George Lee's input to the MacGill Summer School was designed to be crowd-pleasing, writes NOEL WHELAN
SEVERAL OF the audience participants at this week’s MacGill Summer School suggested that a “national debt clock” should be erected in Dublin city centre as a means of focusing minds on how rapidly our national debt is rising.
There were suggestions that it should be sited at some of those iconic Dublin buildings which have banking associations to emphasise the extent to which bad banking has contributed to the crisis. Others expressed concern that given the history of the Millennium Clock and the “Floozy in the Jacuzzi” and indeed the denial that still exists in some quarters about the level of our national borrowings, such a debt clock would not last long.
A figure cited most often by speakers at the summer school, and seized upon by audience contributors, was that Ireland is currently borrowing €480 million a week. This figure was parsed repeatedly, into amounts per day, per hour and per minute. One questioner even pointed out how much Ireland had borrowed during the time it took to hear one particularly lengthy speech from the platform.
An apparent conflict developed in the various sessions of MacGill, akin to that which developed on the national airwaves this week. This was between those backing the urgency of tackling the public finances in order to ease future pain, and those in denial about this urgency, or cautioning that cutting or taxing too much could cause unnecessary hardship.
There was a lot of economic expertise at MacGill, and almost all of it was of the view that major steps must be taken this autumn to correct the budgetary crisis. Several economists had reservations on the Government’s proposal to tackle the banking situation, but almost all felt the timeframe which the Government has set out within which to tackle the budget gap is correct. As one economist put it at an after-hours session, “There are only two options – tax increases or spending cuts. Those who argue that some third way can be found are simply looking for magic.”
One of the most anticipated contributions to MacGill was that of George Lee. The venue was packed on Tuesday for a session with Fine Gael’s newest deputy, Labour leader Eamon Gilmore and Minister for Finance Brian Lenihan.
Gilmore’s contribution was typical of the sophistication he has shown in recent months. He suggested, for example, that alongside any national debt clock there should be a similar display showing the rising unemployment numbers. Gilmore again spoke of Labour’s willingness to play a role in tackling the economic crisis, but was careful to avoid any specifics. In one classic passage, he complimented the McCarthy report as a serious document, emphasised how Labour was in favour of achieving value for money in public spending, and said there were some McCarthy proposals he didn’t agree with. He didn’t say which.
Lee’s contribution was designed above all else to be crowd-pleasing. He set out a colourful description of the economic mess and delivered his numerous applause lines with trademark passion. Those passages where he departed from his pre-issued text were particularly populist, in a way which was at times perturbing. If anyone feels I’m misrepresenting his presentation, the full speech can be watched on a webcast link on the MacGill website.
Lee argued that a key element of the guarantee given to the banks last September – that to bond holders – should be let lapse when it comes up for renewal in September of next year. This proposal, in the view of most other economists present, would have drastic wider consequences for our banking system and for Ireland’s financial standing.
Lee argued the Government should take longer than it is proposing to close the gap in the public finances, saying the Government’s objective of bringing the deficit back to 3 per cent of GDP by 2013 was a mistake. This ignored the reality that correcting our public finances at the pace which is planned is being done to reassure international bond markers who have become more comfortable about Ireland’s position of late.
Getting our finances in order relatively quickly is in the national interest. While postponing the pain may be popular in the short term, it merely transfers more of the burden to future generations. Lee gave no specifics of an alternative timeframe. Neither did he suggest, for example, what deficit should be budgeted for next year.
This was Lee’s first substantial outing as a Fine Gael spokesman on economic matters. To many economists his analysis will be seen as overly political, and his solutions as unrealistic.
Lee has left several political hostages to fortune which, if pursued by his former colleagues in the media, will present difficulties for his party, and for Richard Bruton in particular, as Fine Gael seek to set out a measured economic policy ahead of the next budget.