'There is no denying the reputational damage Ireland has endured in recent months," Finance Minister Brian Lenihan wrote in the Financial Times on Wednesday.

"In Ireland we find ourselves in an unusual position; we are negotiating entry into a programme of financial support although the economy is beginning to recover. Because of our sustained efforts to stabilise our public finances over the last two years, our budget deficit will decline to just over 9 per cent next year," he wrote.

Utter nonsense.

Even taking a step back from the hysteria and madness of the past seven days, what is clear is that Brian Lenihan and the rest of the Government are still firmly in cloud cuckoo land.

Firstly, Ireland's deficit this year will be 32 per cent, not 9 per cent, because of the cost of the bank bailout. Secondly, Lenihan's figure is also misleading because he is using a holiday on interest to distort the numbers. We will still have to pay the money back in 2013.

Needless to say, the markets and international financial houses regard his figures as farcical and not credible.

The four-year plan has few positive elements to it, but they are being introduced two years too late. Had Lenihan introduced this four-year plan back in October 2008, much of the pain being suffered by the Irish people would have been avoided.

Now as it stands, because of this plan, Ireland is facing at least another four years of harsh, biting austerity which will only further Ireland's stagnation, not end it. Of the few positive measures, the reduction in the minimum wage from €8.65 to €7.65 is a welcome respite to small business owners who have been abandoned by this Government.

However, the overriding message of this plan is a negative one. It is a slash and burn accounting exercise which is as inequitable as it is misguided. In a stinging rebuke of the Government's plan, the ESRI's Richard Tol said the four-year plan "repeats many of the things that we have seen before. It is not a new strategy. It is more of the same. Strikingly, there is no culling of quangos and no privatisation".

Also, the continuing indulgence of needless state agencies like the National Equality Authority; the Irish Research Council for the Humanities and Social Sciences; the Digital Hub; the Crafts Council of Ireland; the Housing Finance Agency; and many others while cuts in health spending will kill people is scandalous.

The whole area of public sector pay and pensions is another missed opportunity. Lenihan, like Cowen, seems to have become wedded to the economically treasonous Croke Park deal.

Refusing to properly stand up to the public sector unions and cut pay again for existing civil and public servants is among the biggest mistakes in this plan. At the press conference on Wednesday, Lenihan paid tribute to the sacrifice made by public servants in the past 18 months.

What he didn't say is that thousands and thousands of public sector workers have still been receiving incremental pay increases since 2008, which has insulated them from the effects of the cuts made. You haven't heard Blair Horan, Jack O'Connor or David Begg shouting this point out in all their complaining.

And yes, they have started to contribute to their pensions in the form of a levy, but let us remember this. Despite the turmoil of the past two years, their Rolls Royce pension is guaranteed, and their value (roughly about 20 per cent of salary) far exceeds the contribution made (7 per cent). On the issue of pensions, the cut in private sector pension reliefs is a major retrograde step and unfairly squeezes middle-income earners even further.

Small and medium-sized business association Isme described the plan as a "mixed bag" saying it lacked "fresh ideas" for a business-stimulus package. It said the decision to reduce social welfare and the minimum wage "while regrettable, is unavoidable" but also described the cuts in private sector pension reliefs as a "mistake".

"On the spending side, a key assumption is that productivity in the public sector will be significantly increased through the implementation of the Croke Park agreement. Rapid progress on this front in early 2011 will be necessary if the alternative route of further cuts in public sector pay is not to be reopened for the 2012-2014 phase of the plan," TCD economics guru Philip Lane said.

On the tax side, the Government has finally come around to the fact that having half your workforce out of the tax net is unsustainable. Lowering the tax relief limits to €15,300 means that medium income earners are likely to pay between €1,000 and €2,000 more in tax a year.

The delayed rise in VAT has been seen as an attempt by the Government to get people who have been hoarding their cash in record numbers out shopping again.

"A standard policy approach is to pre-announce a future increase in VAT, thereby encouraging consumers to bring forward planned expenditures. This is indeed part of the plan but the VAT increase will only be incrementally increased in 2013 and 2014.

"A bigger boost to domestic demand in 2011 could have been achieved by pre-announcing a one-step increase in VAT for 2012," Lane said.

On the issue of water charges, despite talk about it since 2007, meters will only be in by the end of 2014 at the earliest.

Tol, of the ESRI, said the roll-out of water meters is likely to be the next e-voting machines catastrophe.

"Water charging will be postponed to 2014. That probably means that the Department of the Environment plans for a three-year, top-down programme to roll out water meters, paid by the National Pension Reserve Fund! A system with a flat-water-charge-unless-you-install-a-meter-yourself can be up and running in a year."

The plan will have "massive overheads and likely delays", he said. "You may recall the e-voting machines. There were far fewer, and there was no need to enter private property," he added.

Overall, the biggest weakness in the plan is that it is totally optimistic in its growth forecasts, which were vague and dangerously hopeful.

Taking €6bn out of the economy in 2011 and €15bn by 2014 without any sort of stimulus on the other side will result in zero growth next year and Lenihan and co are deluding themselves that growth will just magically start happening following such a deep cut.

"It is disappointing that the plan did not specify in more detail the extent to which these pro-growth proposals are expected to improve growth performance within the near-term confines of the 2011-2014 period," said Lane.

Furthermore, "the plan was silent on the impact of the banking crisis on projected growth rates. While much will turn on the resolution plans that are set to be announced in the coming days, some discussion of this key issue would have been welcome", he added.

Lane's point here is well made. The banks have been the cause of Ireland's demise, central to Ireland's bankruptcy and have caused us to be taken over by the IMF. Maintaining that the two crises (the banking one and the fiscal one) were separate has been a repeated and fundamental mistake during Lenihan's tenure as finance minister.

Both Labour's Joan Burton and Fine Gael's Michael Noonan complained that there was nothing in the plan about the creation of jobs.

Actually there is. The Department of Finance reckons that by 2014, 90,000 jobs will have been created. However, there is scant detail about how these jobs will come about or where they will come from. It is the private sector that will create jobs and as long as it is being hammered by Government, such growth remains a pipe dream.

Ultimately, every forecast Lenihan has given since he has taken over as finance minister has been wrong. Every time our worst fears have been realised. Last Wednesday's plan was not the start of a new beginning for Ireland, but more of the same. That approach will get us nowhere.

Originally published in