Budget votes – January 1982 and December 2009

While I should have been reading about the power of veto players in the political process for a class tomorrow, I found myself drawn to the vote on the budget in 1981, the last occasion on which a minority government fell because of the votes of independents in the vote on the budget.

As of yesterday, when former Progressive Democrat TD Noel Grealish announced that he was no longer supporting the government, they were officially left with minority support in the Dáil. After the 2007 election, Bertie Ahern was considered quite clever in putting together a level of support that would make it very difficult for the government to fall, being nominated as Taoiseach by a vote of 89 (77 Fianna Fáil, 6 Greens, 2 Progressive Democrats, Beverly Flynn, Jackie Healy-Rae, Michael Lowry and Finian McGrath) to 76 (51 Fine Gael, 20 Labour, 4 Sinn Féin and Tony Gregory).

Now there are just 81 TDs under the government whip, 72 Fianna Fáil, 6 Greens, Mary Harney, Jackie Healy-Rae and Michael Lowry, leaving 82 in the opposition, 52 Fine Gael, 20 Labour, 4 Sinn Féin and 7 Independents. There are a few categories of Independents: Maureen O’Sullivan succeeded to the seat of the deceased Tony Gregory, and like him will oppose the government; Finian McGrath initially supported the government, but withdrew his support after the budget last year; Joe Behan was elected as a member of Fianna Fáil in 2007, but left the party after the education cuts in October 2008; Sligo-North Leitrim TDs Eamon Scanlan and Jimmy Devins resigned the Fianna Fáil whip in August in opposition to cuts at Sligo General Hospital; former Minister Jim McDaid lost the Fianna Fáil whip in November 2008 when he abstained from a vote on the cervical cancer programme, and announced this week that he was no longer supporting the government; and Grealish, as mentioned above, no longer feels bound by the deal made with the Progressive Democrats after the 2007 election as of the formal dissolution of the party last month. Fianna Fáil are also down one seat since Pat The Cope Gallagher vacated his seat when elected as an MEP in June. See Elections Ireland for the succession of diminishing support for the government in the Dáil.

Back in 1981, after the election on 11 June, a minority Fine Gael-Labour government was elected. They had 65 and 15 seats respectively, and the support of Jim Kemmy, a former Labour member who had left to form the Democratic Socialist party in 1972. Garret FitzGerald was opposed in the nomination for Taoiseach only by the 78 Fianna Fáil members, with Niall Blaney (Independent Fianna Fáil), Noël Browne (Socialist Labour), Seán Dublin Bay Rockall Loftus (Independent) and Joe Sherlock (Sinn Féin The Workers’ Party) abstaining (two H-Block prisoners, Kieran Doherty and Paddy Agnew were also elected).

This was always going to be a difficult government to maintain, and when it came to the vote on the John Bruton’s budget in January 1982, with controversial measures like a tax on children’s shoes, it received the support of the 80 government TDs, as well as Noël Browne. Voting against were 77 from Fianna Fáil, Charlie McCreevy (who had lost the FF whip after calling a vote of confidence in Charles Haughey’s leadership), Joe Sherlock, Jim Kemmy and Seán Dublin Bay Rockall Loftus, a total of 82. Garret FitzGerald declared immediately after the vote that he would seek a dissolution, and on 18 February, the country went to the polls, with a short-lived minority Fianna Fáil government to follow.

How likely are we to see such as an occurrence on Wednesday? Though it is a possibility, I would be surprised if it did not pass. It will nevertheless be interesting to see which of these independents will vote against it or abstain. I expect it to be supported by the 81 government TDs, as well as Devins and Scanlon. Having supported previous government budgetary measures, they will probably maintain that it is on matters of health policy alone that they disagree with the government. This will give them their 83.

There are 79 who can be counted on to vote against: the 76 opposition party TDs, as well as Behan, O’Sullivan and McGrath. So it’s a question then of whether Jim McDaid and Noel Grealish will vote in favour, against, or abstain. My guess is that they’ll abstain. In that way, they would send a clear signal to the government that they don’t want to be cut off entirely, but that their support will have to be won.

The government must stand firm to the unions

The Irish government is now borrowing in excess of €14.7 billion, while the cost of repayment on these loans is increasing. The more tax the government has to spend repaying this loan, the less it has for more beneficial spending and the higher taxes will have to be. With roughly one third of government expenditure on public pay and one third on welfare, any cuts will have to include these areas. People at all levels are overpaid in this country, and this has been one of the strong factors in our loss in competitiveness.

These cuts must be made. To be fair, there need to be proportional cuts in salaries across the scale in the public sector. There was something particularly galling to see the higher civil servants on strike today as well as those earning far less than them. We are rightly shocked at Taoiseach Brian Cowen being the highest-paid head of government in Europe at €257,000. With this represented across the board and at all levels, we are not getting the value for money that other countries are getting. While the cost of living in Ireland is high, the level of pay is a considerable factor in this. And while the cost of living is decreasing at the moment, those on fixed income salaries are seeing a rise in real terms in the value of their salaries.

The simple point is that the government cannot afford to spend at its current level. Pay must be cut. At the top levels, this should be at a substantial level, even of 20%. Grades going down the scale should be cut at decreasing levels. At the lowest point, I would not advocate a direct pay cut, but a lowering of the tax base to include those at entry-grade level. This would, of course, apply across the board, in the private as well as the public sector. Even supporters of a proportional tax system should not support a system where only the top half income earners pay tax. Paying a certain level of tax acts as a reminder to the public of where public services come from, and why they should demand more efficient service.

The unions advocate increasing the higher levels of taxation. While it may seem a small amount extra for those who can afford it, with the top 5% of taxpayers paying 45% of the income tax in the country*, there is only so much this group can be targeted without affecting their incentives and risking a shift in capital investment out of Ireland. Not that the government should rule out tax increases, but in no way can they rely on them. And again, given the scale of our deficit, there is only so much of a reduction that can come through extra taxation.

Basically, the government overspent in the past ten years, willing to grant pay increases while they could afford it. Whatever Charlie McCreevy’s reputation as a fiscal conservative, this was true only to the extent that he cut taxes, stating that in terms of expenditure, “if I have it, I’ll spend it” (of course, the US Republicans also built up a massive budget deficit up to 2009, while cutting taxes, destroying the budget surplus that existed at the end of President Clinton’s time in office, with Vice President Dick Cheney claiming that “deficits don’t matter“). With the money associated with construction, either stamp duty or the related intake, and income tax down, with welfare payments up, they must cut back.

The trade unionists will rightly lay the blame for this recession and deficit on other hands, such as the lack of regulation in banking. But if it is not the fault of the public sector, neither was it the fault of the many in the private sector who have become unemployed or lost pay in the past eighteen months. This is not an attack on the public and civil service. I work part time in Dublin City Public Libraries, and it is by and large well run.

I think the government should be commended in December in as far as it does manage to tackle the problem, and be criticized most strongly if it fails to take hard decisions, particularly if it fails to tackle those interests closest to the party. We do need certain reforms to tax, as well as direct cuts in payments. I think stamp duty should be scrapped, and replaced with a property tax, as we should not find ourselves again relying on such a volatile source of income. I welcome the proposal from Fine Gael, of which I am a party member, to cut PRSI in an attempt to make employment easier, which should be offset with a properly implemented carbon tax. But I will be disappointed if Richard Bruton focuses his criticism on issues such as reductions in child benefit or if the party continues to oppose a reduction in the minimum wage, rather than, say, that more could have been taken on the top level of pay in the public service.

The unions seek to spread the recovery over a greater period of time, but this would only increase the cost of borrowing in the longer term. They are right to say that public sectors workers having less money will reduce demand in the economy. But we need this period of adjustment, in turn affecting prices, to make this country competitive again, so that the possibility of droves driving to Newry for their Christmas shopping will disappear, and that we once again attract inward investment. However tough it is for those working in the public sector, with pay as one of the biggest parts of the government’s bill, at around €20 billion a year, there is no alternative.

*Statistic corrected