Sunday 19 January 2020

Yet another indictment of our architects of destruction

Cowen and Ahern, through their negligence, incompetence and recklessness, have wrecked the economy, writes Daniel McConnell

Another week, and another report telling us how Ireland's economy was ruined. "The experience of recent years shows the very high cost of pursuing bad economic policies," the ESRI's Recovery Scenarios for Ireland told us.

"The depth of Ireland's recession and the massive funding crisis in the Irish banking system have necessitated swingeing interventions to stabilise the government deficit," it added.

Bad economic policies -- including the fuelling of the most pronounced property boom in western Europe, the huge expansion of useless quangos and the skewing of our tax system -- placed Ireland back among the list of European rogue states. Bad policies pursued by former Taoiseach Bertie Ahern and his successor and former Finance Minister Brian Cowen.

Ahern, the chief architect of Ireland's collapse, and his willing accomplice Cowen, through their negligence, incompetence and recklessness, have condemned Ireland to a path of fiscal rectitude so severe as to cause real long-term damage.

The cost of their mistakes is phenomenal, and their impact is so far reaching and devastating.

As a result, we are now €82bn in debt -- which will be at least €150bn before we're through. Some 452,000 people are out of work, with 280,000 of those job losses coming in the last 18 months. The country could lose a further 200,000 through emigration by 2015, the ESRI warned.

The interesting thing about the ESRI report is that it is the latest to lay the blame for Ireland's calamity at Cowen's door. Central Bank Governor Patrick Honohan also pointed the finger of blame at the Taoiseach, as did Regling and Watson.

The EU, the IMF, rating agencies and a whole host of economists have all lined up to blame Cowen and Ahern's economic policies for Ireland's demise.

Everywhere you look, all avenues of our economic woes lead back to Cowen.

Now, for his part, the Taoiseach has repeatedly defended himself, saying he acted on the best advice around. But he, and Ahern before him, were and are the political masters. He, as Taoiseach, is there to listen to advice, but then must make up his own mind. They make the decisions and that's why he gets paid so well.

What's worse is that neither the ESRI report nor the Moody's downgrade on Monday seemed to concern Cowen at all.

But enough with the past, to the future, and Ireland's fortunes are dependent on Brian Lenihan.

Lenihan, who has always managed to distance himself from the mistakes of Cowen and Ahern, has committed to taking €3bn out of government expenditure at the next Budget.

At the end-of-term cabinet meeting at Farmleigh on Wednesday, he presented his cabinet colleagues with a 40-page memo outlining his view on where cuts in spending could come from.

"The implementation of this programme of fiscal cuts imposes real costs on the economy in terms of lower output and employment; however, we believe they are necessary to ensure the long-run sustainability of the public finances," the ESRI said.

It reckons that between now and 2014, in total the Government will need to take out another €7.5bn from spending to bring Ireland back in line with agreed EU debt levels.

The real cost is the closure of schools, hospitals and further cuts in social welfare and child benefit.

It is the further reduction in wages and all of our standards of living.

And while I agree it will be painful, there is no other choice. Because of Ahern's desire to buy everybody off in the good times, including the €25m slush fund for unions, and Cowen's desperate desire to keep social partnership alive, our spending must be cut.

We can't go on borrowing €20bn a year, and the time has come to cut the real fat, like the quangos or the needless administration in the HSE out of the system.

Added to all this is the issue of the banks -- which between Nama and capitalisation could cost anywhere between €50bn -- €70bn.

The secretary general of Lenihan's department, Kevin Cardiff, appeared before the Public Accounts Committee on Thursday to discuss the department's role on the night of the blanket guarantee on September 29, 2008.

While other committee members got bogged down in the detail of the documents released, Sean Fleming astutely queried the documents that were not released.

'Lenihan is to spend most of August resting up -- of all ministers he deserves a break. Ireland needs him at his best when he returns'

It emerged that out of 84 documents considered for release, only 22 were released in full, many others were partially withheld and 50 or so were deemed not suitable for public consumption.

Fleming pressed Cardiff as to why so many were being withheld and pointed out that any investigation into the guarantee bordered on farce, given how much documentation was withheld. "We are being asked to operate in a vacuum," he said.

We all know from last weekend what was released.

What isn't released is what happened that night of September 29. That crucial six or seven hours from when markets closed, to the arrival of bank CEOs and chairmen into government buildings, and, crucially, why Cowen and Lenihan decided to go for the wide-ranging and risky bank guarantee scheme.

In asking the question, Fleming hit the nail on the head, whether he meant to or not.

Under question again is Cowen's decision-making at a crucial time, under pressure. From Cardiff, we were left asking ourselves why, after weeks of meetings about meetings, did Cowen only push the button on the guarantee when the bank chiefs came knocking at his door?

As the ministers head off for their summer break, we now have to wait until the autumn before the budgetary process kicks into gear. Lenihan has a huge task ahead of him -- not withstanding his own health concerns.

He is to spend most of August resting up -- of all ministers he deserves a break. Ireland needs him at his best when he returns.

Sunday Independent

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