Fine Gael and Labour are likely to present themselves to voters as the core of an alternative government in the next general election campaign, the Labour Party leader, Mr Pat Rabbitte, has said.
Mr Rabbitte also said last night that he favoured a wealth tax in certain circumstances as an alternative to increasing income taxes to pay for improvements to health, education and transport services.
He said it was "naïve" to think that his ambition to improve services would automatically require increases in income taxes. Asked if he would favour a wealth tax, he said: "I think I would yes, in certain circumstances.
"You can't rule it out in a country that now has significant wealth.
"You can't rule out some modest rating that deals with wealth in some sense or another. You can't simply say we will impose what are still pretty hefty taxes on work and no taxes on wealth."
He declined to go into detail or outline the circumstances in which he would introduce such a tax.
Mr Rabbitte also signalled he favoured a significant change in the party's stance in relation to its electoral strategy. He suggested voters in the next general election would be offered a "presentation" of an alternative government with Fine Gael and Labour as its core.
Labour steadfastly ruled out any pre-election deal before last year's election, saying that while it would "prefer government with Fine Gael, all options were open".
However last night Mr Rabbitte told TV3 News that his party's objective was to get Fianna Fáil out of government, and that a joint "presentation" to voters in combination with Fine Gael was therefore the most likely prospect.
He did not rule out coalition with Fianna Fáil but said: "You can take it that the objective of the party is to get Fianna Fáil out of government, that it's not to go into government with Fianna Fáil."
He was opposed to the current Government "and therefore it would seem to make sense that the alternative in terms of making a presentation to the Irish people closer to election time, the core will obviously be made up of Fine Gael and Labour. That's the most likely prospect."
He said his party's electoral strategy would ultimately be decided at the party conference immediately preceding the next general election.
It was too early to know what this would be, he added.
His short-term focus was on building the Labour Party organisation. Labour would have new young candidates and "a record number of women" running for the Dáil next time, he said.