The most significant budget since turn of the century

For the centre to thrive, pro-business social democracy must be developed, heralding this ‘new politics’ once and for all, writes Jody Corcoran

‘THE centre must hold” was the mantra of Fine Gael and Fianna Fail from either side of the Dail on Budget day. The battle cry of the two old parties was met with disdain by those who remains intent to usher in a “new” order, the form of which remains ill-defined, other than to be rooted in the tried and failed ideologies of the far left, of the Socialist Party, the Socialist Workers Party and an increasingly confused Sinn Fein.

In Ireland we do not ‘do’ the far right, not since the Blueshirts were laughed out of town in the 1930s, with the emergence of a political system which, generally speaking, has stood this country in good stead since the foundation of the State. But elsewhere around the world the far right and far left have gained traction since the collapse of the system in the ugly form into which it had evolved by 2008, in the “new” form of what are called populists such as Donald Trump, Bernie Sanders, Marie le Pen and Jeremy Corbyn to name a few, but which are, in separate ways, echoes of a failed past.

For all the populist traction, however, the centre is holding, has held, although is fractured, as was evident here in the general election this year, with the emergence of a strong, though far from radical, Independent vote. That vote was centrist in nature, though, in a traditional sense.

In Ireland we do not, or no longer does a right, even of the kind unashamedly expressed by Michael O’Leary behind closed doors as a fundraising event organised by Fine Gael before the Budget, that is, of the kind that seems to have learned nothing by the collapse, or worse than that, which is intent to capitalise on that collapse to take all the advantage.

So, in Ireland, the centre is pushing back, against the extremes of the far left and even the relatively moderate right, where the underlying right wing tendencies of Fine Gael have been always located, and was ascendant since 2008 until it got the message in the election. The most extraordinary aspect of the Budget was the extent to which Fine Gael has moved to the left in response to that election. This may be a move of convenience. Many suspect it is. The outcome of the Fine Gael leadership contest will tell a lot. The move is almost certainly temporary, which is as it should be. Centrist parties can move to the left or right, depending on the mood, or on the circumstances of the time. Just look at Fianna Fail. For two decades it was a centre-right party, which came to a peak in the era of Charlie McCreevy, a liberal more at home in the Progressive Democrats, or alongside Leo Varadkar.

The re-positioning of Fianna Fail to its roots at the centre-left was the first achievement of Micheal Martin, behind his greatest, which was to hold the centre by giving birth to ‘new politics’. His party reaped the dividends in the election to the astonishment of almost everybody, but not those who had come to realise that a centrist electorate had no viable alternative, other than those Independents.

This represents a failure of the international left in the first instance, and the far left here, to put a viable political narrative on the work of Thomas Piketty, for example, in relation to wealth and income inequality. The great failure of the far left here, and Sinn Fein, was to address such inequalities in a manner, or with language that harked back to old ideologies which have been shown to have failed.

Similarly, the great failure of Fine Gael was to talk about keeping the recovery going to no particular social end. To achieve that, Michael Noonan introduced five regressive budgets in a row, hard budgets for a hard time, which wreaked social havoc. But there was no talk of challenging the global financial system which took hold in the 1980s, which saw national politics recede, which led to a deregulated banking system and allowed privatisation to sweep the world. For two decades, this may have allowed centrist governments to keep the money flowing and the financial markets happy, to rebuild schools and to open hospitals, but it also led to a sea change in culture which allowed Wall Street to move in, followed by a sub-prime housing market crisis which — to continued anger — caused international capitalism to be rescued by massive government bailouts. The creation of Irish Water was seen as just another manifestation of this.

So now, in what will be his last budget, Michael Noonan has moved, or has been moved by Fianna Fail and by centrists Independents and the Independent Alliance, to the left. It was an extraordinary sight to behold. That is not to say that Fine Gael is, all of a sudden, a left-wing party, or even a centrist party. It is more a divided party. In his budget speech, Paschal Donohoe referred to a “just society” of the kind conceived by the late Declan Costello and implemented by the late Garret FitzGerald. Ditto Michael Noonan, on RTE’s Prime Time and Frances Fitzgerald, at the Kennedy Summer School in September and again in London on Friday night. Hell, even Leo Varadkar, a classical liberal, has come over all ‘fair society’. In the short to medium term, this will be the future for Fine Gael, however. But who can lead the party into this future; who will be the true inheritor of Garret the Good? Perhaps he or she has not yet shown his hand.

All of this tells us that the centre ground in Irish politics has shifted to the left. It is possible to estimate to what extent. Michael Noonan defines the “squeezed middle” as those households with an income of up to €70,000 a year.

That may have been the case before 2008. There is no doubt that such households are struggling, primarily with large levels of personal debt, compounded by increased taxation to rebuild a tax base hollowed out by the centre-right years of Fianna Fail. But they are no longer the real squeezed middle. The Unite research officer, Michael Taft has recently published convincing research, based on authoritative income levels, which show that the squeezed middle now has a household income of between €21,500 and €53,500. If you earn €75,000 you are in the top 10pc; if you earn €50,000, you are in the top 22pc earning bracket. This is the new reality.

So, income inequality is still the core issue for those who espouse centrist politics, who want the centre not just to hold, as it must, but to also thrive. There remain many other issues which must be addressed, not just economic or budgetary such as the deficit, important though that is, resonant though it is of ‘keeping the recovery going’. For the centre to hold, for its authority and self-confidence to have validity, new ideas related to the inventiveness and productivity of people must be fostered. The future is a pro-business social democracy that focusses on science and engineering, for example, and that values higher education, but that also requires private companies to offer apprenticeships, to pay the living wage, to pay their taxes.

In this budget there were the faintest sightings of a form of new thinking behind the old tax-andspend mantra, behind the potential of re-inflating a property bubble, which I believe could make this budget the most significant since the turn of the century, potentially a watershed moment, enough to give life to ‘new politics’; but there were not nearly enough of those sightings, and they were nowhere nearly clear or confident enough to show through.

That was the limitation of this budget — its lack of the boldness that will be required for the centre to thrive, to meet the challenges that lie ahead. That will be a long road, but the centre, at last, has made a real start.

‘The real squeezed middle have an income of €21k to €53k, not €70k’