A DEFAULT on Ireland’s debt is inevitable, former Fine Gael minister Ivan Yates told a conference of small business yesterday. Speaking to more than 300 members of the Irish Small and Medium Enterprises Association (Isme) at their annual lunch, Mr Yates called the recession unprecedented.
He also criticised the Government’s handling of the crisis. “It is a no-brainer. There is going to be a default in my opinion and it is just a case of how it will be organised – the Government need to get their head around the inevitability,” said Mr Yates.
Mr Yates, who is now a radio presenter and whose bookmaking business recently collapsed, said the default would need to be done on a multilateral basis so as to minimise international anger.
“I do worry that they don’t quite get it,” said Mr Yates of his former party. “They don’t need a five-point plan, they need to do three things – they need to fix the banks, they need to fix the deficit and they need to fix the cost base.”
On the public finances, he said Government expenditure was “unsustainable”. “The public services we have, the €21 billion in welfare, the €8 billion in education, the €14 billion in health are only being sustained on a daily basis through the goodwill of our creditors.”
There was no “silver bullet tax” to solve the problem and expenditure had to be cut, he said, suggesting that 30,000 public servants needed to be taken off the public payroll.
Mr Yates also said the principle of universality needed to be looked at. Wealthy citizens should not be eligible to payments such as child benefit.
He encouraged the Government to use their honeymoon period in office to enforce cuts in expenditure which, he said, would help Ireland return to competitiveness and thereby assist the small and medium businesses he termed “the backbone of the Irish economy”.
Earlier in the day, John Ryan was elected chairman of the national council of ISME. He replaces Eilis Quinlan who held the position for the past two years. Mr Ryan is co-founder of Certification Europe Ltd and he previously served as vice-president of the council. He is replaced in that role by Eamonn Kielty of Kielty Cashell Financial Services.
Separately, yesterday, IFSC Ireland chairman John Bruton said Ireland was spending €13-€14 billion more on public services than it was taking in revenue, he noted.
“That is a problem entirely under our own control. We cannot blame the European Union or anyone else for that difference between spending and revenue,” he said.
However, the former Fine Gael taoiseach told the annual conference of the Institute of Certified Public Accountants that Europe should accept responsibility “for the foolishness of their banks” in lending money to Irish banks.
Reiterating criticism of France for being “fixated” on Ireland’s corporation tax rate, he said it was “wrong” that Ireland was being attacked in order to suit the domestic French political agenda.
“Low corporation tax has been a cornerstone of Ireland’s economic miracle since 1956 before President Sarkozy was born,” Mr Bruton said.
