The Green Line

May 19, 2020

Originally posted on the Business Post, 10 May 2020

 

The phrase “in these uncertain times” can't disappear fast enough from our public discourse and commentary.  The extent of the uncertainty, be it in our business, personal or social lives, is compounding the discomfort of the lockdown.  This week's news that talks had finally commenced on a programme for government should be dispelling some of the uncertainty, but can any of the three players, Fine Gael, Fianna Fail and the Greens, win acceptance for such a coalition?

Even arriving at an agreed programme for government is in real doubt.  The recurring mantra of the putative minor party in government, the Greens, is that any programme for government has to signal a 7% reduction in carbon emissions annually.  Nothing illustrates just how tall an order that is than, even with the reduction in economic activity, travel and fuel consumption because of the Coronovirus lockdown, that 7% target won’t be met this year.

According to recent research by Carbon Brief, a publication which focuses on climate science, the estimated global carbon reduction in 2020 thanks to the worldwide pandemic lockdown will only be 5.5%.  This particular estimate might not be entirely agenda free, as Carbon Brief is supported by a group called the European Climate Foundation whose aims are to promote policies to reduce greenhouse gas emissions.  Separately however, the International Energy Agency's latest numbers project that emissions will have dropped by 8% by the end of the year.  This agency, originally established to secure oil supplies for some OECD member nations including Ireland, also points out that the lockdown effect is six times larger than that caused by the great recession in 2009. 

It seems that the crippling misery of the lockdown is only achieving the same scale of reduction in carbon emissions that the Green Party is insisting we achieve each year. 

To be fair to the Green Party and their supporters, their general election manifesto was clear in its target of achieving a 7% reduction in annual emissions for the next decade.  The Green Party manifesto had plenty of ideas for what needed to be done to achieve that, and even some ideas for how the associated costs could be met.  Their taxation suggestions were derived from old proposals and the manifesto offered little indication of how much additional tax might be collected to fund reform of the way we care for the environment.

The Green manifesto asked for a financial transactions tax, seemingly oblivious to the havoc it wreaked on the stock exchange of one European country that did introduce one, Sweden, in the 1980s.  They want to reduce VAT on products and services linked with energy conservation, but that would require a change by the European Commission to the VAT Directive and is not within the gift of an Irish government.  They raise the old chestnut of a wealth tax on individuals holding assets over €10 million but without saying what the rate might be let alone how much it might bring in.  They want Ireland to support the OECD processes for global corporate tax form, even though Ireland has been among the earliest adopters of those change proposals. 

No political party manifestoes for the last general election remain relevant because none of them were drawn up at the time of a pandemic.  The Green proposals to fund environmental initiatives are particularly problematic.  They weren’t coherent even at the time of their drafting, yet their greenhouse gas emission reduction target remains a red line for their participation in government.  What are they actually proposing to meet the cost of developing alternatives to our current patterns of energy generation, storage, transportation and consumption to reach this target?  Their manifesto proposals won’t do it.

A new government is urgently required to ensure we can continue to bailout our damaged businesses and support the unemployed.  It is right to fear global warming.  It is right to be terrified of coronavirus and its impact on our people, our healthcare workers and our communities.  But the country cannot continue to deal with either crisis without having a reasonable economic footing.  We can neither tax nor borrow our way both to economic recovery and to a 7% greenhouse gas emission reduction target within a year or two.  Thanks to the pandemic, it may not even be possible within the lifetime of one government.

All over the country, in every walk of life, totems are being knocked down.  In the space of a few weeks, we have re-engineered how our public services are delivered, how we shop, how we educate and assess student achievement.  Many businesses have re-imagined their business model and are still trading, often online, using courier deliveries and with people working from home. 

Our politicians involved in government formation talks must now also re-engineer the attitudes of their parties and supporters.  Unless they do, there will be no certainty of success in government formation talks.  The time for red lines, and green lines, is past.

Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland