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Brendan Keenan: Put plans in place now and be ready for inevitable recovery

OKAY, Pat Rabbitte didn't say the Government had no plan for medium term recovery. I only wish he had.

Remember plans? The great and the good would gather in Dublin Castle while the Taoiseach -- Bertie Ahern for as long as anyone could remember -- would outline the measures which would bring higher incomes and more employment to every sector.

When you got into the glossy brochures, however, they were really plans to spend public money. The massed ranks of the beneficiaries of the plan -- employers, unions, farmers, community groups -- sat, beamed and applauded as details of the largesse were revealed.

Nothing else much ever came of such plans. Each year, as the money rolled out, bodies sponsored by the government itself, such as the National Competitiveness Council and the National Economic and Social Council, would detail what was actually happening in the economy.

Rising costs relative to competitors, slowing productivity, relative declines in infrastructure, poorer education performance, and so on. Those governments were very good at launching plans; they just weren't very good at governing.

Different world

The current coalition inhabits such a different world than that of Mr Ahern's administrations that it is probably unfair to assess it in similar terms.

The question is whether ministers quite realise how different is the world in which they must work from that inhabited by Mr Ahern and his pals.

It may seem a silly question about an administration which must comply with the terms of a bailout, reduce deficits by €10bn over the remainder of the Government's life and cope with a threatened global catastrophe every five months, on average.

But these things will pass. How they will pass, or when, is impossible to say. When they have, it will still be necessary to change the way Irish governments do their business, and change the way people expect them to do their business. But we can't wait that long before making a start.

How well is that understood? It is worth remembering that much of the present Cabinet also inhabited the world according to Ahern, even if from the isolation of the opposition benches.

Senior ministers fondly remember their brief period in office in the 1990s and it sometimes seems that they regard the crisis as just an awkward interruption to the resumption of normal service, circa 1996.

At this stage, it looks more likely that it is a fracture, not an interruption, for Ireland and perhaps the world.

Grandiose targets

Even those who still believe in setting the kind of grandiose targets in the old plans -- remember the 100,000 jobs from Fine Gael's investment plan? -- even they must recognise that they do not know enough about what is going on to be specific about how things will be in five or ten years' time.

In their defence, government ministers would say that the crisis simply does not allow time for anything else. That is a genuine dilemma, and one which shows no sign of getting better. The best they can do, perhaps, is be specific about the tasks, and identify the most urgent ones.

Mr Ahern's government neglected and abandoned the tasks they had identified, for fear of unpopularity. Now, the fracture in the economy has cruelly exposed those failings.

These are not the attention-grabbing tasks of fixing the public services. They are certainly not the chimera of looking for growth when the deficit is still more than 10pc of GDP in cash terms. It is the much more subtle task of maximising the growth when the crisis has passed.

We know that will be a slow process. The long-term effect of so many years of abnormally slow growth has become a key topic for economists in several countries.

It is even the concept underlying the "structural" deficit which features in the fiscal treaty, but we won't go there, thank you very much. In simpler terms, the question is whether national income will ever get back to where it would have been without the bubble and burst.

The answer is, probably not, which raises the second question; how big will the loss be? That is where policy comes in -- policies which must be applied now, if the loss is to be kept to a minimum.

Old-fashioned Republicans used to publish maps of Europe with Britain missing. The same sense of yearning can be felt if one draws a chart of Irish economic growth without the bubble and burst.

Output in 2011 is much the same in both cases but, in the imaginary case, without the enormous damage done by the crash.

That is not the end of the story, however. The damage is still being done. The unemployed find their skills becoming redundant; those leaving school and college do not get the chance to acquire skills; companies are unable to invest in modern equipment; public infrastructure declines in both actual and relative terms.

The result is that, when recovery comes, the economy is not able to grow as rapidly as it would have if none of this had happened.

One day, output will regain the levels of 2007. Let's suppose that happy moment is in 2018.

The unhappy fact is that output and national income, while they may have reached a new peak, will not be as high as they would have been if this disaster had not occurred.

Spilt milk

This is not crying over spilt milk. The size of that gap between future reality and what might have been will depend very much on what is done now. Action, not regret, is required.

It is still much the same as that identified, and largely ignored, during the last decade. More needs to be done on the weaknesses and anomalies in the employment, re-training and further education systems.

The education system itself needs thorough reform -- particularly at third level -- and a new culture of achievement and accountability.

The high costs and low satisfaction in many private services must be dealt with, as well as in the public services. Starting as soon as the next Budget, there should be deeper cuts in current spending to allow a bigger, better targeted capital programme.

The analysis has all been done but there will be fierce resistance to any such measures. So far, those resisting have always won. They are their own worst enemies in the end, as well as ours. This time, they must be overcome.

Indo Business