Saturday 22 October 2016

We're wise enough to know pied pipers will only lead us back to cliff edge, aren't we?

Published 09/06/2014 | 02:30

European Commission President Jose Manuel Barroso. Reuters
European Commission President Jose Manuel Barroso. Reuters

WE all know the scene in the movies where the heroine is clinging by her fingertips on the edge of the skyscraper. "I can't hold on any longer," she cries, just as the hero comes to the rescue.

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There is no doubt that Irish households are clinging on by their financial fingertips. The Millward Brown opinion poll for this newspaper shows that many feel they can hold on no longer. Unfortunately, there is no obvious rescue in sight; just the prospect of an appalling drop into a second, more onerous, bailout.

The poll results suggest that people understand the terrible dilemma they are in. The Irish electorate is known for its sophistication. They want to be rescued from the financial pain but today's results suggest they know this may not be possible.

A sizeable minority thinks the Government should go ahead with the €2bn mixture of spending cuts and tax rises planned for the October Budget. This is certainly a surprise after the drubbing received by the Coalition parties in the recent elections.

The two-thirds who say the adjustment should be less than €2bn are not necessarily ostriches with their heads in the sand. One of the many puzzles about the Government's response to all this is that it has not mounted a campaign against the controversial EU Commission calculations on which the €2bn figure is based.

After the medical card disaster, coalition politicians may also emit a hollow laugh at the finding that more people would prefer spending cuts to tax rises. But at one-third versus a quarter, it is a pretty even split. The complaints will be equally loud on either side.

The same politicians may want to ponder the finding that around two-thirds want means-testing of child benefit. Fine Gael and Labour have stuck firmly to the old advice that if you're excusing, you're losing. Almost nothing they have done has been rationalised, justified, explained or defended. Since they are losing anyway, some context to their future actions can hardly do worse and might even go down better.

There will have to be further action and the public seems to know that. Three-quarters say they want to see an end to austerity, but more than half expect it to continue.

As it does, they see the Coalition falling before the end of its term, as it wrestles with the same dilemma of the need to do more in a state of political and financial exhaustion.

It is a rational conclusion to come to. The numbers are clear. Only this year, for the first time since the crash, will tax revenues be enough to pay for government services. But the services – especially health, but not only health – seem unable to manage with the €30bn they will receive, excluding welfare payments.

This is the crunch that no amount of electioneering can get around. The kind of money the existing public sector would require to deliver first-class services is simply not available. Nor will it become available. To avoid disaster, whatever resources there are must go to paying the €8bn annual interest on the national debt, and reducing that debt as a proportion of national income.

It is less clear whether those surveyed understand the dangers. One can hardly blame them if they do not, since none of their leaders have tried to tell them.

To varying degrees, the opposition parties tell them the hardship is unnecessary. The government parties refuse to defend their own figures.

These see no increase in public spending over the next two years and a €4bn increase in tax revenues. Most of this is supposed to come from economic growth, which simply does not fit with the suggestions that revenue from growth can be spent on easier policies.

Those who promise most vigorously to make it all go away are doing best in the polls, but they had better be careful. Labour's fate suggests that broken promises do more damage than no promises at all.

Barring some highly unlikely bit of good fortune, pledges to have no more cuts to services or reductions of income will also be broken if those making them find themselves in office, even after 2016.

If the Government falls before that, anything could happen. Ireland's ability to borrow in the markets depends on the belief that there will be no great political upheaval. If that belief were shattered, it would be back to the troika and a second dose of austerity would be far more severe.

The poll results, such as the belief that property tax will rise, show an electorate with a grasp of the realities but an understandable attraction to anyone who offers an alternative to those grim prospects.

Behind the figures on party support, more detailed answers suggest voters do not entirely believe the siren songs of Sinn Fein and Independents.

That may mean there is still a small opportunity for the Coalition, but it, too, will have to start dealing in realities.

Irish Independent

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