independent

Wednesday 16 April 2014

Daniel McConnell: Noonan owes a debt to warrior Brian

The Finance Minister adopted the policy of austerity begun by his predecessor

STERLING EFFORTS: The late Brian Lenihan tried to put some order on the public finances. Photo: David Conachy

MICHAEL Noonan will be able to, with some legitimacy, say in December that he was the Finance Minister to lead Ireland out of the Troika bailout.

But this would ignore the efforts of his predecessor Brian Lenihan.

On taking office in March 2011, despite all of his party's promises during the general election and those even wilder promises by the Labour Party, Noonan as Finance Minister immediately rejected all of those in favour of adopting Lenihan's four-year plan.

Last week's Budget adjustment of €3.1bn (offset by once-off measures totalling €2.5bn) was laid out in that four-year plan drawn up by Lenihan just before he was booted out of office.

Noonan has chosen to bow to the Troika and set out to be the best boy in the class rather than follow a Greek-style policy of default.

Within three weeks of taking office, Noonan oversaw Lenihan's major bank stress test process which culminated in a further injection of €24bn of taxpayers' money into the bust institutions.

The Fine Gael-Labour Government has continued Lenihan's policy of economic austerity, cutting public spending and increasing taxes in order to bridge the gaping hole in the public finances.

However, it has to be remembered that much of the heavy lifting in that regard was done by Lenihan in just two and a half years.

To put it in context, in his four Budgets (two normal, two emergency), Lenihan made budget adjustments of €21bn, compared with the €9.8bn or so by Noonan and Brendan Howlin.

Even before his death, Lenihan conceded to me and others that he should have cut deeper earlier, which would have averted much of the pain later on, but by December 2008 the country was on fire, and it was too late to stop the collapse.

However, history must record and recognise his sterling efforts from 2008 onwards to put some order on the public finances.

And it must be remembered, he did so despite public opinion, which was still in the Celtic Tiger mindset that the party would roll on for ever. But more importantly he also did it in the face of staunch opposition from his distrusting Taoiseach Brian Cowen, and his deeply sceptical Fianna Fail colleagues.

Throughout that period, he stood alone in his cabinet, and in his party.

"I had fought for two and a half years to avoid this conclusion, and now we were at it. I saw that Ireland's financial survival was very much an issue from late 2008 on. I had such a fierce struggle to bring my country and my colleagues with me ... I believed I'd fought the good fight ... and now hell was at the gates," Lenihan said at the time.

Lenihan was no saint, and he made some disastrous decisions as Finance Minister, for which we will end up paying for a very long time.

His banking strategy can only be described as a total failure which ultimately has cost the taxpayer at least €64bn.

He was ultimately the minister who introduced the bank guarantee, the minister to nationalise Anglo Irish rather than let it sink, and ultimately he was the man who led Ireland into the bailout.

But, any study of this disastrous period in our economic and social history will have to record his efforts in putting us on the right path in terms of public spending.

Yes, Noonan will be remembered as the man who got us out of the bailout, but he will owe a lot to Brian Lenihan for that.

Sunday Independent

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