Labour and the PDs are performing some astonishing feats on the political high-wire, writes Stephen Collins, Political Editor
The political world appears to have gone topsy turvey, with the Labour Party proposing a significant tax cut and the Progressive Democrats pledging a massive increase in the old-age pension, the cornerstone of the welfare system. Both parties have consciously gone out to defy their stereotyped image in an effort to broaden their appeal going into the forthcoming election.
Before the events of recent days, the common assumption was that Labour in government would strive to ensure that public services got top priority when it came to the allocation of exchequer funds, while the PDs would have devoted any spare resources to cutting taxes.
Now Labour has suddenly become the tax-cutting party and the PDs have become the caring party.
Of course neither stereotype was really very accurate. The last time Labour was in office, during the rainbow coalition of the 1990s, the party's minister for finance, Ruairí Quinn, proved to be a very efficient financial manager of the economy and held public spending back to deliver the first budget surplus in more than two decades.
The other side of the coin is that in government over the past 10 years the PDs have presided over a massive expansion in public spending. During their first term of office there were also big tax cuts, but after the 2002 election the tax- cutting ceased and only came back on to the agenda last December with the 1 per cent cut in the top rate as the election came over the horizon.
Although neither party actually conformed to stereotype, the irony was that each refused to accept that fact and persisted in portraying the other in the guise of the traditional bogeyman. In Labour eyes the PDs only cared about tax cuts for the rich, while the view from the PDs was that Labour was obsessed with taking more and more taxpayers' money so that it could be redistributed by the State.
It was striking that at last weekend's Labour conference the biggest applause was reserved for Pat Rabbitte's attack on Mary Harney and, by comparison, his tax pledge received a muted response.
Meanwhile the PD leader, Michael McDowell, has been pounding away for months with his attacks on the Labour Party and his contention that their involvement in government would lead to higher taxes, the squandering of exchequer resources and a "slump coalition".
So where does the sudden decision of both parties to take the unexpected course leave each of them? Labour's decision to go with cutting the basic tax rate to 18 per cent has gone down well with the public, if the reaction being received by the party's TDs is anything to go by. Mind you, cutting tax is not something most of the party's TDs would have suggested as a key election policy.
In fact Mr Rabbitte's conversion to tax-cutting came as a jolt to many of his colleagues. By announcing it at the party conference with minimal consultation in advance he effectively bounced his party into it before anyone had a chance to object. The positive public reaction has now reinforced his position and provided an endorsement of the policy.
More to the point, Mr Rabbitte got a monkey off his back as both the PDs and Fianna Fáil had targeted Labour as the high tax party and had poured scorn on his assurances that he would not be advocating any tax increases. By actually proposing a tax cut he has put an end to that charge. He has also reinforced his coalition arrangement with Fine Gael.
By getting in early with the tax- cutting plans of the alternative government Mr Rabbitte has snookered any plans Fianna Fáil and the PDs might have in the same direction. If the current Government parties propose a cut in the tax rate going into the campaign they can be accused of following the Labour lead, but if they don't, they will allow Labour and Fine Gael to steal their tax-cutting clothes.
The strong reaction of both Minister for Finance Brian Cowen and Tánaiste Michael McDowell only proved the point that the Labour leader had scored a direct hit with his tax plan.
Michael McDowell hit back in a different direction yesterday with the commitment to increase the old- age pension by €100 to €300. This announcement was in the pipeline well before the Labour tax plan but, coincidentally, it will cost almost the same amount at about €1 billion.
It is interesting to note that Labour is appealing to mostly younger voters with the pledge to cut the basic rate of tax while the PDs are aiming at the elderly with their pension proposal. Aside altogether from the rights and wrongs of both proposals, older voters are the ones more likely to cast their ballots.
The Tánaiste was entitled to boast that the Fianna Fáil-PD Government had already delivered to pensioners in a way no other government had ever done in the past. In 1997 both parties had promised to increase the pension to £100 a week and in 2002 they had promised to raise it to €200 a week.
"We were as good as our word. We not only reached that target which we set ourselves - we surpassed it. We do not seek the gratitude of the older generation for what we are doing. It is no less than they deserve," he said.
Mr McDowell may not be looking for gratitude but he is certainly looking for votes, just as Mr Rabbitte is doing. At least this election campaign promises to be much more interesting than the last one in 2002.