Taoiseach Bertie Ahern and Minister for Finance Brian Cowen used the Fianna Fáil "think-in" in Wicklow to warn both the parliamentary party and the public of the many challenges the Government faces, as it begins its third term in office.
On the economy, if the mood of Mr Ahern and Mr Cowen was sombre, their message was blunt and direct. As they explained, much more difficult times lie ahead. The Government's day-to- day spending, up 12 per cent in 2007, is rising too rapidly and must be reduced to single digit figures in the December budget. Lowering expectations well before budget day is the best way of preparing the public for the cooler economic climate ahead. Mr Ahern and Mr Cowen were right to commit the Government to reversing the rise in current spending. That, however, will also mean some reduction in public services in 2008.
The rate of economic growth has slowed significantly in recent months and by year-end tax receipts are likely to fall short of budget estimates by, perhaps, up to €1 billion. One reason is the downturn in the housing market. As fewer houses are started, built and bought, tax revenues are depressed, and the pace of the economy slows. The Government hopes that this decline can be offset by increased building activity elsewhere; in the commercial sector, and through the rapid implementation of the National Development Plan.
Mr Ahern, in his third term, has indicated that he is likely to retire before the next general election. Timing his departure, whether before mid 2009, when Fianna Fáil contests the local and European elections or after, is his prerogative. An early exit would leave his anointed successor, Brian Cowen, facing mid-term elections in which, as in 2004, Fianna Fáil may be hard pressed to do well. A later date could see Mr Ahern step down with a severe dent in his unblemished electoral record. And there are other electoral challenges to meet. One is a referendum on the new EU treaty which could pose a threat to Coalition solidarity. The Green Party has yet to determine its attitude to Europe. A further challenge is the promised referendum on children's rights, which Mr Ahern has suggested could be held next year.
The Taoiseach's decision to launch a public debate on whether Fianna Fáil should become a 32-county party, active in Northern Ireland, is a perplexing move, not least to the UUP leader, Sir Reg Empey. His criticism is a valid one. The Irish and British governments are the guarantors and drivers of the new political dispensation. There would seem to be a conflict between Fianna Fáil's role in seeking to consolidate the establishment of the new Executive and bed it down and an entirely separate role in seeking to make party political advances in Northern Ireland. This initiative owes more to Mr Ahern's wish to challenge the rise of Sinn Féin as the all-island party in the run up the cententary of the Easter Rising in 2016 than anything else. It would only be successful if it mopped up the SDLP. This move could be premature and ill-advised.