It will become the year to beat for bad news at home and abroad. Peering ahead to a fall in living standards and a return to emigration, Fianna Fáil backbenchers are wondering where it all went wrong. But ghosts from years of political indecision, poor fiscal management and concessions to vested interests surround them. Bertie Ahern was propelled from office because of a failure to provide convincing answers to the Mahon tribunal about his personal finances. But his real and damaging economic legacy lives on.
Harbingers of woe appeared early in 2008 as house prices fell and Mr Cowen’s last budget, that promised higher livings standards and an increase in Government spending of more than 8 per cent, proved to be seriously misjudged. Following months of forensic examination at the tribunal, which drove Fianna Fáil and its government partners into paroxysms of embarrassment, Mr Ahern was “persuaded” to step down as Taoiseach. In going, he chose to engage in a prolonged and self-indulgent “lap of honour” that disrupted planning for the Lisbon referendum.
At the same time, the Progressive Democrats took a final stab at reviving the party and elected Senator Ciarán Cannon as leader. But, having drifted aimlessly for a year while Mary Harney concentrated on her responsibilities within the Department of Health, the task proved beyond him. Tied to Fianna Fáil in Coalition and implementing unpopular policies in health, the greatly reduced party eventually agreed to vote itself out of existence.
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When Brian Cowen became Taoiseach in May, he rewarded supporters with pivotal ministerial portfolios, relegating potential challengers to the fringes of power. An inexperienced “kitchen cabinet” took charge. It has failed to inspire confidence or provide adequate leadership in the face of the worst recession in living memory. Disgruntled Fianna Fáil TDs are now muttering about “when”, rather than “if”, Mr Cowen should be replaced.
The rot set in with the Lisbon referendum. Failure by the Green Party leadership to secure its members’ support for a “Yes” campaign failed to ring warning bells. Lessons from the Nice Treaty defeat were not learned. Farming organisations and trade unions attempted to extract concessions. TDs and Senators from the major parties remained largely inactive. But Sinn Féin, Declan Ganley and other disparate groups campaigned actively for rejection. When the threat of defeat was finally recognised, it was too late.
In the North, an affable power-sharing arrangement involving First Minister, Dr Ian Paisley and deputy First Minister Martin McGuinness ended abruptly with the departure from politics of the DUP leader. An attempt by Sinn Féin to advance its political agenda on the transfer of policing and justice powers to Northern Ireland by threatening to withhold support for the election of his successor, Peter Robinson, generated serious inter-party antagonism. It resulted in a suspension of Executive meetings for almost six months; undermined public confidence in democratic institutions and provided a window of relevance for paramilitary organisations.
Then, Government time and effort was expended in reassuring EU states of our bona fides following the Lisbon defeat and our anxiety to remain at the heart of Europe. Intense negotiations have led to agreement on the retention of a commissioner for all member states and specific declarations for Ireland. These revised terms will be put to the electorate next autumn with no certainty about the outcome.
Lisbon and its fallout should have amounted to a year’s political trauma. But it was only the opening blow. Soaring oil prices, a collapsing housing market and a credit crunch in the United States squeezed the open, Irish economy. As revenues nose-dived, an untested Taoiseach and his Minister for Finance Brian Lenihan ruled out a mini-budget and announced spending cuts of €400 million. It was much too little and far too late. Within a month, an early budget was announced to deal with the worsening fiscal situation.
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Having actively encouraged a property bubble for selfish tax reasons and ignored mad-cap lending to developers by financial institutions the Government was in no position to refuse the banks when they came looking for a dig-out. One-third of the entire labour force had been employed in the construction and financial sectors. An initial depositors’ guarantee for the banks was followed by a €400 billion underpinning of the financial markets and, in recent days, by a weak-kneed recapitalisation package.
In the meantime, the Budget turned out to be a crude, poorly judged exercise. It offered tempting targets for the Opposition. And Fine Gael and the Labour Party took advantage. After weeks of intense pressure, concessions were made on medical card entitlements, income levies and in education. Opinion polls showed Fianna Fáil and Brian Cowen at their lowest-ever ratings, while Fine Gael led the Government party by seven points.
By early December, the number of people out of work had doubled and the value of shares on the Dublin stock market had fallen by 60 per cent. Consumer confidence was collapsing; the services sector was on the rack. Government revenues were billions of euro short of expectations. Then, dioxin poisoning in the pig industry caused the recall of all pork products and exposed the taxpayer to a potential charge of €180 million.
Finally, the Taoiseach unveiled the bones of a national recovery plan at Dublin Castle. But a punch-drunk Government was responding to, rather than directing, events. What is needed now, as the year ends, is a resolute sense of leadership.