Fionnan Sheahan: Marching is a right -- but not up the garden path
Simple mathematics: The country is costing €58bn to run this year, but only €32bn is coming in in revenue.
The difference is €26bn, and to bridge the gap, the Government can (a) increase taxes, (b) reduce spending, or (c) use a combination of both.
The recapitalisation of the banks doesn't help the balance sheet, and the Government is planning to cut €4bn from public spending in 2010.
If the Budget was being delivered today, this would roughly come from €1.3bn in public sector pay, €1.3bn from social welfare payments, €750m from capital spending and about €500m from public services, including health -- all told giving about €4.25bn, which will be whittled down come Budget day.
These figures are effectively the Government's opening salvo in the run-up to the Budget. They won't match what's to come on December 9.
Everything is on the table ahead of the Budget -- social welfare payments, public sector pay and health spending.
Amid the internalised debate about the Budget, the OECD report this week provided some outside perspective to the economic challenges facing the country.
The proposition from the Irish Congress of Trade Unions of the Government having the option to spread the fiscal adjustment over eight years, rather than four, was blown out of the water.
Finance Minister Brian Lenihan was directly told the Government simply couldn't afford to wait as the international financial markets would punish us if we delayed.
OECD secretary general Angel Gurria warned cuts had to be implemented immediately. "The problem is you may not have that time, Mr Minister. The markets are zeroing in on countries," he said.
The markets are harsh taskmasters and if they do not have confidence in the budgetary policy of the Government, they will start making borrowing money more expensive for Ireland.
The report was quite timely for the Government as talks continue with unions about identifying ways to cut the public sector pay bill.
The coalition parties of Fianna Fail and the Green Party, along with the grown-up opposition parties of Fine Gael and the Labour Party, all agree an adjustment of €4bn is required.
And yet ICTU prevails with this theory of dragging out the recovery over a longer period, without coming up with any alternative figure for cuts in 2010.
These same union leaders will address protests across the country today, primarily outside Government Buildings and Leinster House at the culmination of the Dublin march in Merrion Square.
There is a democratic right to protest and a freedom to express resistance to chosen government policies, but the trade union chiefs owe their members more than just leading them up the garden path.
A failure to acknowledge the severity of the measures needed to extricate the country from its dire fiscal position does the ordinary workers making up the core union membership no service at all.
There is no prospect of the Government not adjusting the public finances by at least €4bn next year.
In fact, there is an argument that identifying €4bn this year for 2010 will actually be easier than conducting the same exercise for 2011 and for the 2012 Budget.
The Government is now armed with Colm McCarthy's Bord Snip report, showing the stark variety of ways it can cut spending.
The OECD report merely reiterated this list.
The Government will actually be able to say on Budget day that it didn't take the toughest route, as some of McCarthy's proposals will not be acted upon.
This excuse will grow tired in the years beyond, when the level of cuts will go well beyond what was envisaged by Bord Snip.
The lack of reality in the ICTU position does not augur well for the prospects of consensus being reached.
The much-vaunted social partnership model failed a major test earlier this year, when unions refused to sign up to the public sector pension levy.
Their bluff was called when Taoiseach Brian Cowen went ahead with the levy anyway.
The glory days of union, employer and social groups attending gatherings at Farmleigh, hosted by Bertie Ahern, were gone.
The memories of the unions "drinking from the best china" at Government Buildings, as Labour's Willie Penrose famously put it, are dim and distant.
The era of the benchmarking ATM machine was over and the unions were found wanting when it came to achieving agreement.
There is no reason at this point to believe that Cowen is not perfectly serious when he says the Government wants to cut €1.3bn from the public sector pay bill. Indeed, not do so at this stage would seem cowardly.
Cowen is trying to get as much agreement as possible across the board before December 9.
"Whilst people have various views about those, at the end of the day, the Government can't abdicate its responsibility but we want to work with people in a constructive way and recognise that inactivity or inaction is not an option," he said yesterday.
The Taoiseach has the upper hand as he has proved he is willing to act with or without the unions' support.
Today's protests and the day of action later in the month will be used to make a point.
Ultimately, though, there's a phoney war going on as both sides know there is no appetite for all-out strikes.
The union leadership has a mandate to represent its membership in a realistic manner, not by attempting to ignore the inevitable.
fsheahan@independent.ie
- Fionnan Sheahan
Irish Independent
