(This is an unedited version of my Sunday Business Post column from yesterday)
Today’s Red C/Sunday Business Post Poll shows us one uncomfortable truth: when you’re the incumbent, you can buy an election. Look closely. The results are stark. Fine Gael and Labour are experiencing a bounce in their fortunes as more and more people feel a bounce in their pay packets. Despite the Taoiseach’s approval ratings falling faster than the price of a pint of crude oil since he took office, 42% of respondents trust the government to stabilise the public’s finances, up from 37% in 2011. Almost half-47%-of respondents are worried a change in government would actually stall a recovery.
And this is before the real giveaway begins.
The recovery is real. The Irish economy grew by more than 5% in 2014 according to the ESRI’s Quarterly Economic Commentary. Ireland is forecast to grow by 3.5% in 2015, the fastest in the Eurozone. The economy’s resurgence has come from increases in employment, with an increase of 1.5%, or around 29,000 jobs, and in domestic demand derived from these new jobs. Our export markets to the US and UK are strong, while the EU struggles to grow. Many of the new jobs created are in full time employment. Relative to last year, personal consumption is up 1.1%, the government’s tax take is up significantly, and unemployment is falling, albeit slowly. Irish Manufacturing is at a 15-year high.
This recovery is badly distributed. It is confined to the large urban areas and the upper classes and older members of our society. When asked whether they had seen any benefit from the recovery in their own lives, 65% of Dubliners said no. 70% of those in Connaught said no. 71% of respondents who were 18-24 said they felt no recovery at all, while 62% of those 25-34 said they felt no recovery.
It’s the stupid economy.
The very latest the general election date can be set, according to the constitution, is April 6, 2016. That’s more than 370 days away. An early February date is fairly likely. There’s still a long way to go, but there are three important moments of the next 370 days for the government in terms of winning the electorate over. First, the Spring statement. This will be as transparent a vote-buying exercise as is possible, given the strictures the fiscal rules place upon us. It will also afford a new and potentially excellent way to begin a dialogue with government over spending priorities before the actual budget in October.
Take the crucial early childhood care and education issue. Working families, those well-worn stereotypes, are being hammered if they put their child into paid early childhood care and education, losing more than 30% of their disposable incomes in the process. Prior to the introduction of the free preschool year, only 20% of Irish households actually availed of childcare of any kind. The government has been floating ideas like using school buildings as after-care facilities, targeting tax credits to lower-income families, and increasing the free preschool year. The Spring statement will give us a sense of where the government is going with these and other proposals, and from April until October, we will be able to debate the merits of each potential policy change. All of it will be positive. The language will involve nothing but increases in funding, rather than the decreases and static expenditure levels we’ve seen for the last seven years. The debate will feel positively McCreevy-ish sometimes. Who will get more of the surplus?
A re-run of the Red C/Sunday Business Post questions on the economy should see a big change once the broad parameters of the next budget are known. The Taoiseach famously said ‘Paddy likes to know’. After the Spring Statement, Paddy will know, more or less, at the end of April. Policies will be fine-tuned from April until October.
The eventual October budget and its subsequent Finance and Social Protection Bills are the second important moment for the government. The big push in this budget will be the effort to increase disposable incomes amongst those working but earning under 70,000 or so.
The third important moment is the arrival at the end of January of the actual tax cuts, tax credits, and everything else. Households experience economic growth qualitatively, they perceive their standards of living rising, and that will give the government the bounce they need running hard into the next election.
Remember: today, with 2014 effectively squandered by the debacles in Justice, increased numbers of trolleys in A&E, and the introduction of Irish Water, the government has 47% of the population convinced it is the one to deliver stability. 42% of respondents said they trusted Fine Gael and Labour to manage the public purse, as I mentioned earlier. That number will only go up.
Waiting in the long grass are, of course, water charges, the inevitable bungling and cock-ups between now and then, and simple ennui. People might just be sick of Enda and Joan. 62% of respondents believed a change of government was needed to deliver a fairer society. 72% of younger respondents agreed a change was needed. Only 54% of older respondents did. More women, 66%, wanted a change of government to create a fairer Ireland, than men, about 59%.
There were some inconsistencies, of course, in the poll. There always are. Half of the younger respondents aged 18-24 trusted the government to manage the public’s finances, while not feeling any recovery themselves, and agreeing they needed a change of government for a fairer society. So if this is to be believed, the best thing the government can do is increase austerity on the young.
Let’s not do that.
370 days, 3 big events, one prize, and the health of the economy is all that’s really required to see it through. It is the stupid economy.