BURSON-MARSTELLER INSIGHT
The Irish general election Ireland’s politics turned upside down as Fine Gael wins election 3 March 2011
Voters in Ireland have delivered a devastating verdict on the ruling Fianna Fáil party in the Irish general election. The centre-right party, which has overseen the recent economic and financial crisis in Ireland, experienced an electoral meltdown, losing its status as the country’s biggest political party for the first time since 1932. Fine Gael, another centre-right party, was the primary beneficiary: it secured its best ever election result in its history, and won 76 of the 166 seats in the lower house of the Irish Parliament, the Dáil Éireann. The election, which took place on 25 February, saw the highest turnout for many years, with 70% of the electorate voting. TDs (MPs) were elected by proportional representation across 43 constituencies. The speaker is automatically re-elected. Context An economy and a country in crisis Irish voters punished Fianna Fáil (FF) for the economic and financial crisis over which it has presided: 13% unemployment, tax hikes, wage cuts and a humiliating bailout from the EU and the International Monetary Fund (IMF). FF had been in government for 14 years, during which time Ireland became one of the richest countries in the world in per capita terms – and then one of the biggest victims of the global financial crisis. Following the property collapse in 2007, Ireland’s taxpayers were forced to bail out the country’s failing banks. In November 2010 Ireland became the second euro-zone member to seek external help when investors stopped buying Irish government bonds. The outgoing government negotiated a €67.5bn bailout package from the EU and the IMF. That deal became the central issue in the election campaign.
The results Irish politics turned upside down Fine Gael (FG), which is part of the centre-right European People’s Party (EPP), won 76 seats (up 25 seats on the previous parliament). This was a record for the party, and for the first time in its history it becomes the country’s largest political party. FG’s leader, Enda Kenny, is now in line to become Taoiseach (prime minister). Labour – which seems likely to join in a coalition with FG – also scored a major success, finishing second with 37 seats (up 17). Sinn Féin won 14 seats, up 10, to finish fourth. For both Labour and Sinn Féin, this was their best ever result. Meanwhile, FF suffered the worst defeat of any sitting government since the formation of the Irish state in 1921. It
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scored 20 seats, cutting its representation by almost threequarters. However, despite voter anger with the lead party in government, FF’s coalition partners fared even worse: the Green Party, which had six seats in the Dáil, was wiped out. Left-wing parties made gains, with two seats for the People Before Profit Alliance and two for the Socialist Party. There was a record number of Independent candidates running for election, and they obtained 15% of the first preference votes (and 15 seats). All in all, there was a seismic shift - in European terms, the third biggest change by an electorate since the Second World War.
EU impact Re-negotiating the bailout Leaders from eurozone member states will meet on 11 March to discuss plans to put in place permanent mechanisms for responding to sovereign debt crises (via an amendment to the Lisbon Treaty), as well as economic reforms to stop those crises re-occurring. EU leaders hope to secure an agreement on those reforms at a crucial summit on 24-25 March. Both FG and Labour are committed to renegotiating some of the terms of the bailout package, including lowering the six per cent interest rate, which is unanimously regarded as punitive in Ireland. The new government also may seek to make holders of senior bonds in Ireland's nationalised banks shoulder some of the losses. There is consensus across the political spectrum that the country must honour its sovereign debt obligations. At the summit, the new government will be constrained by the terms negotiated with the European Central Bank and the IMF. The loan is contingent on Ireland cutting €15bn from its deficit spending over the coming four years. Taoiseach-elect Enda Kenny will use the meeting of EPP EU leaders in Helsinki on 4 March to encourage the German Chancellor, Angela Merkel, and the French President, Nicolas Sarkozy, to make concessions ahead of eurozone leaders meeting a week later.
The new Irish government must impress its foreign creditors with a demonstration of stability and determination, while also being tough enough to argue a reduction on the interest rate. It is anticipated that the new government will also seek to reschedule some of the debts of the banking system.
Domestic impact Wide-ranging reform on the cards FG and its likely coalition partner, Labour, were elected on a ticket of political and institutional reform. Part of the new government’s mission will be to infuse a new sense of hope into Irish politics. Mr Kenny has promised that his government will be one of “responsibility, not privilege... public duty, not personal entitlement” and which will look “with confidence and courage to the future, not with guilt and regret at the past.” Mr Kenny’s views were echoed by Eamon Gilmore, the Labour leader, who said that people want politicians to work together to resolve the economic difficulties. FG has an ambitious but achievable plan for government and for reforms to the economy and public services. Unemployment has reached an all-time high. Ireland has a highly skilled and educated workforce, but many young people have been forced to emigrate in recent years due to the lack of job prospects. FG has vowed to create 100,000 jobs over the next four years. An extra €7bn will be invested in new energy, water, broadband and telecoms infrastructure to generate these jobs. FG plans tax cuts for employer’s social insurance and to encourage job creation through the welfare system. Mr Kenny’s goal “is to make Ireland, as it was in the late 1990s, one of the best countries in the world for doing business.” He has said that he will resist pressure to increase the country’s low corporation tax rate – despite this issue being raised in recent weeks by the French and German leaders. FG has pledged to cut Ireland's budget deficit to 3% of GDP by 2014. Labour would prefer a 2016 deadline. FG said it would seek to balance public finances mainly through cuts rather than tax hikes, and by reducing waste in the public services. FG has pledged €6bn of cuts, including reduced spending on child benefit and lowering the number of public servants from 30,000 to 18,000. Labour proposes €4.5bn of cuts, but no further reductions in the social welfare budget. These differences are a key element of the coalition negotiations now underway. The Irish health system costs close to €20bn each year and is widely acknowledged to be a failed model. The new government hopes to eliminate long waiting lists and restructure the system, replacing the public-private two-tier system with a universal health insurance system based on the Dutch model – a proposal that was particularly well received by the electorate. Improving the quality of public services is a key goal of the new government. Frontline services - teachers, health professionals, police and local authority services – will be prioritised. The government will hope to reduce the cost of the public sector by 10% over the next four years and to save €5bn by eliminating waste. Administrative and bureaucratic jobs will be eliminated
The results in detail Party
Seats
+/-
Share (%)
Fine Gael (affiliated to the EPP)
76
+25
45.8
Labour (PES)
37
+17
22.3
Fianna Fáil (ELDR)
20
-57
12.0
Sinn Féin
14
+10
8.4
People Before Profit Alliance
2
+2
1.2
Socialist Party
2
+2
1.2
Independents
15
+7
9.0
Green Party
0
-6
1.8
by natural wastage, voluntary redundancy and relocation, in order to create a better more efficient public service. During the election there was much debate from all political parties on changing the Irish political system. FG’s policy is to reduce the number of politicians by 35% and hold a referendum to abolish the upper house of the Irish parliament. A ceiling will be introduced on salaries for politicians and the public sector workers. State cars will use a ‘car pool’ system. Ministerial pensions will be restricted to the retirement age of 65. FG aspires to make the whole political system more transparent and more accountable. One of the reasons why the Irish public had lost confidence in the political process was the feeling that they had been continually deceived by the previous administration on the true finances of the country. A Citizens’ Assembly is proposed in order to address major issues such as electoral reform and constitutional change.
Next steps Forming a coalition The new government has a tough task ahead of it, but with a strong majority in parliament and a skilled and mixed team of experienced and newly-elected politicians, it is well prepared to deliver the mandate entrusted to it by the Irish electorate. FG and Labour are expected to agree a programme for Government by this weekend. Labour, under its rules, will hold a meeting of its members to agree the new programme. What has transpired in Ireland in the past week is a democratic revolution at the ballot box: the Irish people are in the midst of a deep economic recession, and while global factors have impacted on the domestic economy, it is widely held that the previous government was responsible for the property bubble and banking policy that has caused the economic collapse. The people have spoken clearly. The new government will have to bring political stability and hope, as well as demonstrate that it means business as it embarks on the long road to recovery. Original text by Nigel Heneghan, Managing Director, Heneghan PR, Dublin. Heneghan PR is Burson-Marsteller’s exclusive public relations and public affairs affiliate agency in Ireland. For more information, please contact nigel@hpr.ie or visit www.hpr.ie.
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