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A battered and bruised electorate has lost faith in politicians’ ability to solve the housing problem

The levers the Government has at its disposal in the time it has left in office are few and far between

Peter Burke: the Minister for Enterprise Trade and Employment faces a politically fraught decision on raising the minimum wage. Photograph Stephen Collins /Collins Photos
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Jack Horgan-Jones
Sat Aug 17 2024 - 06:00

As the 33rd Dáil enters its final lap, two issues in the news this week crystallise the challenge for the Government parties as they face into an imminent election.

On the first – the minimum wage – the Coalition has a decision to make which will inevitably alienate some voters. Even at a time when the exchequer is laden down with money, and when the political percentages favour a kick for touch, some hard choices cannot be avoided.

Since his elevation to Cabinet, Minister for Enterprise Peter Burke has tacked hard towards Fine Gael’s core voters on business policy. He has made no secret that he included a proposal to cut the VAT rate to 9 per cent for some hospitality businesses in his pre-budget submission.

It seems extremely doubtful that the Government will go down this route, but the politics of Burke going to bat for it are straightforward. Fianna Fáilers darkly grumble about the emphasis he is putting on the issue, believing Fine Gael are eager to set Finance Minister Jack Chambers up as the miserly bad guy who smothered the proposal at birth.

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However, there is unlikely to be a fall guy at hand for the decision Burke must make on the minimum wage. Yes, it will be part of the budget process, but Fine Gael fret that a hike as recommended by the Low Pay Commission (LPC) will be anathema to their base.

During a combative performance on Thursday’s Morning Ireland on RTÉ, Burke vowed to support SME owners who work from 5am to 9pm, not 9am to 5pm. The notional SME voter clearly looms large in the collective FG consciousness (perhaps larger than it figures in reality) but if he lands businesses with another cost before the election then ‘fine words’, ‘butter’ and ‘parsnips’ spring to mind.

It seems the LPC has recommended a minimum wage hike a good bit lower than the figure of up to €1.20 originally touted – more like 80 cent. That may soften the blow for businesses, but not substantially.

Of course, it is open to the Government to ignore or deviate from the recommendation, although doing so would break with standard operating procedure since its establishment. And would Micheál Martin, who likes to position Fianna Fáil as centre left, sign up to that?

What about the Greens? The Government could look to offset the impact by pointing its fire hose of cash towards firms – Lord knows it has reached for this before – but is it good policy to encourage companies to partially become wards of the State, subsisting off tax breaks and handouts? When the economy slows, what do you do if you’ve already had the taps running for years on what should really be a countercyclical buffer?

The latest statistics made for more grim reading: 8.6 per cent house price inflation, and according to an analysis by Savills, four people being added to the population for every new home being built

The Labour Party still claims credit for the LPC which was set up to depoliticise decision making around the minimum wage. But whatever Burke does, it’s a deeply political moment for him.

The second issue in the news this week – house prices – highlights the Government’s relative impotence at this stage of the electoral cycle. For all the political energy expended on housing and the billions of euros sunk into it, the trajectory is now settled. There will be no 11th hour change to the facts on the ground – it is now down to a political street fight between the Government and the opposition over credibility.

The latest statistics made for more grim reading: 8.6 per cent house price inflation, and according to an analysis by Savills, four people being added to the population for every new home being built.

The SCSI found that for a nurse and a garda, even with a Government intervention through shared equity, typical homes in Wicklow and Kildare are now out of reach.

As Rory Hearne, the Social Democrats candidate for Dublin North West, said during the week, “how are people on average incomes ever supposed to aspire to own their own home when every month the cost of that home gets further and further out of reach?”

He’s right, and the sense of hopelessness for large swathes of the population on this front is palpable. The levers the Government has at its disposal here are few and far between. Housing policy works on an almost-geological timescale. Asked if the Coalition has any rabbits in the hat, one Government source quipped this week: “Aside from build more houses and rely on the laws of supply and demand?”

In year four of a five-year cycle, which is likely to be shortened by an early election, it has taken its shots on housing, even if expanded renters’ tax credits and a few other sweeteners are tacked on come budget time. It will cling to Darragh O’Brien’s First Home and Help to Buy schemes because for a certain cohort, they are effective.

The Coalition instinctively knows that while they are imperfect and, in some ways, merely enable participation in a market that is inflating and broken, they are turning some prospective buyers into homeowners. That is probably the key determinant for some floating voters when it comes to favouring Government or opposition. The opposition, meanwhile, will target the part of the electorate that sees its hopes stymied, even with the schemes in place, arguing that radical change is the answer.

Housing is currently a political confounder; voters care deeply about it, but Sinn Féin, which emphasises housing above all else, has gone off the boil. The centre-left parties who also train their fire on housing have hardly taken off in terms of polling. Perhaps it is the case that the electorate, battered and bruised, has simply lost faith in the capacity of politics to solve the problem.

Sinn Féin’s shot here is that voters buy in to the promise of structural reform rather than the Government’s retail offering – that enough voters fall to one side of the line it is drawing between itself and Government. If it is right, if the latent dissatisfaction snaps and the pendulum swings back, it could yet define the general election.

With no time to change the facts on the ground, this is entirely a battle to be waged by the Government and opposition within voters’ minds.