| 2.2°C Dublin

'Biting off your nose to spite your face is rarely a good strategy'

It took 10 years of greed and misgovernment to plunge Ireland into crisis, and it will take a lot more than 10 months to turn it around.

The media tends to focus on the latest controversy, whether it's government advisers or the audacity (or insensitivity depending on your viewpoint) of the Minister for Tourism encouraging people to holiday in Ireland in the week before a tough Budget!

However, it's not often that the Government's record is considered in the round. The IMF/EU agreement has been renegotiated. We have saved €10bn for taxpayers by negotiating lower interest rates. Negotiations on further debt reductions are ongoing.

Relations between the two government parties are good and when disagreements do occur, as they always will in single-party or coalition governments, it's usually down to communication issues or a personality clash, rather than a policy difference.

One bank is being wound down and others have been merged to create two large pillar banks: new AIB and new Bank of Ireland. The cost of bailing out the banks is considerably lower than originally estimated. The Government has also honoured its commitment to save taxpayers' money by imposing billions in losses on shareholders and sub-ordinated bondholders, and by securing private investment in Bank of Ireland.

Contrary to what many believe, we have not injected a single cent into Anglo Irish Bank beyond what was committed by the last Government. Sadly, we did not secure an agreement that would have allowed us to impose losses on senior bondholders. In the end, the risks outweighed the benefits for the Irish people.

We achieved the deficit target for 2011 and brought in a tough Budget. More, however, needs to be done in 2012 to help those heavily in debt to address their difficulties, and this will be done. The number of people signing on is slightly lower but there are still far too many people out of work.

Too often, the debate about the Budget deficit seems to get mixed up with the debate about debt, and about bank debt in particular. The General Government Debt will hit €180bn by the end of 2012. A quarter of that is due to bank bailouts. Reading the papers and listening to the commentators, you would think that it was much more. Three-quarters of the money we owe was borrowed by successive governments to pay for public service pay, pensions, services, infrastructure and welfare. And it is this public debt that we are adding to fastest. You cannot get out of a debt spiral until you stop borrowing. As a nation, we need to face up to the fact that more austerity will be required to balance the nation's books no matter what happens to the bank debt, bondholders, the euro or anything else.

On this one, there really is no easy answer and no viable alternative. Austerity alone is not the answer. I think the biggest challenges for 2012 will be explaining our economic policies to the public, and the referendums. That is where we must focus all our efforts.

2012 will see us go to the polls on children's rights and the abolition of the Seanad. We might also have a referendum on the new European 'fiscal compact' treaty. It should be possible to get these referendums to pass, but referendums often turn into a vote on something else. Europe, however, has become a negative word for a lot of people who may want to give the EU a bloody nose. But biting off your nose to spite your face is rarely a good strategy.

The key to securing a 'yes' vote in any European treaty will be convincing people that co-ordinating national budgets is in Ireland's interest, and showing why this treaty is different to Lisbon or Nice. Why? Because it's not an EU treaty at all, but rather an inter-governmental treaty. It will come into force once it has been ratified by nine countries -- and they will. After that, it's a case of opting in or opting out.

No single country can hold up this treaty in the way that we held up Nice and Lisbon. There will be no sweeteners or concessions to convince us to vote 'yes' or to vote twice. If we vote 'no' we just won't be at the table. If we want to keep using the euro, that's clearly not in our interest.

Ten months into this Government, and Mary Harney and John Gormley have been on my mind. Ms Harney clearly enjoyed being in government. She famously said that your "worst day in government is better than your best day in opposition". John Gormley, who did not, spoke about governing in a straitjacket, the constant criticism, sleepless nights and no-win situations.

It's probably a bit of both. But the key as far as I'm concerned, and as far as this Government is concerned, is to tackle Ireland's problems head on, and get the country working again.

Leo Varadkar is a Fine Gael TD for Dublin West and Minister for Transport, Tourism and Sport

Sunday Independent