Irish Election update: Significant movement towards coalition & Leo’s finest hour?

Despite political instability and market concerns, Ireland steps up its response to the coronavirus and Varadkar wins widespread support for what is widely considered extreme but necessary actions

Introduction

This week we saw some substantial movement towards the formation of a coalition between Fianna Fáil and Fine Gael, with the two parties releasing a joint statement on Tuesday stating their intention to enter into “in-depth detailed talks” in the coming days. The careful wording of their statement – that they will enter into government “as equal partners” – has been taken to mean that they will have a ‘rotating Taoiseach’ arrangement, an unprecedented arrangement in the history of Irish politics. 

Both parties also pledged to continue talks with the Green Party, indicating as expected that the Greens are their preferred coalition partners, necessary to get the coalition to the crucial number of 80 seats. The Greens were quick to throw a spanner in the works, however, stating that they will not continue talks at this time with either of the civil war parties. In a statement released on Wednesday, the party said it wants a national unity government to be put in place first in order to deal with the imminent threat of the Covid-19 outbreak, to be reviewed in three months. 

Fine Gael and Fianna Fáil were quick to disavow the idea of a ‘national government’. Fianna Fáil have argued that such an approach would make government “less effective, not more” in dealing with the pressing crisis, whilst Fine Gael have previously rejected the idea, arguing that their reasons for excluding Sinn Féin from government – concerns around national security, the defence forces and the justice system – are even more valid in an emergency. 

Senior figures in Fianna Fáil have suggested that the Green Party will ultimately capitulate in a few days when it is clear that a national government is off the table. However, Fianna Fáil and Fine Gael  have nonetheless postponed their talks planned for Thursday, with Fine Gael opting instead to focus all of their resources on the state’s reaction to the outbreak. 

Without the support of the Greens, Fine Gael and Fianna Fáil could still form a coalition with a ramshackle of independent TDs, needing to secure 8 additional votes at a minimum. Whilst this is possible, it would likely produce an unstable government. 

What would a ‘national government’ look like?

If a national government were to be brought about, it is likely that ministerial positions would be allocated using the D’Hondt method used in the Northern Irish Executive based on each party’s number of TDs, with the one caveat being that all participating parties would require at least one cabinet level position. Solidarity-PBP would likely not participate, given that a significant part of their raison d’être is their adamant refusal to cooperate with the traditional centre-right parties. Independent TDs would also likely be excluded from ministerial office as they would be surplus to requirements. The Green Party’s main concern would be to ensure the inclusion of Sinn Féin and the other two centre-left parties (Labour and the Social Democrats). Therefore, the distribution of offices would probably look something like this:       

Note: ‘cabinet positions’ are ministers who attend and have a vote at cabinet, ‘Super Junior Ministers’ attend a cabinet but do not have a vote, due the constitutional provision which limits cabinet to 15 formal members. Ministers of State do not attend cabinet but have some power within particular government departments (e.g. the Minister of State for Financial Services & Insurance).

The Response to Covid-19

Speaking from Washington DC on Thursday, where Taoiseach Leo Varadkar is on the traditional St Patrick’s Day state visit the US President, he announced a range of significant actions to be taken by the country until 29th March in an effort to curb the spread of coronavirus. These included the closure of all schools, third-level educational institutes and childcare facilities, as well as cultural institutions such as theatres and museums. All indoor public gatherings of over 100 people, as well as outdoor public gatherings of over 500 people have been restricted. Remote working will also be ‘encouraged wherever possible’ – a statement which has placed pressure on many businesses to immediately initiate working-from-home practices.

After the Taoiseach’s widely broadcasted and publicised statement from Washington DC, senior ministers held a press conference in Dublin to flesh out the details of the government’s response to the outbreak. Both the Taoiseach and the senior ministers acknowledged that these measures would have a significant impact on the performance of the Irish economy for at least the coming quarter. Nonetheless, they emphasised the need to prioritise public health over narrow economics – a move which has triggered a positive response from many quarters of the media and civic society.

Spending package

In addition to the restrictions, the caretaker government has announced plans for a €3.1 billion spending package to be spent both on dealing with the crisis and providing fiscal stimulus to counter-acting its economic impacts. The major elements of the package include:

A significant increase in the statutory rate of sick pay (from €203 to €305 per week) in order to encourage people who may have covid-19 symptoms to take sick leave

A €200 million package of loans available to businesses impacted by Covid-19, with a maximum of €1.5 million to be loaned to individual businesses at reduced rates

€435 million in additional funding for the Health Service Executive
According to Goodbody Stockbrokers, this package amounts to €630 per capita and is amongst the highest per capita packages in the world, as compared to €21 per person in the USA and €124 per person in Italy. This has sparked some in the media to argue that the government is being “overly cautious”.

Nonetheless, Fine Gael will be hoping to win some political capital as a result of their decisive action, as well as for the fact that this level of funding is only possible due to their government’s “fiscal prudence” in maintaining a “rainy day fund” in preparation for Brexit.

Economic casualties

In some sectors of the economy the effects of the outbreak are already being felt, in hospitality and tourism for example. The Restaurants Association of Ireland has issued a statement saying that its members are experiencing 80% corporate booking cancellations due to Covid-19 and is appealing for government support. The Chief Executive of Tourism Ireland has also said that the tourism sector has already suffered job losses as a result of the outbreak. Meanwhile on the Irish stock market, listed shares relating to the tourism and travel sectors such as Ryanair have seen some of the largest falls since the financial crisis. In the case of Ryanair, these falls have only partially been counteracted by the fall in the price of oil.

Whilst these sectors are the first to experience the immediate impact of the crisis, it is likely that other sectors will follow in the coming weeks. Many industry representatives are appealing to government to waives council rates, decrease VAT or introduce other targeted measures to help business weather the storm, as has been done in the UK among other countries. Whilst Fine Gael at the moment appear to be satisfied that their current planned package will suffice to mitigate the worst of the damage, it is likely that the government will feel significant pressure to take additional action in the coming weeks.

Looking forward

Whilst the coronavirus crisis has certainly taken the spotlight in the media from discussion of government formation, talks will still continue in private, with Fianna Fáil and Fine Gael very likely to meet after the weekend. Whether the Green Party will back down on their position towards joining them remains to be seen, although they are likely to face pressure to do so if (as expected) no progress towards a national government materialises.

Fine Gael’s strong performance this week in relation to the outbreak has quietened voices claiming that a new government was needed for decisive action. If the caretaker government continues, is it possible that the response to the coronavirus may well be one of Varadkar’s greatest legacies as Taoiseach?

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Colm O'Dwyer

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Aideen Ginnell

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