eye on the economy
‘Even as a crisis, it was badly handled. It is quite a contest between Dublin, Berlin and Frankfurt as to who made the biggest muddle’
Brendan Keenan
EU/IMF/FF plan, and perhaps toughen it up a bit. Irish governments have got away with this kind of
thing before. The most remarkable was CJ Haughey’s austerity programme in the late Eighties, after coming to power on a slogan that said spending cuts hurt the poor, the sick and the elderly. As protesters marched, one would have got good odds against Fianna Fáil being in office after every election for the next 25 years. The degree to which they might get away with it again depends on what one thinks the voters were trying to do on polling day. That is not easy to assess, even in the era of wall-to-wall opinion polls. Were they attracted by the old song, when Fine Gael promised no increases in income tax? Or were they look- ing for the stability that the Fine Gael alternative to Fianna Fáil excesses has traditionally offered, and will- ing to accept that most of the promises were empty?
Natural incumbent? Whatever the reasons, the Irish electorate has again proved remarkably conservative in terms of the results. Fine Gael has been in office only briefly in those 25 years, and even that was not the result of a general elec- tion. That means the majority of voters cannot remem- ber it being in government. The voters have no past form to go on and even Enda
Kenny’s handlers would not claim he is a charismatic figure. Yet despite all of that, the mould of Irish politics remains unbroken. Fine Gael seems the natural alterna- tive. It will take another election to decide whether it can replace Fianna Fáil as the natural incumbent. That in turn may depend on what the electorate
really wanted. When the posters come down, and the slogans are forgotten, the business of closing the €17bn gap between taxation and spending will resume. The ground has not been well prepared. The parties plan a cash reduction in current spending
of €8bn–€10bn. Most of the past 30 years have been characterised by arguments over spending “cuts”. But there has never been anything like this. Nothing like it has even been attempted. Somewhat bizarrely, Fine Gael married a loss of 30,000
government jobs with the identification of “waste” as the biggest way to savemoney and no reduction in “frontline”
services. Other manifestos were just milder versions of the same. If the public service, frontline or otherwise, is able to
shed 20,000–30,000 jobs and still operate efficiently, we can certainly say that there is no waste left in the sys- tem. But anyone with the slightest knowledge of the public service knows that even the most modest change traditionally provokes both opposition and an inability, or unwillingness, to keep things operating efficiently under the new regime. The derided HSE, it is often forgotten, is a botched
attempt at efficiency. Instead of being leaner, numbers increased and, the critics maintain, services got worse. The latter complaint may not be entirely true, but there was certainly no marked improvement. The IMPACT trade union was central to the unhappy
birth of the HSE, but can also lay claim to be the archi- tect of the Croke Park Agreement. It calculates that public service numbers have already fallen by 12,000 and will reach 19,000 by the end of the year.
Time for clear strategy If that claim holds up, and if these are not just unfilled vacancies but lost jobs,whichwill not be replaced,wewould indeed be well on the way to a public sector that can be financed by tolerable tax levels. It is too soon to say but, if numbers have fallen like this, it also points to a marked lack of strategy in the downsizing of the public sector. Natural wastage, even with redeployment, is not the
same as asking what the State should be doing, and what resources are required for the things it should do. It is 20 years since countries all over Europe, including the Nordic nations, began to change the mix of what is done by the public sector and what by the private sector, whether regulated, franchised or in a free market. There has been no such movement in Ireland. The
changes that have come have been enforced from out- side, usually by EU law. It is bizarre to be seeking a 15pc reduction in public spending without asking these ques- tions and proposing solutions. It did not happen during the campaign but it had bet-
ter happen under the new government. The alternative is crippling taxes and a crippled public service, both of which will reduce the economy’s potential.
20 Irish Director Spring 2011
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