Johnny Fallon

Irish Political Commentator

Archive for the month “September, 2014”

Scotland – Why #Indyref won’t go away

After a few difficult weeks Scotland has decided to stay together with England. Let’s hope for their sake it all works out. One cannot help but give a rueful shake of the head like we are watching a friend returning to a partner who has sworn that they ‘have changed’. Maybe they have.

Jason O’Mahony made the point this morning that ‘stability’ is always a huge force in any vote. Voters don’t really like risk all that much. Given the choice many will always opt to keep the status quo for fear that things can always get worse. I think Stability played a large part in the #indyref.

The problem for England now is that it has to live up to its promises. Leading figures have been love bombing Scotland for over a year. What happens now? Do they just stop? Is this the end of all the litany of people talking about how valuable Scotland is to them and how much it means to the UK? Like any relationship the big danger now is that once Scotland has safely moved back in, life returns to normal and people move on. This will leave Scotland feeling a little ignored and perhaps taken for granted now that a sword of Damocles no longer hangs over the UK.

Promises are always hard to keep. At least any promise that are worth making. England must now deliver and must do so against a backdrop of significant support for Scottish Independence. The Yes vote will be feeling bruised, but will eventually realise this was no more than a battle and the war is far from over. At the first sign of England delaying a promise they will be reminding everyone of what was said. It surely cannot be long before many cars wear a sticker saying ‘Don’t blame me I voted YES’. That’s what the future holds. The problem for England now is that the more it devolves power and honours its commitments the more accustomed Scotland may grow to the idea of standing on its own two feet.

I have a young son and one day made the mistake of telling him if he didn’t get ready for school immediately we were not going to a show we had tickets for. I told him it was his choice. Now either he didn’t appreciate the seriousness of it or he wisely gambled that I was over playing my threats. Either way he made me sweat on his decision. Having left it to him I was snookered. Eventually he went to school but I learned that the risk was too great to ever let him have that choice again or everything could get ruined. It will be a long time before any British government will be willing to let the Scots vote on independence again. The challenge for the ‘Yes’ side is to build that support until it becomes impossible for the Government to hold out in the face of overwhelming polls, but they will have to be overwhelming.

In the end there is a problem at the heart of the argument for England and Westminster. If the European Union were to be inspired by the Scottish No vote and announce that it was to remodel itself as a ‘community of nations’ in the style of the UK, who would be the first country to walk out? Yes, the UK. You see, English people would be horrified at the thought of an EU that contained one central government and that their main politicians went there and were subsumed in large European parties. The Idea that Westminster would become a devolved power with fewer rights than the EU government would shock them. The thought of a British Prime Minister not being the supreme authority on matters of state would be utterly unacceptable.

Most of the problems the EU has are derived from efforts to make a federal state that nobody wants. Despite all its flaws and current interference as perceived by some the EU still falls well short of a centralised state dictating all policy. The more it tries to move in that direction the more opposition it finds.

So we know that the EU cannot ever become a UK. The UK would not accept that. This begs the question of why? Why is it wrong for England to have a devolved parliament? Why is it wrong for England to have policy dictated elsewhere? And why is it ok and better for Scotland? There will be no moving of parliament to Edinburgh or Glasgow for a few months of the year. Scotland is merely a province no matter how it’s viewed. But you see that’s OK for Scotland, England is looking out for them, helping them, minding them, good old England. It would never do for England though.


Ian Paisley RIP – History will judge his place

Ian Paisley was a remarkable man and his journey in political life is a lesson to all observers of the trade. Paisley was a product of the times he lived in. For many it was remarkable that a man who had shown such bigotry and deep prejudice would eventually sit beside Martin McGuinness and share power with Sinn Fein, but the reality was that they had always needed each other.

The IRA was a brutal and merciless organisation responsible for some of the most heinous crimes ever committed on this island However, the actions of the IRA allowed Ian Paisley to find a ready audience for his message. What those of us in the south saw as bigotry, his supporters saw as a righteous and fearless voice against the IRA and encroaching Catholicism. Hi uncompromising message was well received by those who felt most under threat by the IRA campaign. He always needed their actions to find new followers.

On the other side Paisley was also one of the main generators of sympathy towards the IRA in the south. With his talk of ‘popery’ and the evils of Catholicism, his uncompromising and often insensitive attitude to anyone in the Republic. His lack of respect for the Irish state, and his more unusual religious beliefs such as the idea that dancing, even line dancing, was evil. Paisley ensured that people were genuinely afraid of what would happen in Northern Ireland to any catholic should he be left to his own devices. When the IRA sought to justify its arguments and drum up support among threatened communities they needed to look no further than the speeches of Ian Paisley.

For many people in the republic Paisley was a hate figure. A completely unreasonable man. While people felt they might be able to understand someone like David Trimble there was a genuine feeling that talking to Paisley was a waste of time. Growing up in the ‘80s and ‘90s I cannot recall anyone ever suggesting that Paisley could be an instrument of peace. He opposed everything and he opposed it brilliantly. Paisley had a gift; he was one of the greatest orators of his generation. He was decisive and confident at every juncture. Anyone who listened to him speak had to admit that he could deliver his message with a power and conviction that was unequalled by other political leaders.

People in the republic just grew up with the idea that Paisley hated us and we in turn had to hate him. I only once remember a difference in this narrative. It was in 1994 in Abbeyshrule in Longford, when Albert Reynolds was surrounded by a number of people discussing events in the north and they were all in agreement that nothing could be done with Paisley and the only hope would be that people forgot him and moved on. Reynolds, hands in his overcoat, said ‘I don’t know, the same man knows a good deal, but it’s never been up to him, it’s never been his choice.’

I and many other disagreed at the time. Paisley had a choice on Sunningdale, but brought it down. He had a choice on the Anglo Irish Agreement and sought only to oppose it. Right throughout the entire peace process Paisley seemed a figure consumed by such religious and political hatred that he could see no good in anyone. As the Good Friday agreement was being signed and former loyalist paramilitary figures such as David Ervine were getting ready to sign, it really seemed that history was going to leave Paisley behind. Even unionists were describing him as a ‘dinosaur’. It seemed that he would never change.

The following years should be studied carefully however. Paisley was above all a politician. Anyone who today is looking at the parties and people espousing uncompromising positions on government and policy should look at Ian Paisley as proof positive that when faced with the cold hard reality of government , everyone changes. Paisley continued his opposition to everything and by doing so played his politics well. He completely undermined David Trimble and sucked away the support base of the UUP. In the post agreement environment, we came to see an IRA that had more internal personnel problems and more inflexibility than a public sector union. The IRA were incapable of moving forward at speed and grasping the new reality and this delay on policing, on decommissioning and on co-operation with investigations yet again gave Ian Paisley a lifeline.

It was only when it was clear that Ian Paisley was now the top dog in Unionism, that the DUP was now the major political force and that everyone’s future now rested with them that Ian Paisley seemed to change. There was nowhere left to hide. Paisley, for all the faults we in the south attributed to him, was a man who cared deeply about the community he came from. He knew the importance of jobs, welfare, education and health policies when all the rhetoric was left aside. When the ultimate decision was his and his alone, Paisley could not destroy the peace process and refuse to work in conjunction with Sinn Fein. To do so would have plunged Northern Ireland and its people into a bloody and miserable future and Paisley would not do that. There was no one else to blame, no one else to undermine, it was down to him.

Ian Paisley ended his days as a figure who gained much respect in Northern Ireland and indeed in the republic. South of the border people took an interest in him and saw him as a colourful and respected politician, with whom they might not always agree but who was not altogether bad either. In doing so he became instrumental in healing wounds and divisions on the island.

In time many may dismiss his younger days and speeches as the impetuosity of a man who had not yet seen reason. No doubt for sometime to come it is the Ian Paisley of his later years that we will remember. However, no matter how you viewed him, he was a powerful ally, a courageous leader or a worthy opponent and voice to be feared. There is much we still don’t understand about him, but it’s safe to say he made his peace with the people before he left and his skill as an orator and politician will live long in the memory. History will take some time to finally decide on his true legacy.

Leo Varadkar’s long game

Leadership is a tricky business. It takes many different forms and styles. With it comes power. However, if you want power you must be able to seize it. Strategising for such an eventuality takes patience, lots of it.

In early 2011 Miriam O’Callaghan stood on the Dail plinth with a stony faced Micheál Martin and asked him if he had got things wrong, quoting PJ Mara saying ‘You have to have the numbers’. Martin had just lost his challenge to Brian Cowen. The question overlooked one thing. No Fianna Fail leader has ever lost a motion of confidence in the party or been deposed at the pinnacle of a heave. No, a heave is a much more complex situation.

Richard Bruton, supported by Leo Varadkar found this out to their cost. It was a tough lesson. Bruton’s indecisiveness cost them the initiative. Then, when they lost they were surprised and had no plan for the aftermath. In a heave you must accept that in all likelihood, unless you get very lucky, you will not defeat the leader. The all out assault is merely a ploy to keep the Leader and all the party apparatus busy while you plan for what happens when you lose.

Leo Varadkar is not planning a heave. There is no need to at this point in time. He is however, planning for the future. He is setting out his stall as a politician and positioning himself for whatever the future may bring.

No matter who you are people eventually tire of you. We get bored of the same faces and same approaches. Without any doubt a day will come when ‘Enda Fatigue’ sets in in earnest. At that point people will tire of so much of what Enda brings. After Albert Reynolds FF could not wait to install the ‘lets all be friends’ approach of Bertie Ahern. After 14 years of compromise FF were rushing to the man seen as the ‘hard man’ Brian Cowen. Now sometimes leaders don’t turn out to be what you expect, but your perception when choosing them is everything.

After a bullish Michael Noonan, FG were eager for the far more personable Enda Kenny. When we tire of Enda we will want something very different. Varadkar is crafting an image. It’s a very seductive image for an Irish politician at this point. He is showing himself to be the opposite of Enda Kenny in almost every way, yet he is still Enda Kenny’s friend. He is not afraid of decisions. He is not afraid to admit if he gets things wrong or to revisit a proposal. He is loyal to his party but not to the point that he ignores faults within it or its history. He conveys an approach that is at ease with the media, at ease with questions and happy to argue a case.

He also conveys an image of strength. Not afraid to have an argument and not afraid of speaking out. A self confidence that is often lacking in many politicians. Leo is crafting and perfecting this image in the full knowledge that whenever people tire of Enda Kenny they will look to someone who embodies very different values.

The problem for Varadkar is that he still has a tough job to do in health. The system was a mess in 2011 and one of the great advantages James Reilly had was the general perception that anything would be an improvement because it could not get worse. Somehow he managed it though. Varadkar has a lot of cleaning up to do and Health has scuppered careers in the past. On the other hand if he manages to even take some small progress from the Department and aims for more modest victories he could be hailed as a hero. If that happens he will certainly be a force to be reckoned with.

The long game is always what’s important in politics. Enda Kenny will be watching young Varadkar and will know he is a very different opponent to many of his others. Fine Gael will be watching him closely as a party and the public perception of him. If the polls demand it then a party reacts. A knock may one day come at Leo’s door and he will be dragged (kicking, screaming and protesting of course) to centre stage for the good of the party. There is a lot to happen between now and then though and Leo would be well advised to keep a close eye on those around him. One thing never changes at cabinet, everybody is threatened by ambition. Enough small boys working together can overcome the big boy.

Boom & Bust is over? Don’t bet the house on it

Brendan Howlin said today that he believes Ireland has broken the ‘boom and bust’ cycle in economics. Forgive me for not holding my breath. It reminded me of when politicians said that, despite all the evidence from housing booms all over the world, Ireland was different and would have a ‘soft landing’. We are not really that different from everybody else. More to the point our politicians are just as vulnerable to the cardinal sin of believing their own hype.

You see we have been here before. From ’73 to ’86, successive governments made a mess of things and compounded an international crisis. The main factor was ‘borrowing’. Heed that word. It was the buzz word in Irish political circles for over 30 years. Eventually, things began to change. After ’87 borrowing was brought under control. This was followed by tax cuts and that made sense. If you are able to reduce your borrowing and pay your bills then you can afford to cut taxes to create a stimulus. A proper stimulus, not like the 1977 botched attempt.

Fianna Fail bred a generation of politicians for whom borrowing was the litmus test of everything. In fact in 1994 there were many of them who were worried about what FG and labour might do in government. They believed that all the good work on borrowing would be lost. They were wrong. FG and Labour showed that they too knew the importance of never returning to high borrowing. The economy continued to grow and thrive. FF returned to power and though spending was increasing it was doing so at a time when borrowing was still falling.

Here is the problem. In 2002/2003 there were a lot of calls for Ireland to improve its services and infrastructure. These calls argued that it was necessary and given that Ireland had such low borrowing figures it could now borrow for capital purposes and help fuel the economy. To FF this was heresy. They did not listen to these calls. Now you might be starting to get an insight into the FF mind at the time. They saw themselves as being the responsible voice against borrowing to fund things. FF believed that the only thing required to be a good government was to not have to borrow large amounts and to not be FG/Labour.

A property boom fed the economy like a goose laying golden eggs. The government saw astonishing surpluses of cash year on year. These surpluses were used to drive spending and meet demands. To FF this was sensible economics. They were not going mad borrowing like in the ’70s and ’80s. They were raising money and paying for stuff. This obsession with borrowing made them blind to the fact that there are other parts to a balanced economy. It was also an obsession that kept leading them to compare what they were doing with what FG/Labour might have done in the past. This made them foolishly scoff at criticism.

We all know what happened. We reduced taxes every year and increased spending like no tomorrow. However, it was spending based on unsustainable income. Eventually the cash would stop and what then? Where were we going to get the money from to keep going?

The point of all this is that borrowing has been replaced by a new buzz word ‘property’. Now we have a government that believes the only thing necessary for good government is to control property and not be FF. Replacing stamp duty with a household charge is not an answer. The income from it will still fluctuate with house prices and governments and local authorities will increase it and decrease it to get revenue or gain popularity depending on what the books look like.

We can already see how talk of changes to levels of property tax is gaining popularity. Income tax remains our best source but while we decreased it dramatically in the last 25 years we are still determined to decrease it more. Why? because its popular. We will tell ourselves it’s all affordable because now we are not having a property boom. We are doing things right.

House prices will go up. Politicians will say that they are ‘monitoring’ the situation. Revenue will increase and politicians will be rushing to spend it. Right now we are already ignoring international advice about our budgets and looking to ‘ease the burden’. We are doing this while blissfully ignoring the fact that our borrowing problem is now back with a bang.

So no, I don’t believe that cyclical economics is over. At the height of the boom FF politicians were convinced they were doing the right thing. They would never even consider halting the cash cow because that would mean job losses, cuts in services, and lots of annoyed voters. Niall Dowd (@zylon9) on twitter is a man I disagree with on pretty much everything in the world. This morning he did point out however, that no politician would ever stop a boom as to do so would be political suicide. He is correct in that.

Cyclical economics is not gone away. We are merely at the start of a new cycle. There is time enough for this crop of politicians to have departed the scene by the time we get to the next peak never mind the next crash. A decade ago we were told the boom got boomier. Today the gloom is less gloomier. That’s about the height of it.

Budget 2015…..Careful Now

Enda Kenny and Michael Noonan will be feeling pretty good right now. Tax figures are €1bn ahead of expectation. That will show the doubters. Despite promising to keep a calm head they are bound to be thinking that things are about to turn for them and this is their chance.

The reality however is a little more grey. Between 2004 and 2007 Ireland doubled its spending while cutting its taxes. An unsustainable model was in place all gambling that even a property crash would not derail things. The assumption being that the property crash would affect Ireland only as we sleepwalked into the International crises. From 2008 on some semblance of sense returned. Much of this has been forced upon us but there was no avoiding the fact that it was necessary. As a result Ireland is improving in terms of its economic bottom line. It’s still fragile but it is better. The government can now start to look forward with some certainty and they deserve credit for this.

In the 1970’s a national crises was compounded by an international oil crises, it took us much longer to emerge. Our most recent crisis was much worse but at least this time governments did not postpone action on spending.

The problem is that the bottom line suggests that with the extra tax boost we won’t need to cut as much, but we still need to cut. In 1987 Ireland started the process of pain to stabilise the economy. We had a couple of advantages back then. Spending was not being cut from an all time high so it was easier to control. Basic tax rates were at astonishingly high levels so we had plenty of room for cuts to rates once things stabilised. We do not have these things now. Once we entered the crisis Income Tax was not touched apart from the USC. The government will no doubt plan some changes to the USC. However there is also much talk of reducing basic tax rates. Just how much reduction in basic rates do we want?

It is popular for politicians to change the basic rates because its impact is easier to see and understand. Changing something like the VAT rate would be far more effective in redistributing wealth and reducing bills but it doesn’t carry the same impact when you announce it. The USC needs reforming but changes to this are not easily understood and communicated either.

Amid all of this is the central problem we cannot escape from. The international recovery is weak and outside threats are still very real. Our borrowing is still at unacceptably high levels and we have to reduce this or we are throwing money into a black hole in interest payments. Finally, our services are nowhere near fully funded. They have not yet even adapted to the cuts that were made. Further savings are required but we already can see that the Health service, Security services, welfare services and services to groups like the elderly are all struggling. We will still instigate further cuts in the next budget to these services.

Normally one would not start to discuss tax cuts and possible pay increases or other such items until spending is under control and you have a firm idea of what is required for an acceptable level of services. None of this exists in Ireland right now. Yet, we are already taking of sweeteners. Now I know the argument will always be about a stimulus. The problem with that is timing. A decrease in VAT might encourage spending but a decrease in basic tax may just ensure people save money against future bills or threats.

Worst of all I’m not even convinced the government can rely on these sweeteners to boost them. In the early ’90s Ireland had some great figures going for the economy. Growth hit record levels, taxes were slashed, and indicators looked very strong. This had no impact with the public on the ground. It took years before any benefit was felt and people began to agree the economy was moving. Moreover cast your mind back to the pinnacle of the Celtic Tiger. Anyone would think that the government was storming to popularity with its tax cuts. In reality even Fianna Fail was still not as popular as it had been in the ’80s. The problem was it cost hundreds of millions to deliver a saving of three or four hundred euro a year to an individual. Back then we took the money but in reality we hardly noticed it given that pay increases were expected to outshine this and that cost of living wiped it out.

Now we have a situation where the government may find it will cost a huge amount of the money that was so hard got to put a sweetener in the budget. In turn this sweetener will be wiped out by water charges or rising energy costs. We will be happy for a month but once the next few bills come in we will be thinking that the few hundred euro the government threw us was worth sweet Fanny Adams in the current climate.

Finally we need to stop the debate about who contributed to the recovery. We all did. Yes middle Ireland and those in employment gave a huge sacrifice. In time this should not be forgotten. However, do not forget the sacrifice of the unemployed, many of whom lost not only their jobs but much more. They suffered rate cuts and young unemployed were targeted specifically. Do not forget the elderly. We talk a lot about protecting basic rates. Yet we forget that we slashed services and this hurt every bit as much. The cuts to services disproportionately affect poorer people and elderly people more than any other section in society. We all have a claim to make. it’s not a competition. The sooner we all realise that getting out of this is up to us working together the better. There is no room for complacency or greed. Beware of politicians bearing gifts and let’s hope that the lessons of the past have been learned by this government. There is an opportunity now and history will judge the next move.

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