THE bad news is "the world is in sh***" and there's going to be "lots more f***ing bad news this winter".

That's what Ryanair CEO Michael O'Leary says Taoiseach Brian Cowen needs to tell the country when he gets back to work in September.

Because Michael O'Leary has always believed in calling it as he sees it, and telling it as it is.

And last Thursday, the multimillionaire aviation chief was no different when he sat down to talk about the state of the nation with the Sunday Independent.

O'Leary wasted no time in issuing a rallying call to the Taoiseach on what needs to be done now that the first 100 days have passed.

Not that Michael O'Leary is trying to do the job of Government when it comes to managing the economy. In fact, he bristles visibly when asked about a series in last week's Irish Times in which an assortment of big names in business proffered expert analysis on the subject.

Sitting forward in his chair in the lobby of Dublin's Alexander Hotel, the Ryanair chief explains why he declined a request from the paper of record to join in their intellectual exercise.

"We elect politicians to run the country and to run the economy. The last thing they (the politicians) need is either the opinions of rich business people, many of whom either don't live here or pay taxes here, or the trade unions," he says.

But what of those politicians and their leader by acclamation, Taoiseach Brian Cowen? Does Michael O'Leary believe they are up to the job?

It would appear he does.

"I think in Brian Cowen, you have a very good Taoiseach; in Brian Lenihan, you have potentially a very good Minister for Finance," he says.

But what of Tanaiste Mary Coughlan? She did after all (according to herself) play an integral role in lowering inflation recently. What does Michael O'Leary make of her? "Look, I don't know Mary Coughlan. I have no dealings with her; and one way or another, she's not that important. The Tanaiste is about as useful as the role of vice president, not worth a bucket of warm spit as Lyndon Johnson used to say.

"But she's minister for what? Industry or commerce or something. Look, fine. The real decision-makers in this Government are going to be the Taoiseach and the Minister for Finance, and where we'll need leadership in the next two or three months is from them."

Expanding on this, he adds: "Cowen has been there. He knows what a recession looks like. I have every confidence that Cowen will take the hard decisions that have to be taken this autumn."

Asked what hard decisions need to be taken, the loquacious aviation boss quickly warms to his theme.

"What needs to be done, is to cut back public spending massively, sell off all the useless semi-states and get rid of all these useless quangos.

"The National Consumer Agency? Complete rubbish. What are you doing? You're providing a board seat for Celia Larkin to do what? What does she know about a consumer? The aviation regulator? All he's done is rubberstamp price increases," O'Leary intones in relation to just a few of his own personal bugbears.

But the rot for O'Leary goes far deeper than that which has a direct impact on his own business.

Massive cutbacks in public spending, non-voluntary redundancies in the public sector, pay freezes and pay reductions are all part of O'Leary's package of proposed measures he believes Brian Cowen needs to deliver to pull Ireland back from the economic abyss.

But it shouldn't be a mere reprise of Mac the Knife according to the aviation chief. O'Leary fervently believes the Government can soften the blow with the promise of cuts in income tax for those earning up to €100,000 a year.

The tax cuts, O'Leary believes, could be enough to get the public behind the need for cuts elsewhere.

He says: "If this Government came back in September and said 'Here's the bad news, the world is in sh***. We're going to cut back on public spending by 10 per cent this year (MacSharry cut it back by 5 per cent).' [If they said] 'There's going to be lots of f***ing bad news this winter, you're going to have lots of pain, but you're going to have a tax cut on earnings up to 50 or 60 grand of up to 5 per cent,' you'd be amazed at the response the Government would get," he says.

Explaining how the foregone income tax revenue can be made up, O'Leary adds: "How do you make it up? Reduce public spending. Sack civil servants. Why don't you? We have far too many bloody civil servants, most of them employed in useless quangos.

"Charlie McCreevy was right. Decentralisation was a great idea, but two days later to come out and say 'Sorry, nobody's going to lose their jobs . . .'

"If you're a company and you're going to relocate to Mullingar and your employees don't want to go there, it's amazingly simple, either you go to Mullingar or you don't have a job.

"But what we did in the Bertie era was, we would have decentralisation but nobody need lose their job. Well hang on, in the real world if you don't want to move, go find another job.

"We give all these numb nuts a guarantee that it's alright if you don't want to move. You can stay here and do what? Nothing!"

Responding to the point that Brian Cowen was in Government during the Bertie Ahern era when many of our current problems were being created, O'Leary is willing, it seems, to cut the Taoiseach some slack.

He says: "Brian Cowen has inherited problems that are largely a result of a worldwide recession, a doubling of oil prices and a worldwide economic downturn. That's tough, but it's how you respond. If he responds aggressively now, and I think he will in September, as any big employer would, he'll tell people what the problem is: that the public finances are in a mess; that we're going to cut back on public spending; and we are going to have some redundancies. The redundancies aren't going to be voluntary. That's what you've got to do. That's what ordinary companies do."

Commenting on how he believes the public would respond to such decisive action, O'Leary adds: "I think if they [the Government] told the country the bad news, the public would actually respond very well to it. We all know the world is in a mess at the minute, we all know that we're going to have to cut back. So the people just want some leadership.

"The great thing in this country is that they respond to leadership. Haughey did it 20 years ago, MacSharry did it, McCreevy did it, and I think Brian Cowen will do it as well."

State authorities or "quangos" as they are more commonly referred to should also come under the hammer, according to O'Leary.

Bertie Ahern's former beau Celia Larkin and consumer guru Eddie Hobbs are fixed firmly in O'Leary's crosshairs in this regard.

He says: "We have had an explosion of quangos, putting the Celia Larkins of this world on the board of the National Consumer Agency and paying her a fee to do what? Get rid of her! And the other guy, that fella in Cork, the Show me the Money guy, what's his name? Eddie Hobbs. Sack him! What are we paying any of those guys for?

"The National Consumer Agency is useless anyway as we in Ryanair have demonstrated with the "screen scraper" issue," he adds, referring to his company's current campaign to prevent online intermediaries taking bookings for Ryanair flights, and what he considers a hefty illegal sales commission in the process.

The current impasse over pay which saw the national pay talks break up two weeks ago doesn't concern O'Leary particularly. In fact, he believes the talks are "an irrelevance" and shouldn't be restarted at all.

He says: "The problem is you don't have any employers in there. The national pay talks have never been national pay talks. None of the private sector employers are represented. Ibec are in there representing the banks and the semi-state companies.

"Nobody pays any attention in the private sector. The US multinationals haven't paid attention to the national wage agreements for the past 10 years, nor has Ryanair. They're an irrelevance. They're really just the Government sitting down with the unions to talk about pay. The best thing that could have happened for this economy is that they broke down. They shouldn't be restarted."

While dismissive of the national pay talks, O'Leary does appear to have studied the small print of national wage agreement itself.

Referring to this, he says: "They have an 'inability to pay' clause in the national wage agreement. The biggest employers with an 'inability to pay' problem is the Government. They don't have the money."

Of his own business, he says: "Ryanair's had a pay freeze this year. There should be an immediate pay freeze in the public sector. They shouldn't be just confined to the politicians and the top civil servants; it should apply to all of them. Sorry, there's no pay increase this year!"

So what will he want to hear from Brian Cowen when he makes his much-anticipated State of the Nation address in September?

"Who knows? Look, tell it like it is. Look, the world has changed. We're in a much more difficult economic situation. There's going to be higher inflation, there aren't going to be big pay increases and there's going to be job cuts.

"So, here's the bad news. We're going to massively cut back public spending. There are going to be redundancies in the public sector, and if the unions jumps and down, then tough, there are still going to be redundancies in the public sector.

"But we will reduce taxation for those earning less than €100,000 a year. By all means increase tax for rich people like me. We can afford to pay more tax. Do it!

"But lead. People will respond in this country very well."

In the face of cutbacks, what would he do with the health service, a sector which HSE chief executive Brendam Drumm acknowledges swallows a quarter of income tax revenue every year.

"The health service? I would run an ad to recruit some guy who'd manage it and give him a million or two million to manage it. Politicians can't manage unions. Unions are on Siptu radio [in Montrose] every Monday waffling on and misleading.

"The health service never puts anybody out to take these guys on, so you never hear the fact that the consultants only work 30 hours a week, and the nurses are looking to work fewer hours.

"Pay them, the consultants and nurses, more if they work harder. You work longer hours. Why don't we pay consultants by the operation? Don't pay them by the hour, pay them by the operation. If you want to make more money, do more operations, see more patients."

Does he think the Government might be fearful about taking the hard decisions with next year's local and European elections looming on the horizon?

"In the electoral cycle, nobody much cares about the local elections. You have three-and-a-half years to the next general election. This Government needs to take the hard, really painful decisions this winter. The world economic situation will return in the next two or three years. As long as the economy is doing well in two- to two-and-half-years' time, this Government will get re-elected. Nobody's paying any attention to opinion polls right now, three-and-a-half years away from a general election," he says.

The Ryanair boss is a big admirer of former finance minister Charlie McCreevy in his management of the so-called political-economic cycle.

"McCreevy was great. He would always come back after an election and you would get all the pain in the first year. Now the difficulty here is you have had a change of Minister for Finance, you've had a change of Taoiseach.

"They need to take those painful decisions this winter, but equally let's give people a tax cut. If you do, they will take all the pain out of public sector cutbacks, of public spending cutbacks."

One cutback he believes should be made immediately is the proposed construction of the Dublin Metro.He says: "Take for example the Dublin Airport Metro. Six bloody billion on a service nobody is ever going to use! Nobody is ever going to drive from Foxrock or from Tallaght to Stephen's Green at 4:30 in the morning to connect with a bloody tram. Stop wasting that money. Save it."

Asked if any other major infrastructural projects should be abandoned, O'Leary is clear.

"Almost anything that is not necessary in the public sector, I would cut back. You set a target to cut public spending by 10 per cent this year. You would save an enormous amount of money.

"But if you set a target of five per cent, you will achieve maybe two or three per cent. Set a target of 10 per cent and you will achieve five, six, seven per cent. Always set an aggressive target.

"The only way you can do that in the public sector is to take the pain, and the pain is going to be people in the public sector who are not productive, don't have a job to do, getting sacked.

"Is it tough? Yes it is. But that's the way of the world, go find another job. There's lots of companies still recruiting in this country. But at the same time, you have to give people an incentive of reducing tax for low- and middle-income earners."

O'Leary's overall view of the Irish economy is that it can rebound within the next two years if the appropriate action is taken.

He says: "If they [the Government] take the really tough medicine this winter, then the Irish economy will bounce back within the next two years very strongly.

"I think there's a huge demand in Ireland for that kind of strong leadership, there always has been. The problem is, we generally don't get strong leadership. The kind of Bertie Ahern school of leadership, which is to avoid confrontation with the unions, pay them whatever they want, sorry, we're not going to get away with that anymore."

So does he actually believe Brian Cowen is the right man at the right time for Ireland?

"He could be. I think if they take the tough decisions, but lead people in the right direction, tell them 'Look there's a reason we're doing this, it'll be short term but there's a tax cut', you'll get away with almost anything."