Executioner’s axe dangles over the economy

THE Bord Snip part was the easy bit.

These proposals are radical and the suggestion that 17,000 jobs should be axed is about as radical as anything that has ever been proposed in the history of the modern Irish State.

It runs counter to every well-honed commercial instinct spawned by the Celtic Tiger, but it has been generally accepted that spending cuts is the preferable way forward to get us out of this crisis, and not more taxation.

This Bord Snip report is like an executioner’s axe hanging over the economy and how we react to these recommendations will determine the long-term outlook for all citizens.

Opposition to many of the suggested cuts will be strenuous. Strike action is already being threatened while huge concern has been expressed at the social implications of some of the proposals.

Lisbon could fall again if voters choose to use the opportunity to express their anger with the Government.

Generally the establishment reaction has been positive, with leading economists saying yes to cuts in social welfare, health and education, as best for the country, the banks and the stock market.

One thing is certain: If the Government tries to cut the old age pension entitlements indiscriminately, the fallout will be huge.

The point needs to be made that Fianna Fáil governments of the past 10 years have traded on their commitment to improve the lot of the less well-off.

If, as seems to be implied, the old age pension is cut by up to 5% along with other social welfare payments, that could prove to be a bridge too far as we prepare to pump further billions into shoring up our bankrupt banking sector.

Our headline yesterday, saying the elderly, children and the disabled are in the firing line from Bord Snip, is quite chilling in its implications.

At this point it has been suggested we should all step back and take a deep breath before making any further comment.

Before doing that, it is fair to say that the two tomes presented by An Bord Snip Nua could be about as well thought out as Charlie McCreevy’s decentralisation policy of a few years back.

That was a disaster and the danger is that if the Government rushes headlong into acting upon the recommendations, the end result could be the disruption of state services vital to the future of the economy.

Its suggestion that Enterprise Ireland should become the dustbin into which County Enterprise Boards, Údarás na Gaeltachta and other industry back-up agencies should be dumped is worrying.

How their functions could be successfully incorporated into Enterprise Ireland is a moot point.

The cost of the transition could also be substantial and could be more costly to implement than the savings that might result.

On top of that it suggests Enterprise Ireland and the IDA should share offices overseas along with Bord Bia, but stops short of saying merge IDA with Enterprise Ireland. On the face of it, that might be the easiest part of this enormous jigsaw to deliver.

While it is easy to point to the savings that can be made, the implications of how these savings might be achieved is ignored.

But the report will focus minds in the weeks ahead and how we deal with it as a society and as a Government will have implications for us all.

It must be borne in mind that the modest recovery being talked about for the economy by the Central Bank and the ESRI this week is based on the state achieving the €5 billion cuts outlined in the report.

Without those savings, this economy is in danger of going totally bankrupt.

That’s where we are at right now.