Coalition must stick with austerity – softening Budget is road to ruin

MONDAY next marks the second anniversary of the Coalition's extraordinary general election victory. How the mighty have fallen in just 24 months. Between them, Fine Gael and Labour garnered almost 70pc of the 166 Dail seats in that election.

Based on the results of the ‘Sunday Independent’ poll, they would be doing well to win 65 seats if an election was held in the morning, a loss of almost 50 TDs.

Meanwhile, Fianna Fail – the party the 2011 General Election was supposed to have finished off – continues to reclaim support.

Most worryingly for a government that is never shy about trumpeting its achievements, Sunday's poll was carried out after the promissory note deal.

Despite the undoubted coup, the general public seems largely underwhelmed.

No wonder government TDs are getting restless. And it's not just on the backbenches. Last week, two cabinet ministers, Leo Varadkar and Joan Burton, managed to make directly opposing statements in the Dail on budgetary strategy in the aftermath of the promissory note deal.

It's probably nine months to the next Budget. Yet already pre-Budget speculation has begun. Even by Irish political standards, that must be a record and can't be helpful to the Coalition.

The signs of nervousness are not restricted to fiscal matters. Two weeks ago, according to reports, the Labour leadership barely prevented a walk-out by TDs and senators from their party meeting as a gesture of protest over Enda Kenny's failure to issue a public apology to the Magdalene women.

Now Mr Kenny clearly mishandled the the issue on the day the report was published. But the reaction from Labour TDs was knee-jerk and way over the top.

If the Government is to survive, never mind win the next election, it's time for cool heads. Something that, with some exceptions (notably Michael Noonan and Ruairi Quinn), has been largely absent to date.

Of course, it's easier said than done. TDs (and ministers) looking at losing their seats in the next general election rarely do calm and collected.

But if the two parties go chasing opinion poll ratings, they may well end up being a one-term government and losing most of those 50 seats under threat.

To borrow a cliche straight from the mouth of politicians, the only poll that matters is the one on general election day. And, presuming the Coalition doesn't implode in the meantime, that should be over three years away.

Fine Gael and Labour's primary concern should be to make sure they can go into that election able to demonstrate that the budgetary crisis has been dealt with; that the banking system is functioning properly again; that the country is out of bailout territory and on the road to recovery; and that there is hope for the future. Then they will have a serious chance of re-election.

For that reason, it would be a mistake for the Coalition to court short-term popularity by using any gains from the promissory note deal to soften December's Budget. They should stick to the €3.1bn savings target and try to get the budget deficit down to 3pc of GDP as quickly as possible.

Stretching out austerity over a longer period could damage our standing with the troika and therefore our ability to win further relief from our debt burden. But more importantly, it would likely damage consumer confidence and the economy.

And that ultimately will be bad for the Government. The ill-fated Fine Gael-Labour coalition of the 1980s consistently fudged tough decisions with disastrous consequences for the country and for them politically.

It took Fine Gael a quarter of a century to win another election after that.

There's no question the Coalition will be tested in the months ahead. Public sector workers won't like the €1bn cut in the overall pay bill. The property tax will be hugely unpopular.

But the idea that voters will be assuaged because there will only be cuts of €2.3bn instead of €3.1bn in December's Budget is risible. It won't be a factor in April 2016 at the next general election. The State, and the fate, of the country at that point certainly will be. That must be the Coalition's sole concern.