Blood on Fianna Fail’s Carpet

By John Spain

IT’S been an interesting week here in politics, even though officially all our politicians are on holidays. Behind the scenes, however, there’s a lot going on.

As you will remember, Fianna Fail got a hiding in the local elections recently and, if that performance were repeated in the general election due in two years or so, then the party would lose power. Instead of a historic third term in office, Taoiseach (Prime Minister) Bertie Ahern and his merry men would be out of government. Not only that, a lot of Fianna Fail backbenchers would lose their well-paid seats in the Dail (Parliament).

This prospect provoked near panic in the party. To calm the troops, Ahern promised a shake-up in policy and a radical reshuffle of his Cabinet so that the party could turn around the situation before the next election. That reshuffle is to happen next month. Hence all the jockeying for position that is going on behind the scenes at the moment.

Previous promises by Ahern to shake up his team have not come to much. No one expected the two oldest Cabinet members, Agriculture Minister Joe Walsh and Defense Minister Micheal Smith, to be reappointed after the last election, since both are in their sixties. But the ever-cautious Ahern, who will do anything to protect his nice guy image, could not bring himself to fire them.

At least in public. There are various ways of skinning a cat, of course.

Just how deadly Ahern can be behind the cuddly image was seen recently when Minister for Finance Charlie McCreevy was persuaded to take the job of Irish Commissioner in Europe, in spite of saying all along he did not want it.

Ahern says that McCreevy was not pushed, that he was the best man for the European job and so on. But no one believes it. McCreevy had a choice — either take the job or risk being moved out of finance in the reshuffle, which would be seen as a demotion.

The shafting of McCreevy came after Ahern had held individual private meetings with all his Fianna Fail back benchers, who blamed McCreevy’s conservative economic policy and tight control of government spending as the reason for the hammering the party had got in the vote.

He had to change or go, they said. The government purse strings had to be loosened.

So the unthinkable happened. Ahern dumped his buddy McCreevy, while heaping praise on him in public. It sent shivers up the spines of the rest of the Cabinet.

And last week, bowing to the inevitable, Minister for Agriculture Joe Walsh announced that he will be stepping down from the Cabinet in September. The cynics said that he went before he was pushed too. And certainly there was little or no chance that he would have been reappointed in the reshuffle.

Defense Minister Smith, who knows his time is up, is still hanging in there, but all eyes are on him to see if he will make a dignified exit as well. If he does not, the axe will fall next month.

This will leave Ahern with three senior Cabinet posts vacant for his reshuffle, which the minimalist Bertie would probably consider a radical shakeup. But is three enough?

If he is to convince the uneasy Fianna Fail backbenchers that a genuine new start is being made he probably needs to shift four or five senior ministers rather than just three. There will be even more blood on the Fianna Fail carpet before this is over.

On policy, there is no easy answer to the dilemma Ahern faces. It was our low tax regime that nurtured the Celtic Tiger.

Now Fianna Fail wants to spend its way back into power, by throwing money at problem areas like health. But you can’t have high spend and low tax at the same time, unless we’re to go back to the bad old days of high state borrowing. And that, as we all learned in the 1970s and ‘80s, is the road to ruin.

Apart from state spending, the other big area that Ahern will have to get to grips with is prices. Of course it is wonderful that our economy is continuing to grow at an impressive rate. But there is a downside to this, with the price of everything now soaring to insane levels.

Basic items are very much part of this syndrome. Supermarket groups with stores on both sides of the border are now charging their southern customers an average of 14% more than their northern customers for exactly the same trolley of groceries.

A survey has revealed some shocking disparities. One popular brand of cookies is 60% cheaper in the North than in the same supermarket chain in the south.

Supermarkets have always explained differences revealed in price surveys between here and Britain or Europe by the high cost of transporting goods to our island nation. But it costs just as much to bring goods to the North as it does to the south, so why the yawning price gap? It is hard to avoid the conclusion that profiteering must be a factor.

The problem is that the boom here has pushed our wages and costs way up, which at least partly explains why prices are so high here now. Through the ‘90s our inflation has been higher than in the U.K.

Wages in the south now are much higher than in the North, for example. Which may partly explain the difference in supermarket prices between north and south.

But only partly. The rest is blatant profiteering. And it’s not just the supermarkets who are at it.

The price of everything has gone through the roof, including services of all kinds. Call a plumber or an electrician here and even the smallest job ends up costing a fortune.

So prices are a big issue here now with voters. There’s a feeling that things are out of control. Which is the reason why the main opposition party, Fine Gael, last week called for the introduction of a new prices ombudsman to crack down on the rip-off merchants who now fleece the consumer on a daily basis.

But it’s a complicated issue. Fine Gael is not calling for the new prices enforcer to actually set prices. They still want the market and supply and demand to do that.

But they are saying that we need an independent consumer rights enforcer with power to name those charging high prices in media ads and to impose heavy fines for non-display of price lists in pubs, petrol stations and retail outlets. That’s a long way from actual price control.

In Ireland we already have a Competition Authority to stop cartels like supermarkets, petrol retailers and others from acting together to fix prices. And we already have a director of consumer affairs, with the job of making sure that quality, guarantees and other consumer rights are honored.

But we do not have any agency with the job of actually fixing prices, for the very good reason that doing so may not be possible in a free economy, no matter how much we might all like to have the rip-off stopped.

But the idea of having a powerful new office conducting regular price surveys, highlighting good value and naming and shaming those charging too much in a big publicity campaign, is a good one. It just might work.

Of course the biggest problem facing us is something we can do absolutely nothing about — the price of oil. For most people in Ireland the car is a necessity rather than a luxury, and rising fuel costs are not something that can be avoided.

But it is the wider effect of soaring oil prices that is the main concern. Our economy is heavily dependent on oil, with so much of our goods being transported by truck and our exports carried in oil-powered ships, having been produced from oil-powered electricity in the first place.

Even a small increase in oil prices has a significant knock-on effect on our economy. A global economic downturn could cause us major problems.

Oil prices have risen by more than a third since the end of 2003 and there are fears that they could soon reach $50 a barrel, with serious repercussions for the global economy and for Ireland.

So Ahern needs to be careful. We are all in favor of improving state services like health.

But throwing around a lot of money in the next year or two — and there is no guarantee that doing so will produce the required improvement — may not be the best path for Ireland in these uncertain times, no matter how much Fianna Fail wants to stay in power.