Cabinet must grasp the nettle
ONE of the most important cabinet meetings in the history of the State began at Farmleigh last night and will continue today. The decisions that emerge will not only determine the basic shape of the Budget to be unveiled on December 7, but will exert a major influence on our economy and society for a decade, perhaps for a generation.
Immediate and firm action must be taken to make a start on rectifying the public finances. But this action cannot cover just one year. It will be part of a four-year plan aimed at the target, agreed with the European Commission, to reduce the deficit to the equivalent of 3pc of gross domestic product (GDP) by 2014.
Much of the public debate has centred on the extent of the spending cuts and tax increases which will be necessary in order to reach this target. Initially, a figure of €3bn was canvassed as the minimum needed in the coming year to begin the process. It soon became clear that this would not suffice because optimistic forecasts for economic growth appear most unlikely to materialise.
Advocates of "front-loading" the cuts and tax rises in the four-year plan called for savings of up to €7bn in the first year. Speculation now centres on a figure of €4.5bn.
To most of the population, none of those figures carries any meaning. And to a considerable extent, the fault lies with the Government, which has made feeble and inadequate attempts to explain them. Sadly, that is entirely typical of a cabinet which has itself had the utmost difficulty in coming to terms with the extent of our dilemma or the measures it must take to stop the rot.
Yet, in one respect the position is easily explained. Tax revenues this year will fall short of day-to-day spending by about €20bn. We must make a beginning on closing this deadly gap. And since we cannot rely on economic growth to improve the tax receipts, we must resort to unpalatable and painful measures.
A debate continues to rage between those who favour the "short sharp shock" approach and their opponents, notably the Economic and Social Research Institute, who argue that taking too much money out of the economy too quickly will condemn us to a long period of deflation, even a "lost decade".
The public find this argument as mysterious as the figures bandied about. They have to look to the Government for guidance. And they have had precious little guidance.
It really is offensive to their intelligence and their patriotism to tell them that they must "take pain" without explaining the nature of the pain, the necessity for it, or the considerations which prompt the Government to choose specific courses and reject others.
Much speculation centres on a likely €1bn cut in health services. Health Minister Mary Harney says this will necessarily hit frontline services. She blames the wage bill, which cannot be cut under the "Croke Park deal". Was she not a member of the Cabinet that approved the deal? And can she be unaware that thousands of backroom staff in the Health Service Executive are paid to do literally nothing?
How much attention will those meeting at Farmleigh pay to the issue of fairness? Above all, can they with clear consciences impose pain on some of the neediest people while ignoring the many elephants in the room?
If they want us to believe in either their competence or their goodwill, they must start at the top, not the bottom.
Pay cuts of 10pc or 20pc are not enough. They should cut their own pay, along with that of all other top earners in the public service, by 50pc. The same goes for pensions. They should end the outrageous practice of allowing sitting deputies to draw ministerial pensions as well as Dail salaries. They should sweep away all the unjustified expenses and allowances, like paying deputies to attend at Leinster House.
They should make an equally clean sweep of the quangos; and they must take public service reform seriously. To date, the pace of reform has been pathetic.
That done, they will be entitled to ask the people to make sacrifices. True, the sacrifices will have to be made regardless of how our elected representatives behave.
But how much more willingly we would make them if they were sought with honesty and courage!