quicker than we can say “countercyclical measure”.


This is my column from today's Irish Examiner

INSIDE POLITICS - BUDGET 3

Translate the following comment of Tánaiste Brian Cowen into English:
“Over recent months the dynamics of the housing market have fundamentally changed… The conditions then (before the election) would have destabilised the market. (The Mullingar Alliance’s) so-called solution would have harmed the market. I have always said that stamp duty could only be looked at within the budgetary cycle. We need to support the market and not destablilise it.”

It looks tricky doesn’t it at first glance? But the translation is very simple.
It can be boiled down to one phrase: “A perfectly executed 180 degree u-turn”.

If Brian Cowen had turned up yesterday looking tanned and well five years after his smashed-up canoe was found on a shore on the North-East of England he would have caused less of a stir than his announcement on stamp duty.

Six months after he accused Fine Gael and Labour of proposing stamp duty changes that would destabilise the market, Cowen himself yesterday announced stamp duty changes that were broadly similar. The reason? Oddly enough what would have destabilised the market six months ago was not being introduced to stabilise the market you follow his logic? Erm, not quite.

Twelve months ago Cowen was portraying stamp duty as a non-issue and talking about a ‘soft landing’ in the housing market. A year later the landing experienced by the construction industry could be described more as ‘crash’ than ‘soft’. And forced by a collapse in revenue from property taxes, especially stamp duty, the Tánaiste has essentially being forced into a 180 degree turn – or as he describes it, a ‘step change’ or overhaul of the system.

His reason for this is inarguable. During his 50 minute Budget speech to the Dáil, he said: “Activity is slowing somewhat and there is some uncertainty as to where prices will settle. The housing market is an important aspect of our overall economy and the sustainability of economic activity can be assisted or impeded by the efficiency of that market.”

And it does make for fundamental change. No duty until E125,000. And the 7% on the balance up to E1million. And over E1 million, it rises to 9% for the portion of the purchase price that is over E1 million. The scheme, as announced, is not all that different from that announced by the opposition parties and by the PDs (though a little simpler). The net is that the two stamp duty initiatives announced by the Government this year will cost E270 million (E81 million for first-time buyers; and E190 million for this year.

It will be welcomed by everybody from home owners (those purchasing a E650,000 will spend a whopping E21,750 less in stamp duty) to the construction industry but also leaves the Government very vulnerable to charges of gross political misjudgement, doing too little too late to prevent the housing slump.

“He waited for the housing market to collapse before he address the need for reform in stamp duty,” said Fine Gael deputy leader Richard Bruton.

Labour deputy leader Joan Burton said that he had allowed the housing market to slump and also argued that the reforms would favour the very rich more than the very poor.
The debate between Government and opposition on this is a simple if polar one. One says the measures should have been introduced while the price curve was going upwards; the other says that it could only be introduced when it was going down, or “countercyclical” to borrow Cowen’s ugly word for it.

Cowen’s Fourth Budget was unusual in that it veered away from his usual low-key approach and had a bit of the ghost of Charlie McCreevy about it. For one, there was the stamp duty stunt, a very Charlie gesture. And secondly, it was a much more expansive budget than anybody expected from the usually conservative Cowen.

The overall economic climate has deteriorated dramatically in recent months and the Finance Minister was forced to pick up the pieces after any Government’s most torrid six months, certainly since 2002, and maybe since 1995.

“It is right and appropriate that we should run budget surpluses when the economy is performing very well. It is equally right and appropriate that we borrow when the growth outlook is less favourable,” he said in the opening passages of his Speech.

But in the run-up to yesterday, he talked about modest borrowing and ambitious growth. But the borrowing was certainly not all that modest. The Exchequer will require to borrow E4.9 billion next year. As a point of fact, Bruton pointed out yesterday that the turnaround since 2006 has been “the biggest in the history of the State.”

Then Ireland had a Exchequer balance of E2.3 billion in the black. Next year, it will be almost E5 billion in the red, a turnaround of a stunning E7 billion in fortunes in recent years.

Cowen’s thinking yesterday was clear. By borrowing to invest in the National Development Plan, he was spending wisely to reap plenty in the long term. The GDP increase will be much more modest next year at 3% but it is still better than many other EU countries. If the decline corrects itself, perhaps that will be prudent. But it does mean that the National debt will increase by a significant 50% by 2010.

The net effect of such a dip into the red is that nobody really loses and there aren’t any cutbacks. Capital spending will increase by 12% next year while current spending will rise by a more modest 8.2%. It means overall spending will be E53 billion, a relatively modest increase of E1.7b.

But there are what the opposition will portray as stealth taxes. The drug refund threshold increases to E90 per month; there are rises in bed and A&E charges, and widening the eligibility of medical cards has essentially been kicked into touch for another year to allow some review to take place.

Oh yes, and motor tax will be increased by between 9 and 11% from February (raising E83 million per annum).

Ah motor tax! The stamp duty furore almost completely eclipsed the fact that yesterday witnessed the world’s first ‘Carbon Budget’. A lot of the thunder was stolen from the Green Party’s biggest gain by the fact that the details of the Vehicle Registration Tax were leaked a fortnight ago. Still, the announcement that this year’s C02 equivalent emission of 70 million tonnes will be 63 million tonnes while hardly headline-grabbing is very significant.

Because Estimates were included there were dozens of minor sub-plots, all of them worth of mention, all of them affecting citizens of one hue or another. The E35 million increase in cancer care was a huge disappointment.

There were a couple of eye-catching initiatives like the tripling of income thresholds for family with a child under 18 with intellectual disabilities. Cowen has looked after the lowest earners and those on social welfare, though many of the increases were at a rate just above inflation. Cigarettes went up more than expected by 30c a packet; while there was some vague prose about measures that would favour low-alcohol drinks over high-alcohol ones.

And Section 481 for the film industry was extended another four years until 2012 without any of the resistance McCreevy showed four years ago.

And of course, the Government also had to take a couple of (fully deserved) swipes on the grandiose pay rises they awarded themselves, top civil servants, judges and the rest of the top brass in our society. Oh sorry, there is an efficiency review of the public service promised for next year but it has all the woolly imprecise language we have come to expect since benchmarking.

Fine Gael’s Bruton found the best put-down of it: “(Cowen) joins the solemn chorus, calling for wage restraint and for reform. But like the armchair general ordering his troops over the to into the teeth of enemy machine guns, Mr. Cowen and his pampered colleagues will be a safe distance away. When it comes to their own interests there is no demand for reform or frugality.”

No danger of a U-turn there, was there?

INSIDE POLITICS - NEGOTIATONS

Charlie McCreevy once said that he knew Bertie Ahern better than most and, at that, he knew him only 20%.

Fianna Fail took most people by surprise whey they held their first formal discussions with the Greens yesterday, moving much more quickly than was anticipated to expand their options on forming government.

But anyone who thinks the serious nature of the talks with the Greens – and the seriousness is particularly evident from the smaller party – signifies that this is now the option the FF is pursuing is mistaken.

At the same time, Fianna Fail is doing its business on all fronts. Dealings are continuing with the rump of the PDs and also with the independents – significantly Michael Lowry issued his first statement yesterday confirming that he too had been contacted by the Government.

He said: "I accepted an invitation from Taoiseach Bertie Ahern to negotiate on the terms of my involvement in a cross-party alliance to provide a stable government."

The latest overture by Fianna Fail to Lowry brings to twelve the number of TDs it might include in government.

Sources in Fianna Fail have spoken about forming its own kind of rainbow, with the PDs, the Greens and independents.

The downside of that arrangement is that Fianna Fail would have sacrifice more cabinet positions than what its own TDs consider necessary – at least two senior ministries (one each to the PDs and, at the very minimum, to the Greens) and at least two so-called ‘super junior’ ministries.

The other is that the Greens are to some FF rural TDs what reds were to McCarthyite Americans in the 1950s. They look at the Greens’ stances on corporate donations, on roads, on carbon taxes, on once-off housing and they see meddlers. However, of all the parties, FF backbenchers know their place and if a deal is struck with the deals, they will go along with it obediently while grumbling privately.

There’s a couple of problems for the Greens too, that are not all that easy to get over. For one, Trevor Sargent will have to step down as leader if they do a deal with Fianna Fail or else he will be accused of blatant inconsistency.

Secondly, the party is going to have a tough job convincing its members – and its potential supporters in future elections – that it is doing right by the country by going into government while at the same time ceding some of its core principles including a ban on corporate donations; carbon taxes, and transport policies.

The party really wants to go into government. But a sardonic political veteran observed yesterday. “If the Green Party is prepared to compromise on core principles so that it can wallow in high office, they will get hammered.”

From the moment that a third-term was confirmed, Mr Ahern has continued to speak about a Government of stability and longevity. In other words, what he wants is one that lasts for five years, come hell, high water, or further damaging Tribunal allegations.

Part of that equation is numbers. If he has four or five TDs above the magic 83 mark, it will allow the Government some breathing space, and make the government of the country over the next five years less of a hairy roller-coaster ride, where the government will always be vulnerable to a defection or an illness that gives the opposition a chance to defeat the government in the chamber.

However, the corporate memory within Fianna Fail still has bitter memories of the manner in which the most secure majority of all time – that with the Labour Party in 1992 – fell asunder amid mutual recrimination just two years later.

We tend to attribute a Machiavellian slant to everything Ahern says, and McCreevy's 20% assessment gives credence to this. But maybe he's been right all along and his preferred solution is the PDs and independents and he’s sounding out the Greens just to see if it’s a feasible option.

In another sense, he may be playing them all off one against the other to maximise FF’s negotiating position and minimise what the smaller parties might demand in relation to ministries and policy concessions.

And there are some who say that all of this talking is a prelude to FF approaching Labour with an unbeatable offer in the run-up to June 14th, knowing that it has at least one or two other deals in the bag.

The only thing that’s certain is that Fianna Fail has all the chips on its side of the table and is in a powerful position.

But trouble may be coming down the tracks in the shape of the Quarryvale module and the fresh questions facing Mr Ahern.

There’s an element of ‘don’t mention the war’ about this issue. It’s quite possible that a deal can be negotiated with ‘moral high ground’ parties. Of course, the $64,000 question is the $45,000 question, if you get the drift. Will that be conveniently long-fingered for future consideration.

Expect a long week of horse-trading ahead.

INSIDE POLITICS - TRIBUNALITIS

The Government's abject climb-down over Tribunal fees is a textbook illustration of political 'optics' and hubris.

In 2004, then Finance Minister Charlie McCreevy announced that he was going to tackle the spiralling costs of Tribunals. There are lawyers working in the two main Tribunals who are getting two and a half grand a day, a couple of hundred days a year, and have been getting those Biblical sums for a full decade now.

Well, McCreevy was going to take them on, wasn't he? He announced a new fee structure that would apply to new Tribunals and to the running ones. He consulted with the chairmen of the Tribunals and came back with a deal.

We were all told that fees for Moriarty Tribunal lawyers would be reduced from €2,500 a day to €900 a day from January 2006. And for the Mahon Tribunal, that would happen in March 2007.

Of course, there was never any intention to reduce the fees. There was a bit of weaving and ducking, and the whole exercise was designed by the Government to hoodwink the public.

It was only when Tribunals got bogged down in delays and legal challenges, that we found out how badly hoodwinked we all had been.

First the Moriarty Tribunal reached and passed the fee-lowering deadline. And what did the Government do? Crumble of course in the face of the threat that the lawyers might walk out.

But as the deadline for Mahon approached, the taxpayer was given some hope when - out of the blue - Tanaiste Michael McDowell decided that enough was enough. He launched an incredible attack on the costs of the Mahon Tribunal, warning darkly that its overall bill could be as high as E1 billion. At last, we thought, we have found a people's champion. McDowell is going to stand up on our behalf.

Yesterday's news that the Government will allow senior counsel to be paid E2,500 a day showed up the charade that has been going on.

The Government spokesperson said that negotiations between Environment Minister Dick Roch and planning tribunal chairman Alan Mahon would continue but in the meantime the higher rate of fees would apply.

Translated into English, that meant that the Government has caved in and capitulated completely and that much-trumpeted 2004 agreement of McCreevy's wasn't worth the paper it was written on.

And McDowell's brave stance? A straw man, if ever there was one.

BERTIE AHERN’S moment of true political genius during this term of Government was realising he had to give Charlie McCreevy the flick.


Ivan Yates found the phrase for it when he reminded us on RTE's The Week in Politics last Sunday week that eaten bread is soon forgotten. And that was McCreevy’s problem. What he had been so right for in 1997, he was so wrong for seven years later.

Was he killed off by the Frankenstein he himself created to ethically cleanse civil servants from the capital? Was he killed off by the lousy by-election, local election and European election results in 2004?



Or was he killed off by a leader whose control of him was as complete as Mick McCarthy’s over Roy Keane? In all likelihood, it was combination of all of the above. With Bertie nothing is ever as neat as a Colonel Plum-type operation with a candlestick in the sonservatory.

To be sure, here was a leader who innately knew — without being exactly able to say why — that his unpredictable star player was on the wane and had to go. And that he needed an honest grafter to fill the gap.

Timing was everything. And cometh the hour, cometh the Beast. An early departure for McCreevy allowed his favoured successor Brian Cowen sufficient time to make his mark. On Wednesday, Cowen presented his third Budget speech as if it was part of a continuum, as if he had been there forever… Charlie who?

And his budget speech was some feat. The text was that of a leader-in-waiting. The delivery was that of an altar server who’s just received communion, all downcast eyes and humble piety.

Cowen is such a masterful spinner that he often appears completely unspun. He hit all the right buttons on Wednesday in reaching out to all the key constituencies that Fianna Fáil will need to bring them home next year — and getting there firstest with the mostest was never so easy, what with all the sleáms of money he had sloshing around him.

His greatest trick of all was presenting the biggest giveaway election budget of all time as if it wasn’t an election budget at all.

He didn’t go on and on about all the great things the Government has done since 1997. He didn’t strut, he didn’t showboat, he didn’t patronise people about how well we are doing.

The balancing act was a subtle one. Dropping the top tax rate by 1% is a measure that helps the better off. The semantics for that became “rewarding work”.

But just in case anyone got the notion that it’s Government for the rich by the rich, there was the clever little increase in the health levy for those earning over €100,000.

“This extra money will help fund services such as long-term care initiatives for the elderly. We need to act now to secure such funds and I believe it is only right that those best able to afford it make an increased contribution.”

That sounds great until you realise that they’ll actually be making a decreased contribution, having benefited from tax cuts.

The most resonant phrases though was one that encapsulated the Fianna Fáil approach since Inchydoney and ones that you’d never imagine forming on the lips of McCreevy. They related to the social welfare changes.

“One of the measures of a true republic is the strength of its support for those on low incomes…the Government does not see economic growth as an end in itself.”

It would have been fatuous for any of the opposition parties to quibble with the generous increase in pension and social welfare payments. And, in fairness, none did.

But the main asks from Cowen required action on two conflicting fronts. He had to appeal to the all the voters who demanded what’s in it for me? And he had to appeal to all the voters who demanded what’s in it for the poor, the unemployed and the elderly? The paradox was that in most cases it was the same voters who were asking both questions. With one stroke, he had to satisfy their greed and also salve their consciences.

And the problem with that is that it took up the bulk of spending: some €2.6 billion of an estimated €3.7bn. For everything else, it was a case of cutting the cloth to suit the measure.

The much-trumpeted greening of Fianna Fáil turned out to be tentative and half-assed. The €270 million spend on carbon credits was a roundabout admission of failure on our Kyoto commitment.

Maybe we were missing the point. It was a green budget alright. Plenty of greenbacks.

And in Cowen, Bertie Ahern had the perfect minister for bringing Fianna Fáil to its green and republican roots.