The outcome of General Election 2016 has thrown up more questions than answers. Quite where we are right now nobody knows. It’s not quite the chaos mantra peddled by Fine Gael. That was just political rhetoric. But certainly the Irish have turned their back on the supposed “stability” offered by the mainstream parties.
So how did we get to this point and where might it bring us? Rebel Dublin takes a look at the beginning of the end of Fianna Fail & Fine Gael & the emergence of a new political landscape.
An Irish History lesson in 100 words or less…
For those of you uninitiated with the Irish political landscape it goes something like this.
In 1922 Ireland was a divided country. The Irish War of Independence had ended by signing a treaty that gave away Northern Ireland to the British. The loss of the North divided the populace. And so those in favour of the treaty went to war against those opposed. The war left either side embittered for generations.
It was against this backdrop that the Irish Republic was formed. And it is to this day the two warring factions and their political parties are still sitting on either sides of the Dail (Irish parliament) in the guise of Fianna Fail & Fine Gael.
So who who are they?
Fianna Fail (pronounced F-e-e-n-a F-a-l-l) were the anti-treaty side..
A Centre-Right leaning populist party. A bit like the New Labour party in Britain or the Republican party in America.
Fine Gael (pronounced F-e-e-n-a G-a-y-l-e) were the pro-treaty side.
A Centre-Right leaning party. A bit like the Tories or the Republicans.
So Ireland has two Centre-Right leaning parties. With no discerning difference in policies. And very similar & odd sounding names. And they still won’t come to an agreement and do what’s best for the country.
1980’s Ireland – No jobs. Bad hair. Good Tunes.
We fast forward 50 years past all the bickering and sniping to 1980’s Ireland. The country was beset by unemployment, mass emigration and a failed economy. The legacy of a Jack Lynch Fianna Fail government of the late 1970’s which had borrowed too much and spent it recklessly. The 1981 Fine Gael government which inherited this mess attempted to fix it by increasing taxes across the board. This policy also failed. There are arguments that Ireland should have been saving when it spent and spending when it taxed.
In 1987 the electorate gave their backing to Fianna Fail led by Charlie Haughey. Deals were brokered by FF that empowered the trade unions in social partnership negotiations. EU structural funds to Europe’s poorer members & increased FDI laid the foundations for what was to later come. These years were particularly harsh for the Irish people and were synonymous with Haughey’s profligacy with taxpayers money while he addressed the nation telling us we all needed to “tighten our belts”.
In 1994 the electorate had endured enough and voted in a Fine Gael led coalition. Sound economic policy in the form of investment in education, emphasis on export led growth, wage restraint, low corporate tax and tighter bonds with Europe in the form of the Maastricht treaty set the stage for the beginnings of the Irish economic miracle.
Good Times
Back in 1998 Ireland was in a happy place due to a number of factors.
The troubles in Northern Ireland were coming to an end. EU cohesion funds were adding to Ireland’s productive capacity. Low level corporate tax attracted American multinationals. An educated, english speaking workforce filled these jobs. The seeds of economic growth were firmly planted with growth averaging 9% between the years 1995 and 2000.
Ireland was transformed from one of the poorest countries in Europe to one of the wealthiest in a relatively short space of time. Continuous investment in scientific education as well as the completion of the International Financial Services Centre brought low wage levels up to some of the highest disposable incomes in Europe.
Ireland’s emigrant population returned in their droves attracted by this new found opportunity. With it came increased demand for housing.
Fianna Fail swept back into power in 1997 and changed economic policy from one of making things to buying things. Export led production was replaced by consumer driven demand. Income tax was slashed. Wage restraint agreements were torn up. Successive giveaway budgets under finance minister Charlie Mc Creevy bloated the public sector which in turn spent more in the domestic economy. But the best was yet to come…
In 2000 the Euro currency was introduced. A wave of cheap credit poured into Ireland at a time when we probably should have been cooling things down. Efforts were torn away from manufacturing & directed towards unproductive practices such as property, finance and banking. Property prices had already more than doubled from 1995 to 2000.
In 2002, the world economy slowed. And with it came a change in Ireland’s fortunes. The economy was heavily invested in I.T. with the vast majority of its exports attributable to American multinationals. In 2003, buoyed by a wall of credit issued by the US Federal Reserve, the world economy began to pick up again. Ireland’s open economy kicked into gear again. But at it’s core was not sound economic policy, but the property market. Property prices had already more than doubled since the mid 90’s .
The Fianna Fail party, introduced a raft of measures which encouraged further expansion. With average house prices rising came demands for higher wages. Higher wages caused low skilled jobs to migrate to Eastern Europe. The same jobs that had started the boom years. The labour mix changed from one of low paid manufacturing jobs to high paid construction workers & a service economy. Eastern European migrants flocked to Ireland in search of work though the now open EU borders. The increased population needed to live somewhere which created further demands for housing.
Between 2000 & 2003, Finance Minister Charlie Mc Creevy engaged in successive giveaway budgets, boosting public expenditure by 48%. And why not? Tax take from property was now growing exponentially so there was plenty of money to go round.
Warning signs were ignored in the pursuit of auction politics. In fact it became government policy to actively grow the property bubble with tax breaks for developers, loose credit for buyers, lax banking oversight and historically low interest rates adding fuel to the flames.
Property Porn & a Complicit Media
Added to this mix was a newspaper industry peddling weekly property porn. The property supplements were filling the coffers of newspapers who in turn delivered the official mantra that all is well, keep buying houses. Any voice of dissent was quickly drowned out by a mainstream media which had been bought off by vested interests. Supposed informed opinion on the fate of the property market came from the mouths of estate agents, stockbrokers, developers & bankers. Many Irish people didn’t care or question it. They were getting richer just by owning a house.
By 2006 cracks were appearing yet with an election the following year Fianna Fail and its coalition partners continued to stoke the bubble with tax breaks and increased public spending. Hooked on cheap credit, Ireland bought into it and voted in Bertie Aherne for another term. In 2007, property prices peaked. And then began to fall. At first we were told it would be a soft landing. Developers, reluctant to drop prices, gave incentives to buyers such a free kitchens. Or Mercedes cars. Interest only loans were given out. Anything to keep the party going. Bertie Ahern came out with his infamous quote that “those who are cribbing and moaning should just commit suicide.”
We All Partied
Finance minister Brian Cowen, said “we had all partied”. But the Irish were waking up to face the mother of all hangovers. By 2008 the soft landing was becoming a hard landing with property prices plummeting by more than 60%. Unemployment began to skyrocket with 17% of the workforce reliant on construction in some form or other. The tax take from stamp duty disappeared and with it the ability to pay for a bloated public sector. Fianna Fail had led Ireland yet again into an unadulterated mess. This time in the form of the biggest property crash in history.
Irish banks were now all but bust after lending vast amounts that would never be repaid.
In 2008 a fateful decision was taken by finance minister Brian Lenihan for the taxpayer to underwrite all bank losses. Further to this all Irish banks would be recapitalised by the taxpayer, despite not yet knowing the amounts we would be liable for. It ultimately worked out at 64 billion euros.
The National Asset Management Agency (NAMA) was set up as an apolitical body to hoard all defunct lands, loans & properties & prevent them from being released to the market and thus lowering property prices even further. NAMA to this day has continually sold off vast sums of property owned by the taxpayer at massive discounts. And with as ever no accountability this is set to be by far the biggest swindle of the taxpayer in Irish history.
In 2010 Ireland was under threat of being locked out of EU money markets. The Troika, ECB, IMF and EU Commision, had placed Ireland into a series of austerity budgets in return for a bailout.
In 2011 the Irish voted in a Fine Gael & Labour coalition. An Ireland with 17% unemployment, mass emigration & depleted tax take had become by 2016 a nation with 9% unemployment and the fastest growing economy in Europe. However, there is some debate as to how this green shoots of recovery had been achieved. Ireland’s two biggest trading partners, the UK and the USA, had both rebounded from the 2007 economic slump and with it dragged Ireland upwards. Did Fine Gael just get lucky? Was it a case of right time and right place. There were no major policy changes introduced to bring about such a turnaround in the economy. In fact Fine Gael had mostly carried on with disastrous Fianna Fail policy throughout their term.
Come February 2016 and the election results are now in. The Irish people have spoken. Certainly there has been a shift towards the left. United under the banner of water charge protests the Irish had finally got up off their arses and did something they have never done. Protested.
GE 2016 gave the two establishment parties of FF & FG a return of less than 50% of the vote. The first time this has ever happened. The emergence of a number of new socialist alliances & Independents is most noted along with the steady growth of Sinn Fein. The outright rejection of Renua has confirmed the rejection of centrist right parties and a slow but steady movement away from civil war political allegiances to forward thinking social democracy. But will these disparate parties be able to come together and form a cohesive, workable allegiance? Time will tell. I suspect we shall be seeing posters up on lamp posts in the next 18 months. And with it a further movement away from FF & FG.
