The week before the Dáil’s return and the ritual of the political party think-ins sees TDs gather with all their party colleagues in a political context that has changed radically.
The Social Democrats were first off the mark on Tuesday, the date marking exactly 100 days until the changeover in Government in mid-December. They were followed by People Before Profit on Wednesday and Labour in Wexford on Thursday. Fine Gael assembled in Kilkenny yesterday, while the Greens travelled (sustainably, one hopes) to Ennistymon, Co Clare for their shindig. Fianna Fáil TDs head for Mullingar (home to the lately departed junior minister Robert Troy) on Monday while the Sinn Féin event is in Dublin on Tuesday. The Dáil is back on Wednesday.
Time was when the think-ins were largely drink-ins for politicians — and, full disclosure, for those of us charged with reporting on them — but that era came to halt when Brian Cowen croaked his way through a Morning Ireland interview in Galway 12 years ago while a country scared by an (accurate) sense of impending disaster listened on horrified. That’s not to say that the, ah, social side of the think-ins has disappeared entirely; it’s just not the main point any more. The parties try to rally their forces, get a bit of media exposure and generally gird their loins for the busy and fraught weeks to come.
When TDs left Leinster House in mid-July, the rising cost of living was already the most important political issue. Two months later, it has eclipsed almost everything else. Whatever the messages that are coming out of the think-ins — and they’re a mixed bag — pretty soon everyone will be talking about the increase in energy bills that people will shortly see first hand. ECB rate increases are also starting to bite for holders of tracker mortgages.
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The financial pressure that many people will feel, and the Government’s response to this challenge will, I think, be the defining issue of politics over the coming months. It’s not that the Coalition has nothing else on its plate — hello there Liz Truss — it’s just that most people won’t care about anything else. “People are finally tuning into the reality of this,” says one official who has been involved in the planning for months and has been wondering when the public was going to realise what’s in store. It’s coming at them like a train, says another insider.
Bills that arrive in October will be simply unaffordable for many people. As Jack Horgan-Jones reports today, Ministers have been told that bills could treble to an average of €6,000 for households next year. Already organisations that work with people who are struggling are reporting a surge of contacts. People with no spare cash — and that includes many people who are well paid, but who still live month to month — will struggle to pay their bills. They will look to the Government for help. They will demand it.
And help will be forthcoming. A budget that is already due to hit €6.7 billion in spending increases, tax cuts and public sector pay rises will be augmented by once-off giveaways to alleviate cost-of-living pressures, funded by bumper corporation tax revenues which have inflated a budget surplus measured at more than €6 billion. There are more than a few ministers around Government who have ideas for that money.
Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath are fighting a spirited rearguard action behind the scenes to minimise the amount of the surplus that is spent immediately, arguing forcefully — and to my mind convincingly — that spending it (all) when we have it is a mistake we may come to rue.
But Donohoe and McGrath are politicians too, and realistic enough to know that for all the power and independence of their offices — augmented by their strong alliance — they cannot stand against the will of all their colleagues, especially when those colleagues include their bosses, the Taoiseach and Tánaiste. Donohoe is likely to succeed in reviving the rainy day fund — but there will be a limit on what he can squirrel away.
Back in July, one person who will be central to the decision making on this point suggested to me that the once-off budget day package to help with the cost of living would be more than €1 billion. Early this week, Ministers were privately saying it would hit €2 billion. In recent days I put the prospect of a further escalation to two senior sources familiar with discussions at the centre of Government and both concede the cost of the package is likely to go considerably higher than that. By budget day, I expect it will exceed €3 billion. Add that to the already agreed €6.7 billion, and you are heading for a €10 billion budget day bazooka.
Whatever about being economically wise, this is probably politically necessary — not least because the opposition and much of the media are demanding it and the public now expects it. Support for prudence and deferred gratification is neither extensive nor vocal.
Governments all over Europe are realising that this may be like the early days of Covid when all the previous fiscal rules went out the window. Nothing is impossible. European governments cannot contemplate people freezing in their homes and they will do whatever it takes to avoid that outcome. To do otherwise would be to risk social unrest and, as a consequence, their own political futures.
All this also means that we are entering a period of the highest political stakes. Successfully negotiating the coming months will not guarantee the Government anything. But failing to find the balance between adequately protecting citizens and keeping the public finances healthy enough to deal with future needs would almost certainly spell the end for it.