Thursday 25 December 2014

Cowen's cowardice is cleverly disguised as prudence with the nation's budget

Alan Ruddock

Published 03/12/2006 | 00:11

IF DAVID Begg, the capo di capi of Ireland's trade union movement, chokes on his sandwiches this Wednesday, chances are that Brian Cowen has delivered a good budget. Sadly, however, Begg's afternoon tea is unlikely to be spoilt.

Instead of tackling the issues that threaten Ireland's continued economic progress, the Finance Minister will be playing to the galleries. Our money will be handed back to us in a variety of crowd-pleasing ways: more money for pensioners, for children, for the poor.

He may throw in a few tax cuts, he may fiddle with stamp duty for first-time buyers or provide more tax reliefs and he will certainly take more people out of the tax net by widening the tax bands.

He will talk prudence, tell us that our economy is safe only in his hands and warn us that the Opposition parties could destroy the good times. A large number of voters will actually believe him and the media will applaud his good sense.

For Cowen, it is almost too good to be true. He has more of our money than he knows what to do with, the opinion polls continue to show that Fianna Fail will be part of the next Government and the Opposition is dispirited and in some disarray.

The economy, too, ticks along nicely: growth this year and next will be stronger than expected, tax revenues are buoyant and there are, for the moment, no ominously dark clouds.

Which means that Cowen and Bertie Ahern, the Taoiseach, will take no tough decisions: their role, so they seem to think, is to ride the wave of prosperity, doling out money to keep the pleading interest groups content, but doing nothing to ensure that future prosperity is made more likely.

They have, indeed, so much money to spend that their greatest fear is that we will accuse them of profligacy. This year Cowen does not want the tabloids to call him Santa: he wants to be seen as a wise elder statesman, a prudent minister who will not risk the economy by buying our votes, while at the same time being generous enough to keep us sweet.

His budget, therefore, becomes an exercise in public relations, not economic management, and it will be a charade.

Brian Cowen is not a stupid man. He remains the hot favourite to replace Bertie Ahern as leader of Fianna Fail and Taoiseach when he steps down sometime after the next election, and he will be a central figure in next year's campaign. His bruising, bullying debating style makes him the Government's most effective media performer. Where others bluster, he bashes. And, like his counterpart in Britain, he has also mastered the art of staying silent.

Cowen does not offer a sound bite for every issue of the day and cannot be easily pigeonholed on the left, right or centre of Irish politics. There is no burning ideology, no political goal other than power, no sense of a man on a mission to change his world.

In that, he is little different from Ahern. Politics is a game, and they are winners.

Winning, though, is made easier when the economy booms and you are awash with cash. No one wants the boom to bust, and no matter what the polls say about voters' priorities between now and the election, the key issue in the polling booths will be the economy.

Can the Opposition parties be trusted to preside over continued success?

What risks attach to throwing out this Government?

As their pen hovers over the candidates' names, voters tend to put aside the crises and scandals, the incompetence and the occasional whiff of corruption, and think instead about their own back pockets.

That is why this budget becomes so central to the election campaign. Cowen must maintain the illusion of good economic management that Charlie McCreevy, his predecessor, created for this Government and he must gently assuage people's guilt about their good fortune by looking after the lesswell-off.

The problem is, of course, that the perception of good economic management is just an illusion. While the private sector economy continues to improve at a rapid pace, the public sector - that part of our economy over which Cowen and Ahern have direct influence - threatens to drag it down.

Instead of reforming the public sector over the past nine years of government, they have bloated it. Taxpayers' money has been poured into it, but Ahern and Cowen

'The result is that we have a two-tier economy: a thriving private sector that creates wealth and jobs, and a lumbering public sector that soaks up cash, spends it inefficiently and increases the costs of doing business'

have deliberately avoided the reforms that would ensure that our money was not wasted.

The result is that we have a two-tier economy: a thriving private sector that creates wealth and jobs, and a lumbering public sector that soaks up cash, spends it inefficiently and increases the costs of doing business.

The failure to reform means that when there is an international downturn, Ireland will feel the full force because we have not chosen to put our own affairs in order. It is not an historic failure, but a continuing one.

When presented with a blueprint for the reform of the electricity supply industry this autumn, the Government ducked it and opted for monopoly and high prices rather than competition and lower prices.

Even when it does embark on reform, like breaking down regional health boards and creating the Health Service Executive, it does not have the courage to follow through and strip out the layers of redundant jobs.

So reform, Ahern style, creates duplication and extra costs rather than greater efficiencies, just as benchmarking, Ahern style, is a secretive process that increases public sector pay but extracts no measurableconcessions.

Cowen knows the truth, but he will ignore it. He knows that reform of an inefficient public sector is essential if Ireland is to enjoy the sustained economic success that he and his taoiseach talk about so glibly, yet he will not deliver that reform because he is not prepared to upset the David Beggs of this world.

Reform, inevitably, requires confrontation and Ahern's government does not do confrontation. It placates, it seeks consensus, it buys peace with our money, but it does not confront. The public sector unions hold the country to ransom, and Ahern pays it willingly.

That divide between public and private becomes ever more evident. Public sector employees enjoy high wages, secure jobs, plentiful holidays and, best of all, generous pension schemes. They are immune from economic downturns, and can look to a secure and prosperous future no matter what happens to the dollar, or the housing market or the US economy.

It is a divide that is now far more relevant than the old divisions of working class and middle class and one that will create more tensions and more hostilities. Private sector risk, private sector entrepreneurship and sheer hard work has created the economic boom that fills the Government's coffers, and that money is being showered on an inefficient public sector because the Government will not face down the trade unions and demand the reforms that would make our economy more competitive.

Cowen could do that, but he will not. He will instead claim credit for a boom that his inaction endangers, and will be hailed as prudent because he chooses not to give us back as much of our money as he could.

Prudence, though, is not just about hoarding money for a rainy day. Prudence requires the Government to curb its spending on capital projects, like roads, schools and hospitals, so that it does not exacerbate the capacity constraints in the construction industry and the rate of inflation. It requires the next round of benchmarking to be a genuine attempt to inject productivity and merit-based promotion into a public service that lacks both. It requires competition where lazy monopolies rule.

Above all, though, prudence requires the courage to confront and root out inefficiencies and the courage to demand that taxpayers' money is spent withdue care.

What Cowen will claim as prudence is in reality cowardice. His budget illusion will ignore the real issues and focus on the peripherals as he tries to convince us that he, and only he, can be trusted with our economic future.

David Begg can rest easy. There will be no shocks for him and his people on Wednesday and no reason to choke on his sandwiches. Cowen has enough money at his disposal to soothe all the noisiest lobby groups - the greys and the greens, the poverty industry and the rest - while holding enough back to maintain his illusory prudence.

It may well be enough to secure a third term in government, but it will fall a long way short of delivering the sustained economic prosperity that a courageous government could deliver.

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