Johnny Fallon

Irish Political Commentator

2014 – What to watch out for

It’s always a dangerous business to try and predict anything in politics, but we can be sure that everyone involved in the game is doing just that. Planning is everything in politics and it’s something that leader’s value highly. Even if plans go awry it’s still important to have them. The biggest threats are of course the ‘little things’ that trip you up. The question asked on some otherwise perfectly mundane Tuesday afternoon where you just get the words all wrong and cause a storm. The sudden revelation in a newspaper headline. The crisis that develops around something you think is perfectly fine but doesn’t look that way to anyone else.

These are things we cannot predict and will be the biggest problems any government or political party will face. However as the New Year approaches there are 10 key items that all parties need to plan for and that they know are coming down the tracks.

1. Exchequer Returns – From about April onwards these need to be watched closely. The budget is a very tight one. In previous years during this crisis governments tried to sail close to the wind and it back fired. The early returns can be explained away and there are always changes as the year progresses. Previous years have taught us that from April onwards Departments start to worry and cracks start to appear. Ministers’ answers to questions start to sound less assured. However, if all is going to plan and the figures are holding up then this will be an incredibly good sign for the government particularly ahead of the local elections in June.

2. Bond Markets – Ireland does not need to borrow this year but it would be wise to hold some bond sales while we are fully funded rather than waiting until funds are nearly out. The government has a nice back stop of cash and should use this to test the waters of the markets. All eyes will be on the bond markets particularly in the second half of the year. If rates remain stable then the idea of leaving the bailout without any safety net will seem a very shrewd one. If however rates start to rise there will be a lot of nervous faces knocking about the halls of the Department of Finance.

3. The Taxation Argument – Ireland is likely to embark on another great taxation debate. For several years there has been a push to see higher earners pay more tax and to close loopholes to corporations. It is fair to say that this argument was decisively lost. Anyone in government who supported it was on the receiving end of a thumping. The government has no intention of touching income tax, particularly for high earners. Some Corporate tax loopholes are being looked at but it won’t be too scary. The debate is going to change. The side in the ascendency believes in lowering tax rates and having successfully stopped any rise they are set to seek a lowering as a way to encourage employment. The argument is one that is well familiar. It was used heavily from 1996-2007. This argument saw taxes lowered to an incredibly narrow base but one can expect that its return will see rates fall even more at the first sign of life in the economy and the first whiff of an election.

4. Public Sector Reform – Since the troika have at least left Ireland in terms of a visible presence there is a worry about the pace of reform. The government needs to ensure it meets targets and delivers an efficient value for money service. It also needs to rehabilitate the entire public service in terms of its image of customer service but that is likely to be put on the long finger. If economic news improves then the government will come under increasing pressure to halt cuts and some of the more drastic changes to contracts etc. These will not be easy to navigate. Reform has occurred under the cloud of doom that hung over the economy. While some economic success is good news it is also a double edged sword for the government in terms of its overall pace of reform. They say being in government is hard when there are no options. It can be even harder when there are options.

5. Political Reform – To be honest the man in the street is not anywhere near as worried about this as some think. However, it is a subject that people like to get stuck into. We have not seen huge reform from the government, lots of window dressing, but nothing that will really change the perspective of people. The abolition of the Seanad was the ‘big idea’. That wasn’t really reform but it was meant to tick a box. The government now seem to have decided that they are not going to do anything with the Seanad; it’s going to be ignored. That will teach people a lesson. Unfortunately, the people might not be too impressed. Within government circles there is an argument that the people were fooled by the no side into believing that they were voting for reform and that they will now teach them a lesson. This of course is a misreading of the situation. The people were not fooled; they simply didn’t think the government had the right to dictate their only options. That’s why the government lost that referendum and they long they try to continue to dictate the options the more it will annoy the populace.

6. Gay Marriage – This is one of those events that should not really cause the problems that it probably will. In all honesty the abortion debate last year should make this one easier as it is not as complex a moral argument. However, it is the abortion debate last year that is going to cause the problems here. The issue is one which most people will probably have no difficulty with and not see as a major issue. In politics however the conservatives who didn’t spit off from the government and who got a bloody nose on the abortion issue feel they have swallowed their pride enough. They will tell Labour that they will have to wait on this issue.

7. Health and James Reilly – Since the government took office I have always said that what happens in Health could be the make or break issue outside of economics for the parties. I see no reason to change. The system is still suffering huge difficulties with more cuts to come. Even when it had lots of money the system wasn’t working right. The small attempts at change have only left us with a system that’s a bit of this and a bit of that. The government needs to decide if it’s going to follow through on the health system they envisaged at the time of the last election. If so they cannot afford to allow the current mix and match approach continue, big changes need to happen fast. Big changes that will upset a lot of groups and individuals. If they decide to abandon those plans it spells disaster for James Reilly. If they decide to implement them they must ask if his stock is high enough to face down the storms such change will cause. There may be merit in letting him take lots of flak and pushing ahead until June and then letting a new face take over and try to implement things.

8. Local & European elections – It goes without saying that these are the barometer for all parties. Can the government hold what they have at local level? Will FF recover to the mid-20s mark that they need to hold what they have? Will SF and Independents see a marked rise in support? There are many key battles that will be examined closer to the day but the mood of the country come next May will be pivotal for all. Right now the government needs to avoid any scandals and keep those figures on course. The opposition need to rethink their much divided strategies or find themselves struggling to make the impact they need.

9. European Negotiations – Europe will again figure highly on the radar. With a new German government comes a chance for the continent to rethink its future. Britain will be stepping up the pressure ahead of their own referendum which will want to see them in a more influential role. Greece and Portugal still have a lot of talking to do and Ireland may be the poster boy but everyone knows that Europe itself is failing to grow. Europe cannot grow unless the Germans have a working market; they can’t have a working market while everyone else in it is broke. There are a lot of negotiations to come that will decide the future direction of the EU and whether it’s Ireland or Greece looking for a deal, somebody is going to have to give.

10. Unemployment – 2013 was a good year in terms of positive jobs news. It’s still fragile though. 2014 is the big test. This is the year where the government may really eat into the unemployment figure. It has a good base from last year and needs to ensure that the jobs keep coming. This argument could be the trump card. Once you say you are reducing unemployment people tend to like you. It also means that those who are in jobs start to become less fearful of losing them and more willing to spend. That’s a good thing. The government has talked a lot about jobs and strategies. They have bet heavily on it. If it works then the public will be impressed. If it fails or if unemployment doesn’t continue to fall there could be trouble. Right now though things seem promising.

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