Maeve Dineen: All-powerful Rehn should tell Lenihan to bring Budget on
Published 08/11/2010 | 05:00
IN POLITICS, as in most of life, it is better to be lucky than smart. Last week was not a lucky week for the Coalition -- in fact it was shambolic.
Tuesday brought the announcement of Donegal TD Dr Jim McDaid's abrupt resignation; Wednesday the judgment by the High Court president, Mr Justice Nicholas Kearns, that the Government's prolonged delay in holding the Donegal South-West by-election was close to unconstitutional.
On Thursday, Finance Minister Brian Lenihan gave a (very) broad outline of a €6bn Budget plan, which he proposes to announce on December 7, and, to top it all off, on Friday, the international markets remained unimpressed by this scant plan: bond yields failed to budge while bank shares tanked.
With EU Economics Commissioner Olli Rehn rolling into town today, we're in for another turbulent week.
There is much hype and excitement surrounding the arrival of the so-called "most powerful man in Ireland" but the visit is likely to leave an unpleasant aftertaste.
While Mr Rehn described the €6bn budget target for 2011 as "appropriate", he appears keen to discuss all aspects of the four-year economic plan "in detail" with Mr Lenihan over the next two days.
Mr Rehn won't be satisfied with Mr Lenihan's broad brush strokes and is demanding sector-specific adjustment measures.
"It's very important that this consolidation effort will be backed also by a structural reform," a spokesman for the commission said last week. And he was right.
While the spokesman would not be drawn on the precise "structural" reforms that the commission wants put in place, it is clear that the sort of structural reforms required are competitiveness-enhancing changes, such as the opening of sectors of the economy in which there is limited competition.
Watch out if you are a utility, a university, a doctor or some other woefully inefficient part of our struggling economy.
The commission will be less of an impartial referee and more of an active player in crafting of this four-year plan. The stakes are high for us but also for Olli Rehn; this "economic governance" is the only way to ensure the survival of the euro.
Gauging competitiveness is a difficult business, with few obvious benchmarks.
Balancing spending and taxes, deciding wage levels and reforming labour markets ought to be tasks for elected leaders, not appointed bureaucrats. But somebody has to do it when our elected leaders simply don't have the bottle for it.
We must end the uncertainty as quickly as possible. The only way this can be done is for Mr Lenihan to bring forward the date of the Budget and start getting the pain out of the way as soon as possible. Mr Rehn should push for this to happen -- after all, he's pulling the strings on every other aspect of the Budget.
When Mr Lenihan gets up to speak on December 7, he is likely to unveil the harshest budget in the history of the State. By the time he finishes his speech, Commissioner Olli Rehn will probably have helped to turn Mr Lenihan from one of the most powerful to one of the most unpopular men in Ireland.