Wednesday 22 October 2014

Burton's way or Brussels' way? There's only ever going to be one winner there, Joan

Published 03/06/2014 | 02:30

Joan Burton. Photo: Clodagh Kilcoyne
Joan Burton. Photo: Clodagh Kilcoyne

Burton's way or Brussels' way? That is the question the woman who would be Tanaiste appears to be asking, echoing the ill-judged words of the man she hopes to replace.

When in opposition in the run up to the 2011 General Election, the now soon-to-depart Tanaiste, Eamon Gilmore, famously took on the might of the European Central Bank. Grasping the lectern in the Labour Party's campaign headquarters, he promised that he would lay down the law to the ECB if elected. Labour's way, he said with utter assurance, would trump Frankfurt's way.

It didn't, of course, and his words have returned to haunt and humiliate him with great frequency.

Now, with Joan Burton just a few short weeks from grasping the prize she has coveted for so long, the likely Labour leader is setting herself up to fight a battle with Brussels that she is as unlikely to win as Gilmore was in his fight with Frankfurt.

Yesterday, the European Commission published its detailed economic policy recommendations for each one of the EU's 28 countries. Among the many things it is seeking from Ireland is the implementation of additional taxes and spending cuts – amounting to €2bn – that have been pencilled in for Budget 2015.

Only if there is a surge in tax revenues between now and the unveiling of the Budget (in just over four months' time) is there any chance of Brussels relenting. If a tax surge does not happen and the Government introduces an austerity-free budget, a showdown with Brussels will be inevitable (since the crisis erupted all eurozone countries have agreed to give the European Commission new powers to veto national budgets if it believes the numbers underpinning them don't add up).

Ms Burton told this column last evening that "a €2bn adjustment will neither be necessary nor desirable" in October and that going ahead with such a package would "serve only to hinder the recovery".

If there is no surge in taxes, it looks as if the front runner for the Labour leadership will be on a collision course with Brussels and, most probably, her coalition partners, within a few short weeks of taking the helm of her party.

And what of the detail of yesterday's report? The eurocrats had no shortage of criticisms of swathes of government.

Michael Noonan's Department of Finance is scolded for not spelling out more fiscal specifics and for what the commission believes is its too-rosy assumptions about the future. "The achievement of the budgetary targets is not supported by sufficiently detailed measures for 2015," the study said, adding that "the authorities' forecast for the later years of the programme are optimistic (and) medium-term budgetary plans are not supported by well-specified adjustment measures."

There are also questions raised about the most basic aspects of the tax system. The Commission is critical of how work is taxed. "Labour taxation is fragmented and complex," it notes, while the way Ireland taxes consumption also comes in for comment. "Reduced VAT rates are not an efficient and well-targeted policy tool to protect vulnerable groups," it states in an implicit suggestion to move towards one VAT rate for all goods and services, as is the case in some other countries.

If Noonan has attracted less criticism than most of his Cabinet colleagues since taking office, there is an entire branch of government that usually receives less critical scrutiny than it deserves – the judiciary. It was good to see some constructive criticism and suggestions coming from the Commission yesterday.

"Judicial and court administrative resources to implement active pre-trial case management are very limited, which may be contributing to delays in the delivery of justice and raise costs," the report notes. It goes on to upbraid those who administer the legal system for a lack of transparency.

"There are significant gaps in Ireland's ability to collect data on the quality and efficiency of the justice system," it observes.

And what of the wider legal profession? Yesterday the commission noted – yet again – the high cost of legal services in Ireland and pointedly said that "unlike other professional services, legal services costs have failed to adjust downwards since the onset of the crisis, in part due to insufficient competition".

The archaic way the profession is structured comes in for ample criticism, as does the failure to push ahead with reform of the way barristers do business.

The 2011 Legal Services Bill has been languishing in the Oireachtas for the past three years.

Yesterday, the commission put renewed pressure on the powers-that- be to put it on the statute book.

While for Health Minister James Reilly, Brussels' criticisms are yet another nail in the coffin of his tenure as health minister.

The shellacking from eurocrats starts with this observation: "Even though Ireland has a relatively young population, public healthcare expenditure was among the highest in the EU in 2012." The report is particularly critical of the State's continued over-payment for pharmaceuticals and goes on to state that "financial management and accounting systems and processes are fragmented across healthcare providers.

This hinders the monitoring of healthcare expenditure and efforts to achieve value for money and an appropriate allocation of resources."

The troika may be gone, but Brussels' detailed critiques of policy matters in Ireland (and other EU countries) is here to stay. Analysis and recommendations of this kind can only help squeeze out some of the great inertia that exists in our political system.

They should lessen the likelihood in the future of the political class crashing the economy yet again. Who could not welcome that?

Irish Independent

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