WHO’S RUN­NING THE SHOW?

Bud­get 2018 looms, but who is re­ally in charge of the public purse strings: Fi­nance Min­is­ter Paschal Dono­hoe, Taoiseach Leo Varad­kar, Fianna Fáil leader Micheál Martin – or every­body?

The Irish Times - Weekend Review - - FRONT PAGE - Pat Leahy & Fiach Kelly

On Tues­day, Oc­to­ber 10th, Paschal Dono­hoe, holder of the sec­ond and third most pow­er­ful po­lit­i­cal of­fices in the State, will get to his feet in the Dáil and de­liver the first bud­get of the Leo Varad­kar ad­min­is­tra­tion.

In charge of the Depart­ment of Fi­nance and the Depart­ment of Public Ex­pen­di­ture, unit­ing the depart­ment for the first time since the old mono­lith of Fi­nance was split af­ter the crash, this is Dono­hoe’s bud­get. But it’s also Varad­kar’s. While Enda Kenny left bud­gets to Michael Noo­nan, Varad­kar is – in­sid­ers say – all over this process.

It’s also Micheál Martin’s, Michael McGrath’s and Dara Cal­leary’s bud­get, as Fianna Fáil’s as­sent is needed for the bud­get to pass.

And it’s Finian McGrath’s and Shane Ross’s, and all the other In­de­pen­dents in Gov­ern­ment who want some­thing to demon­strate their clout. Every­body wants a piece. It’s every­body’s bud­get. But the buck still stops with Dono­hoe. By the time he gets to his feet on the af­ter­noon of Tues­day week, he will have spent most of the past few weeks clos­eted in rooms in his two de­part­ments ( ac­tu­ally they oc­cupy the same Mer­rion Street block) ham­mer­ing out his Gov­ern­ment’s spend­ing and tax­ing plans for the com­ing year, cut­ting deals with col­leagues, hold­ing out, re­lent­ing, mak­ing fi­nal of­fers. Like all min­is­ters for fi­nance, he says “no” a lot.

Se­crecy

As ever, the process is shrouded in se­crecy. Al­though Varad­kar and Dono­hoe ( es­pe­cially the Taoiseach) have been widely tout­ing their in­ten­tion to cuts taxes, both have also been warn­ing their col­leagues that they will not re­spond favourably to public prompt­ings in the me­dia.

Spe­cial plead­ings on news­pa­per front pages will be coun­ter­pro­duc­tive, they have sug­gested. So there have been fewer sto­ries mak­ing cases for in­creased spend­ing in health and ed­u­ca­tion, for ex­am­ple.

How­ever, there is some trou­ble with the In­de­pen­dents, who had a tense meet­ing with Dono­hoe in Gov­ern­ment Build­ings on Thurs­day af­ter­noon, with some an­gry that they weren’t get­ting ev­ery­thing they wanted. Ac­counts differ on how ex­actly the meet­ing con­cluded, but it cer­tainly ended with­out agree­ment.

There is also trou­ble with Fianna Fáil, which is pub­licly in­sist­ing on USC cuts ahead of Varad­kar’s rais­ing of the en­try point to the higher rate of in­come tax – the break for mid­dle- in­come earn­ers he has been promising for weeks, in keep­ing with his over­all po­lit­i­cal strat­egy.

Most of the “bud­get bi­lat­er­als”, the sup­pos­edly de­ci­sive meet­ings where spend­ing de­part­ments de­bate and agree their set­tle­ments for the next year with Dono­hoe and his of­fi­cials, have con­cluded this week.

Mi­nor is­sues re­main ev­ery­where, but on Thurs­day, ac­cord­ing to one per­son in­volved in the process, three de­part­ments’ set­tle­ments re­mained un­com­pleted – the de­part­ments of Health, Chil­dren and So­cial Pro­tec­tion.

“Just three,” the source em­pha­sises. Well, yes. But health and so­cial pro­tec­tion be­tween them make up for more than half of all Gov­ern­ment spend­ing. So there’s a way to go.

But for all the brinkman­ship and am­a­teur dra­mat­ics be­hind the daunt­ing grey fa­cade of the Depart­ment of Fi­nance, th­ese re­main­ing ar­gu­ments are about rel­a­tively small sums of money.

A few tens of mil­lions will fix most Min­is­ters’ de­mands; cu­mu­la­tively, a cou­ple of hun­dred mil­lion euro is the scope of the ar­gu­ments that will con­vulse the Gov­ern­ment over the com­ing days. That’s not an in­signif­i­cant sum, but it should be un­der­stood in the con­text of the Gov­ern­ment’s to­tal bud­get. To­tal Gov­ern­ment spend­ing this year is more than ¤58 bil­lion.

Varad­kar’s voice

In re­cent weeks, the Gov­ern­ment has been talk­ing up its bud­get, and also talk­ing it down. There will be tax cuts for mid­dle earn­ers, Varad­kar prom­ises. But we will first and fore­most bal­ance the books, Dono­hoe in­sists.

It is Varad­kar’s voice that will hold sway in this bud­get, in­sid­ers say. Michael Noo­nan largely had con­trol of his own pack­ages and could cut deals in the knowl­edge that Kenny wasn’t look­ing over his shoul­der.

One Min­is­ter said Kenny would usu­ally make his pres­ence felt when the bud­get was al­most done, just to en­sure ev­ery­one was happy.

Numer­ous fig­ures who have been in and out of the Depart­ment of Fi­nance in re­cent weeks – and will be for the next week and a half – re­port that Varad­kar’s pres­ence is keenly felt, even if he is nowhere to be seen.

A glar­ing ex­am­ple of that, ac­cord­ing to sources, is that Brian Murphy, the Taoiseach’s chief of staff, is sit­ting in on some meet­ings with Dono­hoe. The line to Varad­kar is di­rect.

One source says that their “gut feel­ing” is that this will be Varad­kar’s bud­get, and that they ex­pect a pol­icy flour­ish for the po­lit­i­cal show­man’s first set-piece.

“Cer­tainly the gen­eral thrust of where the bud­get is go­ing to be will have his fin­ger­prints all over it.”

An­other source says Noo­nan was the deal­maker and had the author­ity to take po­lit­i­cal lib­er­ties in or­der to bring peo­ple on­side. “There is much tighter con­trol from Gov­ern­ment Build­ings this time,” the source says.

“In the last few weeks, it has tight­ened up. It has been mostly Paschal but the Taoiseach’s im­print and ide­ol­ogy are all over it,” agreed a Min­is­ter.

So far, the power dy­nam­ics are fol­low­ing the pat­tern that those in­side Gov­ern­ment have no­ticed since Varad­kar took over. The Kenny- Noo­nan style axis – in which the for­mer taoiseach would at times de­fer to his min­is­ter for fi­nance – has been re­placed by a re­la­tion­ship that clearly has a se­nior and ju­nior part­ner.

But the two most se­nior peo­ple in Gov­ern­ment are still close, says Finian McGrath, the In­de­pen­dent Min­is­ter. “When you’re talk­ing to Paschal, you know you’re talk­ing to Leo. You al­ways get the im­pres­sion Leo and Paschal are do­ing it to­gether.”

Dono­hoe’s po­lite yet firm na­ture will be tested to its lim­its this week, when the real talk­ing be­gins. “It hasn’t started yet,” says one Fianna Fáil fig­ure. “I can’t see things mov­ing un­til next week. Sure it’s like poker.”

Pretty gen­uine

In his min­is­te­rial of­fice, Dono­hoe has a va­ri­ety of sci- fi fig­urines, in­clud­ing Darth Vader, Chew­bacca and a Stormtrooper from Star Wars. One per­son cen­trally in­volved in the bud­getary process wryly re­marks that the “Star Wars mem­o­ra­bilia al­lows ‘the force to be with us’”.

Dono­hoe’s pri­vate per­sona is the same as his public im­age. The un­fail­ingly po­lite yet firm Paschal Dono­hoe, who thanks in­ter­view­ers for their ques­tions be­fore giv­ing away just as much in­for­ma­tion as he wants, is the same Paschal Dono­hoe who warns Min­is­ters and their of­fi­cials that money is tight.

“It is the old cliché,” says one in­sider. “The iron fist in the vel­vet glove.”

Finian McGrath says: “If you come up with a mad idea, he’ll tell you.”

“Noo­nan was a very good prob­lem solver. Paschal has the skill to see the prob­lem first and not let it arise. He will give you a straight an­swer: he can do it, he can’t do it.”

An­other gov­ern­ment fig­ure says of Dono­hoe: “I think he is pretty gen­uine. He cer­tainly gives the im­pres­sion that he is en­gaged. He is very re­spect­ful and he gives you time.”

Dono­hoe has al­ready met Michael McGrath, Dara Cal­leary and Fianna Fáil ad­vis­ers. Cal­leary and Dono­hoe will sign off on the broad spend­ing pri­or­i­ties of the sec­ond of three bud­gets that Fianna Fáil and Fine Gael have com­mit­ted to un­der the “con­fi­dence and sup­ply deal”.

Though the pair were con­tem­po­raries in Trin­ity Col­lege, each man is fight­ing for his own party and will not hes­i­tate to take the up­per hand where pos­si­ble. Cal­leary’s main task is to en­sure that his party’s fo­cus on public ser­vices – in ed­u­ca­tion, health, hous­ing and else­where – is re­flected in the bud­get.

Since last year, Dono­hoe has an­nexed the Fi­nance port­fo­lio, but Fianna Fáil still has Cal­leary fo­cused on spend­ing and Michael McGrath on fi­nance and tax­a­tion.

McGrath has also met Dono­hoe and will do so again but, last year, the fi­nal to- ing and fro-ing be­tween Fianna Fáil and Fine Gael was largely done by phone.

Some in Fianna Fáil be­lieve Noo­nan pulled McGrath too close to him last year in a kind of men­tor- pro­tege re­la­tion­ship, yet the na­ture of this gov­ern­men­tal ar­range­ment is that the two fi­nance spokes­peo­ple have to be close at bud­get time.

Tough

In some ways, the Cork South Cen­tral TD shares some char­ac­ter­is­tics with his now op­po­site number, Dono­hoe. “Michael is tough,” says a Fianna Fáil TD. “He comes across as pleas­ant and charm­ing but he is tough.”

The ne­go­ti­a­tions with Fianna Fáil are ar­guably more im­por­tant than those with In­de­pen­dents, whose de­mands are of­ten pet projects or con­stituency is­sues.

Fianna Fáil will not be given the minute details of the bud­get. In­stead, McGrath and Cal­leary are likely to be told their pol­icy pri­or­i­ties – de­tailed in the con­fi­dence and sup­ply deal – are cov­ered.

Fianna Fáil’s main con­cern is that the “no sur­prises” el­e­ment of the mi­nor­ity Gov­ern­ment deal is ad­hered to. There must be no re­peat of Noo­nan’s late dis­cov­ery of an ad­di­tional ¤300 mil­lion. Tax rises – such as a pos­si­ble in­crease in the 9 per cent VAT rate – must be cleared be­fore­hand with Fianna Fáil.

One fig­ure in the Depart­ment of Fi­nance is wor­ried Fianna Fáil could push the ne­go­ti­a­tions to the ab­so­lute limit and threaten not to vote for the Bud­get even af­ter Dono­hoe has de­liv­ered his Dáil speech on Oc­to­ber 10th.

When The Ir­ish Times put this fear to one Fianna Fáil mem­ber, the re­ply was one sat­is­fied word: “Good.”

Oth­ers in the main Op­po­si­tion party are more cau­tious and be­lieve they can­not be seen to play such games.

Ex­actly how tough the fight be­tween Fianna Fáil and Fine Gael be­comes will be largely down to Varad­kar and Martin. The con­fi­dence and sup­ply deal stip­u­lates that when the re­spec­tive spokes­peo­ple can­not solve dis­agree­ments, the prob­lem gets kicked up­stairs to the two lead­ers. Kenny and Martin stepped in when a dis­pute over the tim­ing of wel­fare pay­ment in­creases lasted un­til bud­get day it­self last year.

It is not in Martin’s in­ter­est to make Varad­kar’s life easy. The Fianna Fáil leader has shown him­self will­ing to push is­sues to the very edge – from the for­ma­tion of the Gov­ern­ment, to water charges, to rent caps – be­fore even­tu­ally ac­cept­ing a deal.

Varad­kar will not want to be pushed around on his first bud­get and, as a lead­er­ship novice, may feel the need to as­sert him­self in a way that Kenny and Noo­nan did not. The dy­namic be­tween the two lead­ers re­mains un­pre­dictable; they are test­ing each other out.

Po­lit­i­cal fil­lip

Ir­ish eco­nomic pol­icy has re­mained re­mark­ably con­stant de­spite reg­u­lar changes of Gov­ern­ment in re­cent decades. Aus­ter­ity poli­cies have been fol­lowed by Gov­ern­ments of all po­lit­i­cal stripes in dif­fi­cult times; just as ex­pan­sion­ary bud­gets have been pre­ferred when times were bet­ter.

There is noth­ing likely in Ire­land to com­pare with the great shifts in eco­nomic and fis­cal pol­icy that would take place in the UK were Jeremy Cor­byn’s Labour Party to win the next elec­tion there. The bud­get, at most, will in­volve mi­nor tweaks to eco­nomic and fis­cal pol­icy. So what’s all the fuss about?

Bud­gets re­tain a pow­er­ful po­lit­i­cal po­tency in Ire­land. Peo­ple pay at­ten­tion to them for a lit­tle while; even peo­ple who ha­bit­u­ally tune out of pol­i­tics. They be­lieve the bud­get af­fects them, so they take no­tice of what the politi­cians say on “bud­get day”.

And most gov­ern­ments hope that a bud­get will give them a po­lit­i­cal fil­lip.

But ul­ti­mately – while the di­vid­ing of the cake can make huge dif­fer­ences in cer­tain sec­tors and to spe­cial in­ter­est groups – bud­get day it­self is pri­mar­ily an ex­er­cise in po­lit­i­cal com­mu­ni­ca­tion.

The po­lit­i­cal boost imag­ined by gov­ern­ments sel­dom oc­curs – or not at the time. Polls sug­gest that the “bud­get ef­fect”, such as it is, usu­ally comes months later, when mea­sures take ef­fect, rather than when they are an­nounced.

On Oc­to­ber 10th, tax and spend­ing changes will be an­nounced. Peo­ple might be bet­ter, or worse off. But typ­i­cally, not by much, es­pe­cially in th­ese post- aus­ter­ity times.

Ex­actly how tough the fight be­tween Fianna Fáil and Fine Gael be­comes will be largely down to Varad­kar and Martin

Main: Taoiseach Leo Varad­kar and the Min­is­ter for Fi­nance and Public Ex­pen­di­ture and Re­form, Paschal Dono­hoe; be­low: Fianna Fáil leader Micheál Martin. PHO­TO­GRAPHS: NICK BRAD­SHAW & EA­MONN FAR­RELL/ROLLINGNEWS.IE

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