The Taoiseach and the Minister for Finance are the key members of this Government, but they are hardly its driving force.
These dynamics matter because we have a Government with power but so far neither the will nor the cohesion to deliver. All the while the world is changing rapidly and our exposure to events is growing.
Micheál Martin scooped the entire electoral dividend available to the two Government parties in the last election. He has complete mastery over Fianna Fáil, but having arrived where he wanted to be over decades, he now seems unable to exercise power effectively.
Paschal Donohoe is the principal Fine Gael presence in Cabinet by default. He is the crutch his leader Simon Harris reached for in a disastrous election campaign. He is indispensable in a diminished Fine Gael, yet he seems unable to exert the fiscal discipline and effective delivery of infrastructure the country needs.
Micheál Martin and Paschal Donohoe are responsible for this Government’s lethargy
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Micheál Martin would be a more credible leader of Fine Gael than Simon Harris
Harris was permanently damaged by that election campaign and he still confuses creating distraction with effective action. Minister for Public Expenditure Jack Chambers has a claim to consideration as a force at the centre of Government. It is too soon to say for sure, but nothing yet indicates he is.
The annual National Economic Dialogue on Monday offered a good analysis of the challenges we face. Tariffs and the fragmentation of the global trading system could have far-reaching consequences for the Irish economy.
Foreign-owned multinationals account for 84 per cent of corporation tax revenue and around half of income tax and VAT paid by all companies in Ireland. The narrowness of our tax base means that €9 in every €10 received last year came from income tax, corporation tax and VAT.
Unlike other rich countries, , we don’t do any other taxes on property or wealth in scale sufficient to make a real contribution or to provide a cushion in a downturn. That is a mistake we have made before and will regret again.
Worse, this Government has shrunk our domestic tax base further. In 2019, 30 per cent of income earners did not pay income tax or USC. This year that is expected to rise to 33 per cent. This would not pass for prudence in Las Vegas.
In the meantime the Irish Fiscal Advisory Council estimates that Ireland’s infrastructure is 25 per cent lower than average for a high-income European country. Inadequacies in water supply, sewerage and the electricity grid are barriers to building homes.
Government spending more than doubled in a decade. This year spending is rapidly outpacing what was provided for in the budget last October and, oddly, the Department of Public Expenditure is not publishing monthly expenditure reports.
Opening the National Economic Dialogue, the Taoiseach warned of “unprecedented challenges”, called for “courage and ambition” and said we must prepare by “controlling the controllables”.
But what is out of control is under his authority.
This is the cumulation of a decade-long, ongoing spending splurge and the failure to reform or lead the public sector. Donohoe is the continuous thread in the decline of purpose in our economic management, which, aside from our response to Covid-19, characterises that time. He accommodated skilfully under three party leaders and made the improbable plausible at a cost to the country.
He seems unwilling and unavailable to engage in the combat required for cultural change and fiscal discipline in a system he too seldom challenged.
In contrast to Donohoe, whose highest promotion may still be ahead, politically this is the moment of maximum Micheál Martin. Apart from 10 days in January 2011 after he resigned from Brian Cowen’s cabinet and before he became leader of Fianna Fáil, he has been on his party’s front bench for 30 years, its leader for 14 and in government for 19 in all.
He has served his ambition by laying off risk rather than taking it on. Constantly frustrated by the system he presides over, he is also unwilling to take it on. His department is no longer the control room of that wider system which openly disparages the departments of Public Expenditure and Housing as institutionally inadequate.
But the Taoiseach will not take control. Off-laying responsibility rather than taking on risk is his preferred route, Ministers – not the Taoiseach – are made to be collateral damage.
By dint of dysfunction, we have an asymmetrical power structure in Government that intensifies the limitations of its principals. There are pockets of energy in departments such as Health, Justice, Higher Education and Enterprise. But as a whole, it is characterised by lethargy. Watching each other is preferred to working together. Our best hope is that another crisis might provoke an adequate response.
