AT LAST, the Government is offering tough remedial action and a sense of purpose in response to the unprecedented economic challenges. Having dithered and hoped for external salvation since last summer, the harsh realities of imploding revenues and rising unemployment have left Brian Cowen and his Government with no place to hide.
The Taoiseach may be reluctant to call a spade a spade when it is an emergency budget, but that is what we are facing. The overriding considerations now must be to get the public finances back on track and to safeguard employment. This time, Ministers have to get it right. If errors in computation are made, they should be on the severe side.
Fairness in imposing new taxes and charges will make the difference between a grumbling acceptance of unpalatable medicine by the electorate and outright rejection. From each according to his/her means, to each according to his/her needs, should form the basis of decision-making. Those who gained excessively from the Celtic Tiger must now contribute in kind. And if a need for emergency funding does not facilitate the introduction of more complex measures at this time, Minister for Finance Brian Lenihan should clarify his intentions when he unveils a three-year recovery plan as part of the budgetary strategy. Wealth, as well as income, should bear a share of new impositions. The entire structure of public expenditure will have to undergo serious examination.
The dramatic shift in the Government’s approach is to be welcomed. Only last week, we were assured its finances were under control and there would be no further taxes in 2009. But a 24 per cent fall in revenue for the first two months of the year along with a 10 per cent unemployment rate has changed all that. From a position where it was pushing difficult decisions into the future, it is now compelled to front-load its fiscal response to a rapidly worsening situation.
The Opposition parties and the social parties have important roles to play if we are to move forward with a consensus on the seriousness of the crisis. There are awkward, third party and hands-off moves being made to involve Fine Gael and Labour in the process of deciding how €4.5 billion or more could be collected from taxation or saved by public spending cuts. The Taoiseach and the Government adopted a dog-in-the-manger approach to suggestions of co-operation last week. It has now referred the Opposition leaders to officials in the Department of Finance.
If the Taoiseach and the Minister for Finance are serious about engaging with the Opposition leaders in seeking a consensus, they should demonstrate respect for Mr Kenny and Mr Gilmore. They should invite them to a meeting of party leaders in the Taoiseach’s office. They should explore the possibility of a consensus on certain difficult decisions with the party leaders and they must also re-engage with the social partners.
There is the making of an important turning point if this is done.