“Whatever they say in public, most of them (i.e. Opposition TDs) have no illusions about the fact that they will be required to make deeply unpopular decisions when they achieve office.
“The two parties are unlikely to spell out in their election manifestos what precisely they intend to do when in office.
“While Fianna Fáil will naturally try to flush them out, the lesson of the British general election is that the electorate doesn’t really expect Opposition parties to give them the bad news and is even likely to punish them if they do. …..Hopefully, they both have a good idea of what they intend to do when they achieve power….”

From the piece it appears that senior sources within Fine Gael have been whispering in Stephen Collins’ ear and the message is: “Forget that old policy rubbish, it’s bare knuckle fight time for us from here on in.’

The  impression is confirmed by Pat Leahy’s piece in the Sunday Business Post.

“….Senior party sources suggest that Fine Gael’s approach will be ‘‘more aggressive’’ in the coming months,” Leahy writes.

“Many in the party believe that Labour has prospered by a series of strong attacks on the government – and on the Taoiseach in particular – while Fine Gael has been busy developing worthy policies. In truth, some of those policies need a lot of work yet. But as politics moves to a pre-election, highly partisan footing, that work will take a back seat. Time for ground hurling, Fine Gael believes.”

So we’re supposed to vote Fine Gael and Labour into office with in excess of 100 seats – based on current opinion polls – and as such with an unassailable majority, in the ‘hope’ that they will know what they’re going to do when they get there, without ever having dropped a hint of it to the long suffering Irish public?

Fine Gael strategists are well aware that the strength of their Dail representation after the next general election, and thus the number of Cabinet positions they will have to cede to Labour, depends on how well either party fares in Dublin. That ill-fated heave against Enda Kenny earlier this year was motivated by a perception, borne out in private as well as public polls, that Fine Gael were losing out to Labour in Dublin because Dublin voters will not vote for Enda Kenny as Taoiseach.

The effects of the recession too have been most felt in Dublin where most of the country’s economic activity, and public servants, are concentrated. Labour has capitalized on this public anger and frustration making anger itself the core of its political appeal.

So the strategy wonks in Fine Gael decide; “If it works for Labour, then surely it will work for us?”

Eh, no. It won’t. The ‘anger is a policy’ ground has already been captured by the Labour Party. All Labour have to do now is to start spelling out some kind of coherent vision for Irish Society and a couple of policy ideas that sound plausible. What will Fine Gael do then? Run after them playing catch-up again?

If this is what they’re at, it’s boneheaded politics.
“Quick and decisive action on the major issues facing the country will be required to stabilise financial markets and give some hope to the people that there is light at the end of the tunnel,” Collin’s Saturday column concludes.
Sorry, that ‘light at the end of the tunnel’ is more like the flash emerging from the barrel of the electorate’s gun with the bullet aimed directly for between the eyes. And that’s exactly what any political party that refuses to play straight with the people about what they will do in office, who it will affect, how much it will cost, and its likelihood of success or failure as a policy, will richly deserve.

When the Dáil resumes next month, the Greens, the Independents and disgruntled Fianna Fáil TDs will all be looking at each other to see if anybody looks like losing their nerve and making a bolt for the Opposition benches. The other side of the coin is that the two left-wing Dublin Independents, Finian McGrath and Maureen O’Sullivan made a point of backing the Government in some crucial votes before the summer and may continue that policy of tactical support in order to avoid an early election.

One thing is missing from this grouping of McGrath and O’Sullivan.  The Dail’s last chance to vote on the NAMA/Anglo debacle was March 30, 2010, when Brian Lenihan put a motion to the House endorsing his approach.  The full text of the motion is below the fold. The government didn’t need this motion for any specific measure related to Anglo (although another bombshell in relation to its capital needs was coming at that time, see below), but a defeat of the motion would have put the whole NAMAnglo debacle in play there and then.

Finian McGrath voted Tá and Maureen O’Sullivan voted Níl.

That Dáil Éireann:

—notes that the Government has taken bold and successful action to address funding problems in the Irish financial system through the introduction of the Bank Guarantee Schemes and to remove the riskiest loans from the balance sheets of the participating institutions through the NAMA process, which has the support of the IMF, the OECD, the ECB and the European Commission;

—affirms that the Irish economy needs a functioning banking system that enjoys the trust of depositors, international markets and the community at large in order to benefit from the global economic recovery;

—supports the Government in the measures it is announcing today for the final phase of the stabilisation process of the banking system;

—supports the Government in the actions it is taking to ensure that each participating institution in the NAMA process will meet the Financial Regulator’s new capital standards by the end of 2010; and

—supports the Government’s structured and measured approach to the issues facing the financial sector in general, which represents the best way to secure its interests and those of the recovering economy while keeping in mind the requirements of the EU.

After the motion was tabled, the Minister’s opening statement included –

The unavoidable reality is that the bank has incurred losses from its large-scale property lending and needs substantial further capital. Unpalatable as it is, only the taxpayer can provide that capital. It is the least worst option. For this reason, I am this week providing €8.3 billion to support the capital position of the bank to take account of the bank’s losses to date. Additional capital support is likely to be required depending on the NAMA discount on the first tranche of Anglo Irish Bank loans transferred to it. The bank will provide comprehensive information on its financial position in its annual report for the 15-month period to end 2009 which will be published later this week. The bank will need further capital to cover future losses and accomplish the restructuring of the bank and its balance sheet. The current estimate is that this could be of the order of a further €10 billion over time.

That brought the known tab for Anglo to €22 billion.

Ivor was appointed to the Seanad by Bertie Ahern as some sort of inexplicable ‘consolation prize’ following the loss of his Dublin North Central Dail seat in the 2007 general election. Thus, you might think there would be some sort of mechanism in place for the current Taoiseach to tell him to pack his bags and get lost. There isn’t.

Fionnan Sheehan, the Independent’s political editor, thinks there should be and that the absence of a Taoiseach’s right to remove an appointee is ‘ludicrous’. What’s more ludicrous is that the Taoiseach has the power to make eleven nominations in the first place and can seemingly use that power to reward ‘favourites’ without any accountability to anyone except himself.

The purpose of the Taoiseach’s 11 is, variously, to provide the government of the day with an inbuilt majority in the Seanad; to appoint persons who will make an outstanding contribution to Irish public life or provide representation to otherwise unrepresented interests (such as Northern Ireland in years past); to implement deals on representation with coalition partners; or give a political leg-up to good future electoral prospects. Finally, a Taoiseach’s appointment may be a way of rewarding the loyalty of party stalwarts, keeping the political careers of failed TDs alive.

Thus Bertie Ahern’s favoured 11 in 2007 included, along with Ivor, Martin Brady who had lost his seat in Dublin North East and John Ellis who lost his seat in Sligo-Leitrim; Maria Corrigan who had unsuccessfully contested Dublin South and Lisa Mc Donald who had failed in Wexford. A new hopeful for Donegal, Brian O’Domhnaill, was included in the 11, as were two representatives of the Green Party (Dan Boyle, and Deirdre de Burca who has since resigned) and Fiona O’Malley and Ciaran Cannon of the now defunct PDs. The writer, broadcaster, journalist, and ardent admirer of Bertie Ahern, Eoghan Harris, became the eleventh, and only ‘independent’ nominee.

No doubt all these fine and worthy Senators are making a significant contribution to Irish public life in their own way; though they could hardly be called the ‘lucky 11’. Deirdre De Burca dropped off her perch when her career expectations could no longer be satisfied, Ciaran Cannon has since crossed over to the ‘other side’ and Ivor Callely has lately become a lightning rod for public annoyance with politicians and their expenses’ regimes in general.

Most of the remaining Senators – 43 of them – are elected by various ‘panels’, with an electorate of about 1,000 county councillors across the country, mostly voting along party lines, which makes the Senate more a Super County Council than anything else. In contrast, the six university candidates have to campaign hard to secure their preference among the sprawling electorates of graduates of TCD or the NUI.

Last year Fine Gael leader, Enda Kenny, proposed abolishing the Seanad, side-stepping his own party’s proposals for its reform. Labour and Fianna Fail favour reform over complete abolition. But the record shows that none of the parties likely to form part of any government in this state will, once in office, do anything other than conveniently forget about Senate reform.

For one thing, they don’t want to upset their party councillors by taking such an important, and exclusive, power of election away from them. Parties can do murky little ‘deals’ with one another across the panels – as Labour and Sinn Fein did in 2007 – to secure election of their respective favourites for Seanad seats, thus boosting the electoral prospects of those Senators in the next Dail election. In some parties, it’s two terms in the Senate to make it to the Dail. Otherwise, you’re out and your place on the panel will be granted to another party hopeful. It suits the government of the day too, to create a majority in their own favour in the Upper House; saves a lot of trouble later on with amendments to Bills and inconvenient motions and the like. And for those TDs who lose out in a general election, a seat in the Seanad can be a political lifesaver. There are very few, past or present, whose aspirations in public life have been limited to a career in Seanad Eireann. But once you’re in, you’re in – for the full term – and what with the salary and staff and expenses and all, as we’ve seen, it’s not a bad gig if that’s your disposition.

The Senate must be reformed. Ivor and his expenses’ debacle are just a symptom of what’s wrong with the entire system. The electoral base for the Seanad should be changed. Parties should be precluded from doing deals with one another to advance the election of their favoured ones. Taoiseach’s nominees should be eliminated entirely. A process of impeachment for all holders of public office, especially those who transgress on financially related matters, might be no end of a good thing too.

Also illuminating is NAMA’s consolidated data for all the loans taken so far.  Anglo accounts for nearly half of the total and a huge majority of the number of loans: 1100 loans out of 1800 in Tranche 1 and 1200 out of 1800 in Tranche 2.  In other words, all this effort to extract and value thousands of Anglo loans, as opposed to sending new people into Anglo to do it.  And the Anglo restructuring plan already envisages that part of it will be left as a bad bank so Anglo is going to need those skills anyway.  So Anglo will spawn 2 bad banks — its own, and NAMA.   As the price tag for Anglo goes up and up, the policy makes less and less sense.

It’s France, last month, when the aid minister Alain Joyandet chartered a jet to go a donors conference for Haiti — conveniently located in Martinique.  Now it cost somewhat more than Noel Dempsey’s outing but the principle is the same.  The apparent difference: Joyandet’s superiors — the President and Prime Minister — have some sense of when gratuitous waste occurred and they got shown up by it.  That ain’t Ireland.

It cannot be gainsaid that the social outcomes were less than were hoped for but the last agreement, Towards 2016, was the closest we have ever come to a social democratic programme in this country. This collapsed in December 2009 and it may be that, like Icarus, we flew too close to the sun in our aspirations.

Social democracy without a social democratic party in government, and in the era when we now recognize that the seeds of a very capitalist crisis were being sown?  But anyway, here’s the text of Towards 2016.  Begg can certainly claim that it doesn’t reflect an emphasis on tax cuts, notwithstanding the many references to “competitiveness”.  Nevertheless, it does read like a document that was written before its real make-or-break element — the size of the the national pay increases — was determined, and it certainly was oblivious to the disaster building up in the financial sector, notwithstanding one reference to the risk of a property crash.  But does it deserve the burden that Begg places on it?

*also general secretary of the ICTU.

Pundits may have raised their eyebrows and privately scoffed at such delusions of political grandeur, but the surge in support to Labour in recent polls has caused them pause for thought.

The strategy of positioning Labour as a viable alternative to permanent political dominance of this State by either Fianna Fail or Fine Gael paid dividends for Labour in the 2009 local and European elections.

Since then the public have been flocking increasingly to Labour as a representative alternative to the traditional Tweedledum Tweedledee formation of Irish politics. The electorate are waiting in the long grass for Fianna Fail, blamed for destroying the economy. With the implosion of its recent heave, a bitterly divided Fine Gael, sporting an ‘Up Mayo!’ leadership badge, is failing to impress. At last, there is a political leader of a united party that never offends anyone, except bankers and developers and other popular ‘hate’ figures, who purports to provide the electorate with  genuine ’change’.
Labour’s ambition to win 50 seats in the next general election, reiterated by Gilmore in his Irish Times interview this week, may well be within its grasp, according to analysis of current opinion poll trends by political scientists. Over on the excellent www.politicalreform.ie site, they’ve been beavering away at the figures and blogging their results.
Adrian Kavanagh’s analysis of the Red C polls suggests that “on these figures, Fine Gael would win 65 seats, Labour would win 48 seats, Fianna Fail would win 46 seats, Sinn Fein would win 5 seats, while 2 seats would be won by independents and other small parties. On these figures, the Green Party would fail to win a seat.” 

Labour would win over half the seats in Dublin, though Fine Gael and Fianna Fail would hold on better to their traditional support bases in rural constituencies, Kavanagh suggests. He surmises that Labour might possibly also land two ’surprise’ wins, in Mayo and Roscommon-South Leitrim respectively, bringing the grand national total to 50 seats. Thus Eamon Gimore’s current prediction would be fulfilled, even without the Party winning the one seat in every constituency that he believes it will.

Further analysis by Liam Weeks yields a similar overall result for Labour, though he is more circumspect than his colleague. Weeks excludes eight constituencies where Labour polled less than 5% in the 2007 election. Using Adrian Kavanagh’s analysis he estimates Labour can win a seat in the remaining 35 constituencies and two in 15 of those constituencies. But the question he poses is what Labour needs to do to achieve these results. It would require some remarkable swings in its vote, he concludes.

In those Dublin constituencies which the party has earmarked to gain second seats Labour, for instance, would have to record a 155% increase in its vote in Dublin Central, followed by “233% in Dublin North, 193% in Dublin MidWest, 175% in Dublin NorthCentral, 161% in Dublin South, 92% in Dublin SouthEast and 134% in Dublin West.”

To win back the old Spring seat in Kerry North would require an 83% increase in the party vote; 212% to regain a seat once held by Michael Bell in Louth and for Jerry Cowley to make the grade in Mayo, an increase of 1072% in the Labour vote in that constituency.
Weeks concludes:
“Of course, since many of the polls are suggesting that Labour’s national vote will increase by 150%, perhaps some of these victories are possible, particularly in Dublin. The opinion polls suggest this is certainly a feasible target, but an increase of 150% would only suffice if (1) the gains stated below were achieved evenly across each constituency, (2) if the vote was divided evenly between Labour candidates and (3) if they manage to pick up enough transfers to move from 0.8 of a quota per candidate to a full one. The occurrence of all three is an unlikely scenario as the surge in the Labour vote per constituency will be very much related to the strength of its local organisation. Taking this into account Labour needs well over 500,000 voters to cast a first preference for one of its candidates in 2012 if the 50 seat target is to be realised (with a stronger organisation Fine Gael won 51 seats from 564,000 votes in 2007). It would be more a hurricane than a gale if such a swing was to occur.”

 
Thus Weeks puts the euphoria about recent poll gains into perspective. In the 2007 General Election, Labour won about 206,000 first preference votes, so it’s a tall order to expect the party to achieve over half a million votes in 2012 and even at that, translate those votes into 50 actual Dail seats.
The most intriguing aspect of Kavanagh’s and Weeks’ analyses, though, is how commentators with direct and intimate knowledge of individual constituencies may feel it squares with their own experience on the ground. In Dublin West, for example, expanded from a three seater to a four seater for the next election and with a chunk of what was formerly Dublin North added in, it feels more likely that MEP Joe Higgins will be returned to the Dail than a second Labour candidate. Does anyone seriously believe that the Green Party will be wiped out in its entirety? Or that Fianna Fail will sink as low as 46 seats, in their terms the equivalent of an electoral wipeout? Or that the next Dail will have only two independents, on these predictions Maureen O’Sullivan in Dublin Central and Michael Lowry in Tipperary North?
Finally, polls can, and do, change and, as shown by the experience of 2007, change more dramatically during an actual election campaign than anyone anticipates. As things stand, Labour is riding high. If it can continue to increase its poll ratings and consolidate its current favour with the electorate, come the next election we may be looking at a sea-change in Irish politics.

Answer: The annual report never directly discusses the loan.  Instead, it is mentioned as “special liquidity facilities outside the Eurosystem” and the counterpart is never named (see accounts Notes 1 and 20 in particular).  And the total amount of such facilities in 2009 was €11,510,060,000.  Put another way, it’s about 4 times the €3 billion in budget cuts that the Minister says we should all really be focusing on. Some of the How and Why of the Anglo bottomless pit revolves around where this loan came from and who else got paid by Anglo with this borrowed money.  But the Central Bank’s report has far more disclosure about the finances of its staff pension plan than about the Anglo loan.  One more thing for Bernard Allen’s committee to look at.

[Note: A previous fun puzzle based on our banking crisis]

No doubt the material will be filleted for gems that support political partisanship of one flavour or another, but for the ordinary concerned citizen, it’s worth skimming through the lot to get a flavour of what was influencing policy decisions at that time.

Hindsight is a great fellow, but as every historian knows, events have to be judged in their own time. Even a limited perusal of this documentation underlines the point made by the current Governor of the Central Bank, Patrick Honohan, in his recent report, that all the focus in September 2008 was on an impending liquidity crisis not the underlying solvency of the financial institutions.

Indeed, the Financial Regulator, Pat Neary, repeatedly asserted there was no solvency issue. This appears to have been the main thrust of his contributions at meetings held to discuss the options in the lead-up to the guarantee. He was apparently supported in this view by the then Governor of the Central Bank.

External advisors, Merrill Lynch and Goldman Sachs, did not mention solvency as an issue either, though they did draw attention to the heavy reliance within the banks’ portfolios on property lending in an international environment where property asset values were already in freefall.

A bizarre presentation from Anglo Irish Bank made quite extraordinary claims for that bank’s business practices and ongoing solvency; predicting a profit of €1.1bn in 2009. Anglo had evidently convinced Pat Neary of their bona fides; the Financial Regulator was just as emphatic  in his advice that Anglo was sound as he was about the other institutions.

Advice notes from the Department and ‘speaking points’ to the Minister for Finance and the Taoiseach concentrated on the liquidity crisis faced by Irish banks; a cashflow problem that would alleviate when stability returned to the international environment. The idea that the Irish banks were undercapitalised or anything other than fundamentally sound was firmly discounted.

The draft legislation for the guarantee was in place from 16 September. Various options to deal with the liquidity crisis were considered at different stages and it’s clear that nobody believed that AIB or BoI were at any serious risk at that point although the systemic risk of any of the six institutions failing was noted; thus ruling out nationalisation. In its advice to the Department on the various options, Merrill Lynch noted that a wholesale guarantee could carry a price tag of €500m, pointing out that the markets were aware the Irish State could not fund a guarantee to that level and that offering it might adversely affect Ireland’s sovereign credit rating as well as annoying other EU partners. The ‘bad bank’ option was also discussed, but one document notes that this option was not pursued in the early stages of the Scandinavian banking crisis of the early 1990s and was a second stage response that would have to be carefully worked out if it became necessary later on.

No doubt there’ll be lots of political sparks flying about all this over the weekend, but one unavoidable conclusion is that none of those involved in managing the crisis had any sense that it might deteriorate so quickly. Certainly not to the point that five of the six banking institutions ultimately covered by the guarantee would face a solvency crisis within a couple of months.  Nobody realised the banks were already bust.

Fine Gael’s new Finance spokesperson is reported to have told a radio station that, in his opinion, ‘New ERA’, FG’s €18bn centre piece programme to revive the Irish economy, will not create the 105,000 new jobs that is its headline promise.

The 105,000 new jobs number may have been the product of some over-enthusiastic PR people, the FG Finance spokesperson said, in the process making his party leader, who trumpeted the 105,000 jobs promise in his Party Conference address last March, look ridiculous.

Noonan is both right and wrong: right in that nobody else believes that New ERA will magic up 105,000 new jobs over a four year period with 40,000 of them coming in the first year; wrong that the number was dreamed up from nowehere by some simple-minded PR guru.

Far from it, FG claims to have arrived at this figure from an interpretation of a model used by TCD economist Philip Lane and others in a paper assessing the impact of Government expenditure shocks on the Irish economy. FG even have a neat little table on their New ERA website, crediting Lane’s analysis as the source for their inspired calculations.

The Lane paper is freely available. Having read it, or more accurately, tried to read it, I’m far from sure how FG’s claim of 105,000 jobs can be extrapolated from it.

‘New ERA’, brainchild of then environment spokesperson, Simon Coveney, has been kicking around since 2009. It’s been launched three times, each time with the jobs’ claim front and centre. It has its own website. Apart from the jobs promise, it has yet to achieve much traction with the broader public.

‘New ERA’ stands for the New Economy and Recovery Authority, an overarching semi-State which would take over existing semi-states, including the ESB, Eirgrid, Bord Na Mona, Bord Gais, Coillte, and An Post. This new organisation would rationalise several of the existing semi-states. It would then lead a targeted investment programme in green energy generation, rollout of broadband and water services, financed by every political party’s favourite piggy bank, the National Pensions Reserve Fund, or through loans from the European Investment Bank or wherever. Borrowing in this way for investment purposes would be off balance sheet, FG argue; a further advantage of their policy.

There’s much in this radical proposal that’s worthy of serious public debate. What are we doing with so many semi-States anyway, and how best should that sector of service provision and wealth creating activity be organised for the future? Should some of the existing semi-States be sold off to the private sector to generate cash that could be invested in infrastructural development that in the long run will help create conditions for growth and economic expansion?

The plan gives rise to serious misgivings too; not least job displacement arising from the elimination of certain types of activity and whether wholesale investment in ‘green’ energy projects, for example, will ultimately yield the results anticipated or can even be economically justified.

It may be that Fine Gael initially launched their New ERA proposal at the wrong time and in the wrong way. It was pitched as their ‘stimulus’ response when it first appeared in March 2009; at a time when it was fair to bleedin’ obvious that the state of our public finances could not accommodate a grandiose stimulus plan of any sort. And from the outset, it has been inextricably bound up with the 105,000 jobs promise.

The leaders of any and all of our political parties are caught between a rock and a hard place on this one. As soon as they propose any policy, the first question they’re asked is how many jobs will that create?’ Were they to reply, truthfully, along the lines of: “We cannot put numbers on this; the most we can do is to state our belief that targeting economic activity in this way will generate growth and that such growth will inevitably result in increased employment opportunities,” they’d be laughed out of it.

Uniquely, it seems, in this country we are wed to the notion that Governments create jobs. They don’t. The most they can do is create conditions, by the policy choices they make, that may lead to productive and sustainable job creation, or minimise job losses within certain sectors of the domestic economy. That’s their job, not direct job creation or inventing fanciful figures for job numbers that may never be ultimately realised.

The primacy of the jobs fixation also serves as a distraction from evaluating the underlying philosophy and practicality of policy proposals, specifically whether or not they will transform our society, and our economy, in ways we find acceptable in the long term.

Right now, Michael Noonan may be wishing he’d never opened his mouth. In the meantime, he may well have done us all a service.