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All parties must bite fiscal bullet

THE Fine Gael and Labour teams who were briefed on the fiscal correction programme by Finance Department officials yesterday had expected to hear bad news. Their leaders, Michael Noonan and Joan Burton, found the news worse than they had foreseen.

Both parties agree with the Government's objective, to reduce the Budget deficit to 3pc of gross domestic product by 2014. Both agreed initially with the first target, spending cuts and tax increases totalling 3pc in this year's Budget in December. Neither took serious issue with the revised projection of 4.3pc which came, apparently by inadvertence, into the public domain.

But although the precise figures for this year and over the four-year period remained unclear yesterday, one thing was starkly, shockingly clear. Ms Burton described the information given to her and Mr Noonan as "very challenging" and "pretty horrific".

The department has revised downward its projections for this year's growth rate. It could be as low as 1pc to 1.5pc. That carries unhappy implications for tax revenue. Faced with a €20bn gap between revenue and spending, Finance Minister Brian Lenihan will have to cut deeper.

It also carries implications of historic proportions for our political system and our society at large.

Whether eagerly or reluctantly, all three main parties have signed up to a search for consensus. Taoiseach Brian Cowen intends to meet Enda Kenny and Eamon Gilmore this week. He will listen carefully to any proposals they put forward.

But their approaches to the task differ, in some cases radically, from that of the Government. Fine Gael wants the spending cuts "front-loaded", with the first Budget of the series carrying the brunt. Labour's present position is far removed from that of the other two parties. In his recent 'Evening Herald' interview, Mr Gilmore in effect refused to endorse any specific measure other than higher taxes for those earning more than €100,000 a year.

This, if accepted, would make savings of even 3pc impossible. It could also make consensus impossible.

That, coming on top of our other woes, would be a misfortune for the country. We need consensus -- all the way to the Budget and beyond, with cross-party input -- because of the magnitude of our difficulties. We need it to impress international opinion. And we need it on a national and not just a political scale. The people must be persuaded of the necessity, and the fairness, of the pain we must share.

Irish Independent