Paschal Donohoe

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    The strong centre

    Paschal Donohoe is a decent man: modest, cultured, the cleverest man in the room, according to a senior Fianna Fáil figure who spoke to Fiach Kelly in the Irish Times recently: the man other politicians envy, and a safe pair of hands. At 43, he has graduated with first-class honours from Trinity college, lived abroad, pursued a career in the private sector and risen without obstacle from local politics in Dublin city council to the heights of government, and the Ministry of Finance. Unlike his even younger boss Leo Varadkar he doesn’t have the sheen of a cultivated image. he has never attracted any suspicion of impropriety, never been excoriated, even in the unpleasant role of frugal Minister for Public expenditure (which he sure-footedly merged with the Finance brief when he took it over). When Village interviewed him he was open, generous with his time, eloquent. He reads progressive Irish fiction, has some quirky tastes, knows what is going on in his constituency about whose substandard welfare he remains committed. He even says he reads Village. Village’s agenda is equality, sustainability, accountability and it is wide and all-embracing enough that any political force, as Mr Donohoe certainly is, can be assessed against its imperatives. He is certainly in relative terms a model of accountability and openness. But what of equality and sustainability? Paschal Donohoe serves the politics of Fine Gael faithfully. He implies that Fianna Fáil is economically fickle, not always pro-european or outward looking and, increasingly implausibly now, that its attitude to ethics is demonstrably inferior to that of Fine Gael. He believes in Europe, the Open Society of Declan Costello, in an embracing attitude to outsiders. He believes in a balance between the markets and the state and, creditably from the perspective of this magazine, thinks the momentum has moved too far to the markets and needs to move back to the state, globally at least. He takes a robust attitude, as did his hero Declan Costello, to the obligations of the state. It will intervene to incentivise or nudge those who do the right thing, it will not perpetrate evil itself. He was passionate in defending the coherence of this attitude, in his interview. Mr Donohoe believes in the rights of property but will interfere at the edges, as with site-value and sugary drinks taxes. The state needs to plan systematically for development of its own lands. On national planning he was reluctant to stay how he would stop unsustainable development – such as the sprawl of Dublin into counties Meath, Wicklow, Kildare and beyond, as opposed to merely incentivise and encourage sustainable development – for example of cities and towns outside Leinster. He does not seem engaged by the environmental and climate-change agendas, though he knows its rhetoric. He rarely acknowledges, in policy, that Ireland is the laggard in Europe on climate, plastic waste and many other environmental performances. He does not seem zealous to revive the across-the-board indicators of social and environmental success, not just economics, that even the Fianna Fáil and Fianna Fáil-Green governments toyed with a decade ago. Failing them, it is likely we will continue to be a model of unsustainable, joyless growth, a paradigm of how to nearly get it right. As to equality, Mr Donohoe is exercised by the plight of those who cannot put themselves in a position to benefit from the equality of opportunity that those with strength crave. He knows from his Dublin central constituency that intergenerational inequality is difficult to mitigate. But his credo is equality of opportunity and he and his party are never going to be forces for radical redistribution, for equality of outcome. He is a decent man of the “strong centre”. He and his party have done some service bringing back elusive economic success to this country bankrupted by the now shiny principal opposition party. It has been argued that Fine Gael, with its visceral fetish for the rights of property, so well-enjoyed by its protagonists and indeed its voters, is ill-equipped to deal with the crises of housing and homelessness that do much to undermine the fabric of society in 2018. It is ideologically too wedded to the private sector to provide homes on the scale required on public lands. Mr Donohoe, in fairness, claims that he has far-reaching proposals to do just that. We’ll see. Ireland is lucky to have such an open, decent, youthful and thoughtful politician in the Department of Finance as the risen fiscal pendulum suggests we can once again explore a national Vision. But it is impossible to be radical from the centre, however strong, and – for Village, Mr Donohoe would do well to address the social and environmental agendas as stringently and competently as he continues to promote and foster the purely economic agenda.

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    Paschal Donohoe: Minister for Finance, Public Expenditure and Reform

    I interview the charming, chatty and firm Minister for Finance in the Department of Finance on a bright Wednesday in late April. He has just benefited from a profile in the Irish Times which of course likes his supposed toughness, especially when public-sector-pay talks loom, and which quotes a senior Fianna Fáiler praising him as “the cleverest man in the room” (even when Varadkar is in it). It also notes that despite his “Hello, Everybody” manner, “Business and interest groups that come into contact with him leave impressed with his knowledge and command of his brief. These are the traits that other politicians note and envy”. Donohoe is, then, an Irish Times sort of guy. Arranging the interview was straightforward, and his handlers, particularly Deb Sweeney, efficient and unstuffy. He gave me more time than had been allocated, and a book, ‘The Value of Everything, Making and Taking in the Global Economy’ by Mariana Mazzucato (2018), as I was leaving. He was still engaging about his favourite works of literature as I was in the end ushered down a corridor and out into the sunlight. Mazzucato, in her book, claims that many advanced western countries, in particular the US and Britain, now confuse those who create value for those who extract it or destroy it, leading to impoverished and unhappy societies, soaring inequality and declining growth. I conclude the gift was well-judged. On his Political Philosophy… “My political philosophy is a politics of the very strong centre. I look at the opportunities and chances that I’ve had in life by virtue of the school that I went to and the upbringing that I’ve had. I believe that should be available to everybody in our country. I believe that, in order to make that happen, we need to have an open society and a diverse economy. I want to see an Ireland that is inclusive, that can welcome people and make them feel at home, and I strongly believe in a mixed economy. I believe we need both strong governments and strong markets and I think either on its own cannot achieve what citizens need”. On his Economic Philosophy… “My economic philosophy then springs from that. I believe in a resilient and mixed economy. I believe that markets can do some things well and I believe government can do many things well. If you look at the kinds of new economies that are being developed and the new challenges that are developing, we can only respond to them if both the State and markets play their role. We have seen, to the great cost of our citizens in particular, what can happen if markets become unbridled; and we have seen at other times in history what can happen if the State is expected to do everything; and I don’t believe either work. I believe the global balance needs further shifting at the moment – in favour of the State. I believe that we get the balance about right here in Ireland but I believe that we are going to need to continue to support supranational organisations like the European Union, like the WTO, like the OECD, to help nation states respond back to new challenges like artificial intelligence and to the de-globalisation agenda that is now beginning to develop. I believe very strongly in equality of opportunity but I’m very conscious at the moment that that credo is being challenged by developments within the market economy – if we keep on encouraging our citizens to believe they have equality of opportunity and then, generation by generation, that equality of opportunity is not realised, it poses very serious questions for citizens regarding how they feel about the State. Because if, from generation to generation, that opportunity is not realised or even offered the prospect of citizens either blaming themselves or the system and the State for not offering that agenda poses really grave challenges for how we organise our liberal democracies. I unfortunately believe some of those risks are beginning to materialise elsewhere at the moment”. On equality of outcome… “I think equality of outcome is something that is very, very difficult to achieve because I think it runs against the grain of initiative and individuality that I ultimately believe has a very important role to play in our society as well”. As to whether equality of opportunity is desirable… “I think equality of opportunity is more desirable than equality of outcome and certainly in the policies I try to follow and implement in the two jobs I do at the moment it is about trying to realise opportunity. But I’m conscious of the fact that an equality of opportunity agenda doesn’t speak to, or doesn’t help, citizens who are at the margins of our society; and for those citizens a more interventionist approach is necessary on behalf of the State I should say”. As to whether equality of opportunity can be unfair to the extent that people’s capacity for grasping opportunity is sometimes determined by luck and not entirely a product of effort or initiative… “And this is why I accompany my support of equality of opportunity with a strong support for the necessary role for an enabling and strong State. The difficulty that the equality of opportunity agenda has is when it runs into the chance of birth or runs into intergenerational inequality, and this is why I believe we need an active and enabling State alongside regulated and flourishing markets. I would be supporting the interventions that we have at the moment. I do not think that the agenda of positive discrimination is one that can command ongoing support here in Ireland and so this is why I support the State playing a more active role in the management of land, why I support for example property taxes. It’s why I support a a progressive tax code. Because without having those things in place you can’t offer the support that is needed to deliver the funding for an active State”. On difference in emphasis from Michael Noonan’s… “As

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    Bud get real

    The Annual ritual surrounding the budget will come to an end on Tuesday 10 october when finance minister, Paschal Donohoe, unveils his first package of tax and spending proposals since his appointment earlier this year. Don’t expect too many surprises though, as most of the expected initiatives have already been well aired through inspired leaks from various government and other sources. Once again, and despite the faux outrage of some Fianna Fáil frontbenchers who are threatening to pull out of its confidence-and-supply agreement unless the USC is cut or pensioners given another ver, the reality is that the deal is already done. It will not take much to cobble what both parties will claim as a victory in relation to cuts to the USC for lower- and middle-income earners while also ensuring that the wealthy are not overburdened and indeed will also gain from fiddling with tax bands and rates. Varadkar has promised to reward those who get up early and those who create wealth and pay for public services in what is clearly a pitch to the middle-class and better off voters he needs to keep on board if Fine Gael is to regain power. Equally, Micheál Martin does not wish to alienate the same constituency which he hopes will return to the Fianna Fáil fold in greater numbers than the party managed in 2016. Ultimately, the differences on tax and spending policies between the two main parties are minuscule and any rows over tax breaks for builders, increases in stamp duty, inheritance tax or whatever other measures are largely manufactured. The real question of the ratio between reducing the tax burden at the expense of improving public services is of course ideological. This makes the contribution of the hardly radical Economic and Social Research Unit all the more interesting. It has warned against tax cuts while the economy is growing by around 5% this year and an expected 4% in 2018. It submits that tax cuts will only overheat the economy. “Given the pace of growth over the past number of years there is certainly no case to stimulate economic activity with the budgetary package”, ESRI economist Kieran McQuinn said. He added that, if anything, the Government might need to raise taxes in order to dampen consumption and in order to raise the funds for essential capital spending on infrastructure in housing, health and education. This is not the narrative that Varadkar needs, to boost his chances of retaining power after the next election which many expect will come some time after the third and final budget to which Fianna Fáil committed in the confidence-and-supply deal. This is subject of course to the upshots of other unexpected events which could prompt a rush to the polls earlier next year or following the abortion referendum. Others on the Left who oppose the tax-cutting agenda and argue that the housing and health crises, not to mind other social needs, demand that all available resources should go into public services. SIPTU president Jack O’Connor spelled this out at the union’s biennial conference in Cork on 2 October. In his final presidential address to the union after more than fourteen years in the job, he argued that there should be no tax cuts whatever between now and the centenary of the foundation of the State in 2022. Arguing that all available resources should be put into the construction of social housing, decent health and education systems and a mandatory second-pillar pension scheme, he condemned the main parties for promoting tax-cutting policies and “a value system that precipitated the crisis in the first place”. “It’s back to be looking the other way, while exponentially growing inequality reasserts itself in our domestic and social affairs. It is absolutely unforgiveable that thousands of our children are homeless, in the aftermath of the collapse of a credit fuelled property bubble”, he told delegates in Cork city hall. “It is appalling to think that this is happening within twelve months of the celebration of the centenary of the insurrection of 1916, which was fought on the basis of a Proclamation which declared the establishment of a Republic which would cherish all the children of the nation equally. And while this is unforgivable in itself, it is absolutely obscene that our major political parties are again promoting a tax-cutting agenda while children are homeless, in this, one of the wealthiest countries in the world”. It is unlikely that Donohoe and Varadkar will heed such advice or that Fianna Fáil will do anything more than pay lip service to such utterances. As O’Connor, who is chairman of the Labour Party, also said, it will require an alliance of all genuinely progressive forces in Ireland to achieve his ambition for the common good by 2022. And that is a big ask. Frank Connolly

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