Trying to figure it out
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IN VIEW of the dreadful shortfall in expected tax revenues, the Government should consider a mini Budget in the new year. The object of this mini Budget should not be to introduce panic measures, such as tax increases, but rather to make realistic forecasts and introduce achievable targets so that, next year, we will not have to endure the monthly revisionism and ever-deepening gloom that marked 2008. The people need to see a roadmap, in terms of years, rather than the current, uncertain bush beating.
As the latest chapter unfolded in the Dail, the Taoiseach failed to signal that any such roadmap exists, as yet.
The Government would seem to have some choices. Ideally, it would find ways to invigorate and expand the economy, but in the present economic climate, this is a big ask.
Alternatively, the Government could choose to try to ride out the storm and do little or nothing until the economy, hopefully, recovers.
Or, the Government could reduce the need for borrowing, by finding new ways to save on public spending. That is, without cutting frontline services.
While the review body, variously dubbed 'An Bord Snip' or 'An Bord Slash' (depending on your sense of urgency) goes in search of such savings, it is not certain that the country can afford the time the Government seems to need in order to make up its mind to tackle public service reform.
It is quite dismaying that the Government is still standing by its plan to increases under the public partnership pay agreement. Falling inflation -- and perhaps no inflation at all in a torpid 2009 -- means that a 3.5pc increase is as unwarranted as it is unaffordable.
Sooner or later, the spectre of economic decline is bound to take its toll on the body politic. Opinion polls have already registered the public's dissatisfaction with the Government's handling of the economy.
Worsening public finances must place a question mark over the Green agenda, the prices demanded by an increasingly beleaguered John Gormley to keep his party in government. What effect might the introduction of a carbon tax next year have on the mood of the electorate?
No, the Government needs to think out its way forward . . . and then spell it out.
