Charlie McCreevy is expected to keep his job in Finance. His independent approach could be an asset, writes John McManus
It is tempting to think that Fianna Fáil and the Progressive Democrats are of one mind when it comes to the public finances. As members of the outgoing Government they take equal credit for the budgets that saw public spending jump by 40 per cent over two years and left the Government's books hopelessly out of balance.
Both parties also held themselves out to the electorate as more prudent than any of their rivals, and the electorate appears to have voted for them on this basis. ...
The conventional wisdom is that despite the excesses of recent years, a tough line on public expenditure is a given in the programme for government that is expected to flow from the current negotiations.
Perhaps not. When you examine the manifesto commitments of the two parties, there is a subtle difference. The Progressive Democrats committed themselves to a tough target figure - albeit with numerous caveats - by which they will allow public expenditure to grow. For the record, the figure was 8 per cent per year.
Fianna Fáil fudged the issue in its manifesto. The section on public expenditure in their manifesto gives no target figure. It has two paragraphs. One talks of the need for continued investment in public infrastructure and social services. The second adds the rider: "We also have to recognise that a dynamic economy (not weighed down by heavy costs) provides the fastest means of generating the necessary resources for rapid physical and social improvement."
There are two ways of reading the Fianna Fáil manifesto (and presumably this is what the authors intended). It appear to commit them to the sort of massive increases in public spending promised in the election but at the same time gives some cover should they need to row back on these promises, or even cut expenditure.
Which way Fianna Fáil will jump is now the issue. As they sit in Government Buildings, the negotiators from the two parties will have access to the most up to date figures on tax revenues and government spending.
If the figures confirm the picture that emerged once the election got underway - a looming crisis as expenditure spirals and revenues collapse - then it looks likely that the second paragraph in the manifesto will turnout to be the relevant one.
The noises that are starting to emanate from the Department of Finance and the Civil Service generally indicate that the situation regarding the Government finances is not improving. Departments are already warning state bodies that the squeeze will come on sooner rather than later.
Among measures being floated are a freeze of recruitment into the public sector, bar those election commitments that cannot be wriggled out of, such as more gardaí and medical staff. The other area predicted to suffer is the National Development Plan, where progress in some areas, such as roads, has already slowed to a crawl.
The scene would appear to be set for a challenging single-digit target for public-expenditure growth to be included in the new programme for government. However, any such figure will be viewed with a degree of scepticism. It should be remembered that the same coalition set itself a target of of 5 per cent annual growth in public spending in its last programme. This figure barely survived the first budget.
With the odds shortening by the day on Charlie McCreevy being returned to the Finance ministry, the chances of the new figure being adhered to must be lengthening if his past form is any guide.
Paradoxically, the Progressive Democrats are supposed to favour Mr McCreevy remaining at his post. Two reasons are given for this. First, there is his close friendship with Mary Harney, the PD leader and Tánaiste. Second, he is genuinely his own man and would not automatically support the Taoiseach and his Fianna Fáil colleagues to push through policies the PDs oppose.
If this analysis is correct, then the re-appointed Minister would be under tremendous pressure to deliver cuts in public spending. He is unlikely to be popular as a result - particularly with his high-spending colleagues in health and education - but it is a job that Mr McCreevy might well relish. His pay-back might be the new agency to raise private-sector funds for infrastructure, which was the centrepiece of the Fianna Fáil economic manifesto.