IT'S a long road with no turning. For the first time since the recession began, the dole queues are shrinking and consumer confidence is rising. From being the title of a book, Back from the Brink is, hopefully, beginning to describe an economy pulled back from collapse.

Fairly or unfairly, Lisbon has been carried. Warts and all, the National Asset Management Agency is reality. Slowly but surely, green shoots are poking their heads through the surface of despair. Only two things stand between recovery and ruin. The first is confidence. The travelling circus of those queueing up to tell us the hundred ways we've died -- and to convince us that they predicted the bust before anyone else -- has done us untold damage. The EU Commission forecasts Ireland growing faster than the EU by 2011.

But when I interviewed Brian Lenihan for my book last July, he was frustrated at the lack of any positivity in economic reporting: "We are starting off on a far more affluent basis this time and I think that's a point that hasn't, hasn't hit home sufficiently. We're starting from a position where our standard of living is way ahead of the European average."

There are other things to be confident about, besides that. Despite recession, our population is up from 4.2 million in 2006 to 4.5 million today, and headed for five million by 2020. Even the most pessimistic forecaster believes that post-recession employment levels will still be 1.8 million; back where it was in 2005 and half a million higher than in 1997. GDP and GNP levels are also settling back to 2005 levels.

For those who understand what is happening, this is reassuring. The recession interrupted Ireland's journey back to the future -- a long process of restoring population to pre-Famine levels. But this allows a second journey back to the future to be completed, one without which the first cannot be resumed. To get back to growth, we have to liposuction the toxins put into the economy between 2005 and 2007.

Which is where the second barrier to recovery comes in. What we spend on the public sector is unaffordable, and if action isn't taken, Ireland's destiny will once again be in the hands of outsiders.

And here is Lenihan's bitter dilemma. His party was never more popular than when it was throwing money out of proverbial helicopters. But once it started making the right decisions, it sank to its lowest support in history.

He recalls how this dilemma nearly destroyed the country in the Eighties: "My teenage years were spent in the Seventies and the early-Eighties. After Charles Haughey was elected leader of Fianna Fail he made an address to the nation in 1980 in which he said that we were living beyond our means. Then he failed to take action about it and the economy drifted for a number of years and I was among those within Fianna Fail who were unhappy at his failure to take action at that stage, although very loyal to the party ... I believe that Fianna Fail should be a big enough party to be an effective instrument of government in this country and that the discipline of the party and the cohesion of the party in government should provide clear leadership for the country, so I was disappointed in 1980 when that did not happen."

Now Lenihan has provided clear leadership, but not always in a successful direction. In two Budgets he has made more budgetary changes in six months than Ray MacSharry did in three years as finance minister between 1987 and 1990.

MacSharry was a hate figure for those opposed to any cuts. But with the support of opposition leader Alan Dukes, his decisiveness restored growth in the economy and, soon afterwards, public spending.

Fine Gael has changed since then. On May 20 in the Goat Inn in the wealthy Dublin suburb of Goatstown, Fine Gael's new wunderkind, George Lee, gave his maiden political speech. Answering a question I put to him afterwards, he argued that to cut pay for public servants who had committed to mortgage payments and their children's education would be unjust (I pointed out that private sector workers had made similar commitments but were losing their jobs).

It's a view that cuts no ice with Lenihan. "The idea of ruling out any adjustment for public servants means that you have to have either an even bigger adjustment for social welfare recipients or you have to abolish state programmes and simply have the public service sitting there collecting their salaries, so it's not a realistic political position."

Lenihan also criticises any idea of delaying fiscal adjustment, as proposed by both George Lee and, more lately, Siptu's Jack O'Connor. "George Lee has advocated that instead of having a five-year stability and growth pact we should seek the consent of our European partners to a longer-term approach to the public finances. The problem I see there is that the cost of money for Ireland will become prohibitive and it won't be sustainable."

Anyhow, it's not as if Lenihan has any choice. Ideology aside, the case for further increases in income tax, as advocated by Ictu, is non-existent. From just four per cent in March, the rate of annual decline in income tax receipts accelerated alarmingly to 27 per cent in August. As the economy was beginning to stabilise, tax hikes have turned the loss of revenues from a trickle to a haemorrhage.

Contrary to suggestions, not only Lenihan but also his officials "do get it": "The scope for substantial additional revenue-raising measures in this Budget is limited, the Budget for the next year is limited, therefore the main scope of the adjustment of the public finances must take place on expenditure."

Given his loyalty to his party, this is as close as Lenihan will come to admitting the tax hikes were wrong.

What if Lenihan's bravery causes the Government's downfall and a general election? It would, Lenihan argues, be a pointless affair. Had Fine Gael and Labour won the 2007 election, they would have faced the same dilemma. "They wanted even more expansionary economics, even less taxation and even more expenditure on social and other programmes."

These views get support from a surprising quarter. A few days before interviewing Lenihan, I interviewed a heavyweight of another prestigious political clan: Garret FitzGerald. "They (Fine Gael and Labour) allowed a belief to grow that Fianna Fail were effective in economic policies when in fact they were damaging the economy. An opposition which fails to challenge effectively a government that is pursuing economically disastrous policies -- and which goes along with those policies, as happened in 2007 -- is not doing its job."

Lenihan praises Alan Dukes for the Tallaght Strategy, but of Haughey he says: "The impression I found was that Mr Haughey was afraid of the electoral system and was afraid of the fact that he would lose so much support, and in some respects he was right because he postponed action in 1980."

And he adds: "I am concerned about the fact that the political system of the country is ill-equipped to putting the country first."

FitzGerald also worries about Ireland's political system. He says: "It is obvious that our whole society is vulnerable to an electoral system manned by people who are chosen on a clientelist basis and whose orientation is towards meeting local and public pressures and do not have the education, the formation and the experience of taking wise policy decisions."

If the Government collapses over the Budget, mayhem may result. Fine Gael and Labour have never been further apart in policy terms. Fine Gael wants to privatise state assets, suspend public pay rises and increments and implement sweeping reforms of the public sector without a trade union veto. Labour know that most of this agenda is not a runner with their voters.

As well as swollen coffers, that coalition had Labour's rivals, Democratic Left, inside the tent.

What are the alternatives? For Fianna Fail, supporting a minority Fine Gael government from opposition -- Tallaght in reverse -- offers the chance of redemption, not to mention power without responsibility. Or Fianna Fail may recover. Even the usually sceptical Garret FitzGerald entertains the idea. "Fianna Fail is a very efficient organisation and I am sure they will in time, recover some of the ground lost," he says. "If the Government manages to stay in power the position in two or three years' time may be quite different."

Or the unthinkable could happen. In a post-election scenario where Labour are unable to countenance government with either Civil War party, those parties declare an end to that very same Civil War. Younger generations barely understand, let alone care, about their differences.

If the trend of recent decades continues, Fine Gael and Fianna Fail's combined 'old-firm' vote will sink below the critical 50 per cent threshold within a decade. Coalition would then be inevitable. If so, why not join together now when the country badly needs strong government, rather than waiting until it's too late?

- Marc Coleman

Sunday Independent