Fianna Fáil's vote dropped from 50.6 to 45.3 per cent and its seats from eighty-four to seventy-five.68 The Lynch–Haughey inheritance of debt and inflation led to a sharp decline in middle-class support, while rising unemployment and lack of tax reform produced an only slightly less sharp drop in working-class support.69 However, its vote in 1977 had been exceptional, and, given the worsening economic situation, its losses were not unexpectedly high. In 1969 Fianna Fail had won an overal majority of seats with a slightly smaller share of the votes. It was the agreement between Fine Gael and Labour to urge their supporters to give their second preferences to the other party that proved decisive. Without the transfer arrangement Fianna Fail would have won five extra seats, which, given the absence of the two hunger strike TDs, would have provided it with a clear overall majority.70 Haughey made use of this to claim that he had not really lost the election: a quirk of the electoral system and the intervention of the hunger strikers had robbed him of victory.71 That the new government was a minority administration dependent on the votes of three leftist independents encouraged him and his supporters to believe that their loss of office would be brief.
Although still convinced that Fine Gael's only secure future was as a ‘social-democratic’ party, FitzGerald was soon forced to apply a radical deflationary programme to deal with what his Minister for Finance, the wealthy County Meath farmer John Bruton, termed the threat to national economic independence that was the legacy of the previous government.72 An emergency budget was introduced in July with increases in indirect taxation and spending cuts aimed at reducing the Exchequer borrowing requirement from 20 to 16 per cent of GNP.73 The draconian budget created major problems for the junior partner in the coalition: Frank Cluskey, the gruff Dublin trade unionist who had been elected Labour leader in 1977, would probably have led his ministers out of government. However, Labour had lost two seats in the election and one of those was Cluskey's. His successor was the altogether smoother Michael O'Leary, a former student radical who had been a research officer for the ICTU before becoming Minister for Labour in the 1973–7 coalition, where he was seen as the most successful of the Labour ministers.74
Labour's performance in the election had been dismal. Given a bad result in 1977 and that it was in opposition at a time of very high unemployment and inflation, it had expected to make gains. But its share of the vote fell to less than 10 per cent for the first time since 1957 and its number of seats to fifteen in a much larger Dáil. Its performance in Dublin was particularly bad, with a reduction of three seats that left it only three, a sad decline on the ten it had won in 1969. The party remained divided over the leadership's support for a coalition strategy. Anti-coalition feeling and a more ideological socialism were strong amongst party members in Dublin, but continued backing for a coalition was guaranteed by the support of rural members. Critics argued that the pursuit of coalition with Fine Gael had blurred Labour's distinctiveness and weakened its independent appeal: ‘since a vote for Labour was a vote for a Fine Gael-dominated coalition, then in many ways it may make more sense simply to vote for Fine Gael per se.’75 It now faced a challenge from a number of smaller parties to its left. Noel Browne had changed his party affiliations yet again and was elected as a Socialist Labour Party TD in Dublin; Jim Kemmy, an independent socialist with strongly anti-nationalist views on Northern Ireland, won Limerick East; and Joe Sherlock won East Cork for Sinn FéinThe Workers' Party (SFWP), as the increasingly successful political arm of the Official IRA was now known.
Labour entered the 1981 coalition from a position of weakness. In 1969 it had won half as many votes as Fine Gael; now it had barely a quarter. With four cabinet seats out of fifteen, the Labour ministers could do little to blunt the edges of Bruton's draconian budget except prevent the income tax cuts that would have intensified the regressive effects of the taxation changes. Dissent within the party increased, and in October its ruling Administrative Council declared that the Labour ministers had exceeded their mandate in agreeing to the July budget. However, worse was to come when in January 1982 Bruton proposed an even tougher second budget, with cuts in food subsidies, rises in indirect taxation and new taxes on clothing and footwear. FitzGerald refused to consider an exemption for children's shoes in case it was exploited by women with small feet. This was the last straw for Jim Kemmy, who subordinated his strong dislike of Haughey's position on Northern Ireland to his rejection of such a regressive measure and voted with the Opposition against the budget, thus ensuring the government's defeat by eighty-two votes to eighty-one.
Despite its commitment to austerity, Fine Gael marginally increased its vote in the subsequent inconclusive general election in February 1982, although its number of seats fell by two to sixty-three. Fianna Fáil increased its vote from 45.3 to 47.2 per cent and its seats from seventy-eight to eighty-one. The Labour Party's vote had declined slightly, but it held its fifteen seats, although it now faced a sharp left-wing challenge in the Dáil after the SFWP made a breakthrough to win three seats. The three SFWP TDs and four independents held the balance of power and were assiduously courted by Haughey.76
Haughey's failure to win a majority for the second time precipitated a period of intense convulsion in his party. The Opposition front bench was already divided over economic policy when the election was called. In an attempt to mend fences with some of his most prominent critics in the party, Haughey had appointed Martin O'Donoghue as the party spokesman on Finance and had agreed that a more ‘responsible’ attitude be adopted to the government's proposals for dealing with the dire economic situation. However, as soon as the campaign started he reverted to populist mode and attacked the coalition's ‘Thatcherite’ approach. FitzGerald, he claimed, was ‘hypnotized’ by the issue of the national debt, and Fianna Fáil would find ‘a more humane way’ of running the economy, even if it meant borrowing money. This failed to convince many of his colleagues, and it also had little impact on the electorate. At the beginning of the campaign 51 per cent of those polled preferred FitzGerald as Taoiseach, compared to 31 per cent for Haughey; by the end the respective figures were 56 and 36 per cent.77
Even before a new government could be formed, Desmond O'Malley had declared his intention to stand against Haughey for the leadership of the party. O'Malley's distrust of Haughey dated from the Arms Crisis, when he had been a key supporter of Lynch. It was now accentuated by his wholehearted commitment to neo-liberal economics and an identification of Haughey as an irresponsible populist. However, O'Malley's aloof and prickly personality made him an unappetizing alternative to that sizeable section of Fianna Fail TDs who were wavering in their allegiances, and when Martin O'Donoghue, who had been O'Malley's campaign manager, at the last moment called for unity behind Haughey, O'Malley withdrew his challenge. Haughey then outbid FitzGerald for the support of Tony Gregory, an Independent TD of republican-socialist leanings, who represented an inner-city constituency in Dublin. The ‘Gregory deal’ involved a government commitment to spend over £80 million in job creation, new housing, environmental works and schooling.78 The support of the three SFWP TDs for Haughey was a major surprise, given that party's shift to a position on Northern Ireland that accepted the need for unionist consent for constitutional change. The party supported the proposals of James Prior, the Northern Ireland Secretary, for the election of a Northern Ireland Assembly. While Haughey believed the proposals to be unworkable, he agreed to adopt a public position of neutrality. Together with his promise of opposition to the privatization of state-owned companies and his anti-Thatcherite rhetoric, this was sufficient to obtain SFWP support.79
The government's short life was dominated by rumours of plots and the unorthodox methods adopted by some of Haughey's supporters to deal with his critics. George Colley was dropped from the cabinet and, with his veto on appointments to the Ministries of Defence and Justice removed, Haughey filled the positions with two of his loyalists, Seán Doherty and Paddy Power. Power was a very traditional republican and when the Belgran
o was sunk during the Falklands War he embarrassed Haughey by making a speech accusing the British of being the aggressor. However, it was the appointment of Doherty that would have the most devastating long-term effects on Haughey's career. Only thirty-seven when appointed, the County Roscommon TD had been one of Haughey's most strident supporters. An ex-Garda, he showed little inclination to respect the law when it came into conflict with his political or personal priorities. In January 1983 the Garda Commissioner and his deputy were forced to resign when it emerged that they had agreed to Doherty's request for the tapping of the telephones of two journalists. The purpose of the taps was to discover which of Haughey's critics in the party had been talking to the press. Doherty also supplied Ray MacSharry, the Tánaiste and Minister for Finance, with Garda equipment to bug a conversation with Martin O'Donoghue. When in August a suspected murderer was found living in a flat owned by the Attorney-General, who departed on a holiday to New York in spite of the crisis, Haughey described the sequence of events as ‘grotesque, unbelievable, bizarre and unprecedented’. Conor Cruise O'Brien turned the description into a telling acronym that became the government's epitaph: GUBU. The débâcle was to lead to another attempt to oust Haughey in the autumn, which failed, although this time twenty-two TDs openly opposed him. However, the fate of the government had already been decided by yet another turn in economic policy.
Ray MacSharry had initially dismissed the economic policies of the coalition as ‘gloom and doom’ and promised ‘boom and boom’. However, as 1982 progressed, the economic crisis deepened, as more companies collapsed, more redundancies were made, and unemployment rose. At the same time net foreign debt rose from £3.45 billion at the end of 1981 to £5.11 billion a year later.80 In response MacSharry announced a radical shift in policy in July, with a postponement of an already agreed rise in public sector pay along with a series of spending cuts. The government's apparent conversion to economic realism was complete by October, when it published a major economic policy document, The Way Forward, which committed it to phasing out the budget deficit by 1986. The promise of austerity ahead brought an end to SFWP support. The party had already been annoyed by Haughey's denunciation of the Prior proposals for a northern Assembly when they were made public in April. When Garret FitzGerald put down a vote of no confidence in November, the government fell.
The FitzGerald Coalition 1982–1987
The second general election in less than a year saw Fianna Fáil's vote fall from 47.3 per cent to 45.2 per cent, while Fine Gael's rose from 37.3 per cent to 39.2 per cent, and Labour's increased marginally from 9.1 per cent to 9.4 per cent. Fianna Fáil lost six seats, while Fine Gael gained seven and Labour one. Michael O'Leary had resigned as leader of the Labour Party in October after failing to persuade its annual conference to adopt a pre-electoral commitment to coalition. His successor was Dick Spring, a 32-year-old barrister who had been elected to the Dáil for the first time in the 1981 general election. Spring's father, Dan, from whom he inherited his North Kerry constituency, had been typical of the rural TDs who had dominated the party until the 1960s. His son's horizons had been widened through the still-unusual choice of Trinity College Dublin as his university and by two years spent working in the US. The result was that, although Spring maintained his father's distrust of the intellectual left in the party, as personified by the eloquent Galway TD and Chairman of the party, Michael D. Higgins, he was much more sympathetic to those arguing for a liberal agenda on such issues as divorce and contraception than many of his rural-based colleagues.81
With Fine Gael's seventy seats and Labour's sixteen, the coalition had a working majority in the 166-seat Dáil. Spring was Tánaiste and Minister for Environment; Frank Cluskey, Minister for Trade, Commerce and Tourism; Liam Kavanagh, Minister for Labour; and Barry Desmond, Minister for Health and Social Welfare. Although Spring developed a good personal relationship with FitzGerald, he came into frequent and sometimes public conflict with Alan Dukes, the Minister for Finance. Like Spring, Dukes had entered the Dáil for the first time in 1981. A former student of FitzGerald, he had been an adviser to the Irish Farmers' Association and was on the right of Fine Gael. Dukes gave strong support to the view of Department of Finance officials that the major task of the government was to cut the budget deficit by the maximum amount possible. Dukes's right-wing radicalism allowed FitzGerald to present himself to Spring and his Labour colleagues as a moderate social democrat trying to contain the Thatcherites in the Fine Gael ministerial group and parliamentary party. He supported Labour's demand for a residential property tax and for a National Development Corporation to deal with the problem of the growing number of young unemployed.82
The unease that this apparent alliance between the Taoiseach and Tánaiste produced within Fine Gael has led some commentators to claim that FitzGerald's government failed to confront the crisis of the public finances.83 But by taking some account of Labour's concerns in both the 1983 and 1984 budgets, FitzGerald was able to implement what remained quite draconian cuts in public expenditure accompanied by substantial rises in taxation. The coalition thus made an important contribution to the reduction in the Exchequer borrowing requirement from a threatened 21.5 per cent of GNP in 1982 to 1.5 per cent in 1989.84 Inflation was cut from 17 per cent to 4 per cent. The cost was high for many of Labour's traditional supporters. Real personal income after tax fell by 12 per cent between 1980 and 1986, and emigration, after net inflows in the 1970s, averaged 25,000 a year during the 1980s.85 The Labour Party paid a high electoral price for FitzGerald's economic achievement. It lost its four seats in the European Parliament in the 1984 elections, and in the local government elections of 1985 it did badly nationally and was humiliated in the capital, where the Workers' Party, as SFWP was now known, won six seats to its two.86 Spring finally decided to leave the government in January 1987 rather than support cuts in health expenditure.
In the general election that followed, Labour's support dropped to 6.4 per cent – its worst result since 1933 – although it managed to retain twelve seats. Fine Gael dropped from 39.2 per cent to 27.1 per cent and from seventy to fifty-one seats. Despite the unpopularity of the government parties, Fianna Fáil under Haughey failed for the fourth time to win a majority. Its vote fell marginally to 44.1 per cent, although its number of seats increased from seventy-five to eighty-one. The biggest shock of the election was the performance of a new party, the Progressive Democrats, who replaced Labour as the third-largest party, winning 11.8 per cent of the vote and fourteen seats. The party had been formed in early 1986 after a schism from Fianna Fáil led by Des O'Malley Although its main figures were prominent ex-Fianna Fáilers, including Bobby Molloy and Mary Harney, it was able to attract support from sections of Fine Gael who had disapproved of the ‘contamination’ of the party's traditional conservative stance by the coalition arrangement with Labour.87
Haughey and the Origins of the Boom 1987–1992
The recession had promoted a new left–right polarization in Irish politics, pitting Labour and the Workers' Party against Fine Gael and the Progressive Democrats. Fianna Fáil had fought the election on a centrist platform, renewing its commitment to economic growth, welfarism and social partnership while accepting the need for some degree of fiscal balance. A trade union movement that had felt spurned and neglected by the coalition was happy to have Haughey back in power. In opposition, Haughey had assiduously cultivated trade union leaders. A Fianna Fáil Trade Union Committee was established in 1986 and through it a series of meetings with key union officials laid the basis for the government–union concordat, The Programme for National Recovery, concluded in October 1987. As Kieran Allen has pointed out, Haughey was the beneficiary of the decline in trade union strength and militancy that the soaring redundancies, unemployment and rocketing emigration of the early and mid 1980s had produced.88 Shut out of any role in the framing of public policy on the economy under FitzGerald and Spring, and with the Progressive Democrats keen to import a pure neo-liberal model, it
was little wonder that the trade union leadership accepted Haughey's offer to participate in what he skilfully presented as a national stabilization programme based on partnership rather than on a Thatcherite dog-eat-dog philosophy.89 In return for an agreement for modest wage increases over a three-year period, the unions were tied into cooperation with a government that proceeded to implement a cuts package of £485 million.
The size of the cuts proposed by Ray MacSharry, Haughey's Minister for Finance, so impressed the new leader of Fine Gael, Alan Dukes, that he announced that he would not oppose the government as long as it stuck to its commitment to slash expenditure. Dukes's so-called ‘Tallaght Strategy’ meant the arrival of a dominant ideological consensus from which only Labour and the Workers' Party were excluded. MacSharry's economic shock therapy, implemented in two budgets, cut public expenditure by £900 million, or 8 per cent, between 1987 and 1989. Within a short period of time the harsh medicine appeared to work. Economists started to talk about ‘expansionary fiscal contraction’. The dominant consensus on putting the public finances in order had apparently restored the confidence of investors, and from the second half of the 1980s the Irish economy began to grow at rates that far outpaced the rest of Europe.90
Irish GDP rose by 36.6 per cent between 1987 and 1993, compared with an increase of 13.3 per cent in the EU as a whole.91 Growth accelerated in the period from 1994 to 1999, when GDP rose by 8.8 per cent a year. Ireland had surpassed even the emerging ‘Tiger’ economies of Asia in terms of growth rates, industrial production and low inflation. Unemployment, which had stood at 17 per cent in the mid 1980s, the second highest in the EU, had fallen to 6 per cent – below the EU average – in 1998 and was reduced further to 4.4 per cent in July 2000.92 By the end of the decade the Republic's per capita income surpassed Britain's and by 2004 its per capita GDP was the second highest in the EU, behind Luxembourg.93 The OECD, notoriously a severe judge of national economies, said of the Republic in 1999: ‘It is astonishing that a nation could have moved all the way from the back of the pack to a leading position within such a short period, not much more than a decade, in fact.’94
Ireland Since 1939 Page 40
