Social Democrats latest new Irish party ahead of uncertain elections

By Padraic Halpin

DUBLIN, July 15 (Reuters) - Three independent Irish members of parliament, including a former junior minister, set up a new centre-left party on Wednesday, preparing for elections early next year that could usher in a multi-party coalition.

The Social Democrats are among a number of new parties to emerge in a bid to challenge one of the continent's most stable political systems seven years after Ireland (Other OTC: IRLD - news) was plunged into a debilitating financial crisis.

While Irish Prime Minister Enda Kenny's Fine Gael remains the most popular party according to opinion polls, it may struggle to retain its two-party coalition with Labour, having swept to power in 2011 with a record parliamentary majority as a coalition.

The Social Democrats party follow Renua, a new centre-right party set up by former Europe minister Lucinda Creighton, and a third catch-all grouping of non-party MPs in setting out its stall ahead of elections due to take place by April next year.

"We know that a significant proportion and possibly the majority of Irish people have become disillusioned with the existing political parties and the democratic process," the Social Democrats' Roisin Shortall told a news conference.

£What has happened in this country, the disastrous collapse of the economy was caused by a failure of politics," said Shortall, who quit as a junior minister and a member of the Labour Party in 2012 over the coalition's health policy.

As Ireland's economy recovers and allows a reversal of years of tax hikes and slashed spending, the Social Democrats said it would favour a 2-to-1 ratio in favour of spending over tax cuts, compared with the even split advocated by the current coalition.

It said it would also seek to abolish water charges and reform Ireland's abortion laws, two likely election issues.

The new parties are hoping to win the backing of critics of the government who believe little has changed in the political system since the crisis and capitalise on the strong support for independent candidates in opinion polls.

"This is all about government formation. It seems likely Fine Gael and Labour might not get a majority, then they will need the votes and this is exactly what these groupings are thinking," said Liam Weeks, politics lecturer at University College Cork. (Editing by Jeremy Gaunt#)