So much depends on re-negotiation with Europe
The net result was that consumer and business confidence evaporated and consumers and businesses that had been contemplating spending or investment were too fearful and uncertain to follow through. Thankfully, we now have a government with a decisive majority and an apparently large appetite to get on with the task of running the country and digging it out of its hole.
We must hope that it gets on with the job in a decisive way and that it walks the walk rather than just talking the talk. The stakes are too high for anything else.
The people of Ireland are crying out for strong, brave and decisive leadership and effective policy making. Leadership without concrete action would be of no use and if the Government displays any such leanings, the national psyche will most likely go in to a state of absolute depression.
The Programme for Government can arguably stand accused of being too vague, general and full of aspiration. However, it was thrown together over a couple of days and so could not contain great detail.
Furthermore, there is so much uncertainty relating to the real size of the black hole that is the banking system, and the basis for negotiating a workable solution with Europe, that it could not be too prescriptive about the future. Too much remains unknown. The two EU meetings in March and the next round of banking stress tests will provide some greater clarity on the magnitude of the task.
In relation to the generality of the economic and financial elements of the programme, sensible people who recognise the realities of Ireland’s plight could not find too much to disagree with. Re-negotiation with Europe is essential given Ireland’s unworkable plight.
Looking at the various policy suggestions in relation to the crucial small and medium-enterprise sector, there is a lot to be positive about, provided the policy proposals are followed through on. The reform of public procurement, changes to bankruptcy legislation, a single business tax for enterprises with turnover of less than €75,000, the streamlining of the regulatory burden, a credit guarantee scheme and a strategic investment bank are all eminently desirable.
I think a single business tax would be desirable for companies with a much greater turnover than €75,000. The changes to VAT and employers’ PRSI are also very sensible. However, I worry that the proposals for reform of local government will not be radical enough. Commercial rates and local authority charges as they relate to business are too high and must be cut substantially as a matter of priority.
The programme covers many aspects of Ireland’s economic, political and social system. At a sectoral level there are many sound suggestions in relation to tourism, the agri-food sector, international education, and the green economy. I particularly like the idea of developing the “Education Ireland” brand.
If the programme were to be fully implemented, I have no doubt that Ireland would have a much more efficient and effective economy and society. In my view the success or failure of this government should be assessed two years into its lifetime at the earliest, and mainly by reference to the number of people engaged in real and sustainable employment.
However, we should not forget that the Government was handed an incredibly tight straitjacket from its predecessor and that ultimately what Ireland is being asked to do in relation to bank debt, sovereign debt and the fiscal targets is simply not feasible without substantial help from Europe.
