INSIDE POLITICS:More public protests, internal dissent and contracting tax revenues may cause the Government to fall, writes Stephen Collins
THE GOVERNMENT withstood the campaign by teachers to reverse the education cuts in better order than many expected after the medical card fiasco. That has revived the morale of Coalition TDs to some extent, but they can't escape the fact that they will certainly face many more difficult days in the months ahead.
While the teachers' unions mobilised a large crowd outside the Dáil on Wednesday night, Government backbenchers did not feel under anything like the same level of pressure as they did during the previous week's protest by the elderly over medical cards.
The wrath of the teachers didn't inspire the same level of fear among TDs as that of the pensioners, mainly because it was predictable. Teachers have mobilised massive protest at government decisions before, often with great success, but they are a known quantity and TDs feel they can live with the long-term impact, unpleasant as that my be. What spooked them about the medical card protest was that it was such an unknown quantity and they had no idea where it might lead.
Another factor that helped to settle nerves was a steadying in the Coalition ranks. Fianna Fáil TDs held their discipline and that helped to keep things calm in the Green Party. While there was some nervousness about what Paul Gogarty might do, he made it clear from last weekend that there was no question he would vote against the Government, which was enough to calm everybody else, including Michael Lowry and Jackie Healy-Rae.
The doughty performance of Minister for Education Batt O'Keeffe in defending and attempting to explain the thinking behind his decisions also played an important part in ensuring that his troops did not buckle under pressure. In media interviews and in his Dáil speech, he explained again and again that as salaries made up 80 per cent of the education budget, he had no option but to increase the pupil-teacher ratio back to the 2007 level and introduce a range of niggling cuts.
Of course that begs the question about why the Government paid out the last 2.5 per cent pay round to the entire public service two months ago without a whimper, when it was quite clear that its revenues were collapsing. They also negotiated another national wage round, with pay increases that the State cannot afford and which most private-sector employers probably cannot afford either.
The pay and pensions bill for the public service is at the heart of the matter, as it accounts for well over half of all State spending. If it remains sacrosanct, regardless of the State's ability to pay, then far deeper cuts will continue to fall on the services provided by the State. The weakest will inevitably lose out most, although those making the most noise will not necessarily be the ones suffering most.
Some politicians and commentators are arguing about whether the response to the public finances crisis should involve spending cuts or tax increases. In reality, the argument has gone way beyond that; we will need substantial tax increases and spending cuts.
With hindsight, it is obvious that 10 years of cutting taxes and increasing public spending by over 10 per cent a year was folly of the highest order. The property boom helped the Fianna Fáil-led Government defy economic gravity for so long, but that same boom has made the crash all the more painful.
Much of the public resentment at the Budget, and the refusal of so many people to accept the reality of the economic position, stems from anger at the mismanagement of the past few years. That raises the underlying issue of whether the Government responsible for creating the economic mess will ever be allowed the leeway by the voters to take the necessary steps to clear it up. This feeling has fuelled speculation about an early election, on the basis that if the Government doesn't have a mandate to take the necessary action to do what is required, then continued public protest and dissent in its own ranks may bring it down. After a steadier week, such speculation has abated but has not gone away.
What is difficult to envisage is the precise circumstances in which the Fianna Fáil-Green Coalition might fall. Everything depends on the state of the public finances. If the tax revenue continues to contract for the rest of the year at the same pace as it has since July, then the projected tax shortfall for this year will be even greater than the €6.5 billion it forecast a month ago.
That would be bad enough but, if the trend continues into next year and tax revenues contract even more in early 2009, the country would face financial Armageddon. In those circumstances, a supplementary budget to raise substantial extra revenue through taxation or a pay cut across the public service, or even a combination of both, would have to be contemplated.
If that doomsday scenario comes to pass, it is possible that the Government could fall, with internal tensions between the Coalition parties or within Fianna Fáil leading to a Dáil defeat. That would catapult the country into a general election on the public finances.
While Fianna Fáil would regard such a prospect with horror, it would concentrate minds all round. The Opposition would have to respond with a more coherent approach than they have to date.
Fine Gael and Labour don't have to take responsibility for the mess Fianna Fáil created, but in an election they would have to explain how they propose to clean it up. All of the parties would be put under pressure to say where they propose to put the emphasis, on higher tax or on universal entitlement. A good debate on that issue would be instructive for the electorate and the political system. Whichever combination of parties took power after such an election would at least have a mandate to deal with the problem, assuming the coalition parties involved are not elected on entirely different mandates.
For the moment, the Coalition has created the space to soldier on. The planned farmers' protest in the weeks ahead is not causing great concern. "The IFA screwed us on the Lisbon Treaty so they know what they can do with themselves," said one Fianna Fáil TD from a rural constituency. Other opponents will not be as easy to deal with.