Make or break time for the coalition

Party think-ins and Cabinet deliberations in reality represent aspects of micro- and macro-management. Both are useful approaches but are not always immediately compatible. In advance of the budget and the new Dáil session, Fine Gael and Labour Party TDs and Senators gathered to appeal for tax cuts and social improvements on behalf of their struggling constituents, while Ministers urged caution and the need to protect a fragile economic recovery.

A mid-summer hammering in the local elections concentrated minds within both parties. Their complex responses – a new Labour Party leader and a Cabinet reshuffle, followed by a retreat into auction politics – had to be reassessed. Minister for Finance Michael Noonan emphasised the importance of prudent management, with minor concessions. Labour Party leader Joan Burton spoke of recovery taking three to five years.

Confirmation that the electorate remained angry because of cuts in services and living standards was delivered in unambiguous fashion to Taoiseach Enda Kenny and to Tánaiste Ms Burton at their party think-ins. Politicians whose seats are at risk don’t hold back. But a recovering economy was also impacting on public opinion. A majority of the electorate now believe that the unpalatable decisions taken by the Government were necessary. Not only that, investment in public services is favoured over tax reductions.

Less than two years from an election, the clouds of recession are beginning to lift and opportunity beckons for both parties. Economic growth is expected to exceed 3 per cent and significant savings can be made on Government borrowings. In that context, job creation has been identified as the number one priority by both Mr Kenny and Ms Burton, with the latter securing agreement that savings within her Department can be used to encourage parents to return to work. Housing availability, both social and private, has become the other hot issue.

The past week has generated good news for the Government. Phil Hogan was appointed as Commissioner for Agriculture to the satisfaction of the big farming organisations. Mr Noonan secured EU agreement for the early repayment of IMF loans. And, according to Mr Kenny, the issue of bank recapitalisation "remains on the table". Whether the nascent feel-good factor survives a return of the Dáil and an opposition onslaught on issues ranging from policing to water charges, from housing to health policy, will depend on ministerial ability and Government cohesion. Recovery remains in a fragile state, with unemployment exceeding 11 per cent, while major questions are being asked about the viability of promised health reforms. The Taoiseach and Tánaiste are facing into a make-or-break period.