Careful choice needed for finance job

TAOISEACH-in-waiting Brian Cowen will have to choose his replacement as minister for finance with care, economists have warned.

While much attention is on the next-in-line for the post of tánaiste, straightened economic circumstances mean the finance brief and whoever holds it are going to come under intense scrutiny in the year ahead.

“Whoever it is, come December, they will face the most difficult budget in 10 years and will have to handle it very prudently even if it’s not popular,” said Alan McQuaid, chief economist at Bloxham Stockbrokers.

Austin Hughes, chief economist at IIB Bank echoed that view.

“If we were talking about two years ago, it would be different but it’s not a case of the man in charge of the sweet shop any more,” he said.

“The public have to be confident that the minister can say no to cabinet colleagues, say no to interest groups, and has a clear sense of how the public finances work.”

None of the rumoured candidates for the job, Dermot Ahern, Brian Lenihan, Micheál Martin, Mary Hanafin and Noel Dempsey, have a strong background in finance although that is not an essential requirement given the experience on the departmental staff.

“While the politicians change, the civil servants don’t and they keep a close eye on things,” said Mr McQuaid. “We also exist in a eurozone and we have fiscal rectitude responsibilities, so we have to work within certain parameters.”

However, the new minister will have about €70 billion in spending to oversee this year, so there is a lot of scope for getting things wrong and the consensus is that Mr Cowen will want a successor with a conservative approach.

Although Micheál Martin has the related Department of Enterprise under his belt, Dermot Ahern and Brian Lenihan are both strong candidates because of their perceived steady-handed approach to their briefs.

Dermot Ahern would have an edge over Mr Lenihan because of his experience in foreign affairs, useful in talks about the looming prospects of tax harmonisation across the EU and tax treaties with the US.

Noel Dempsey is close to Mr Cowen but may be considered insufficiently cautious and while Mary Hanafin is considered to run her department with rigorous attention to detail and a value for money ethos, a leap to finance may be before her time.

Mr Dempsey’s advantage may be in the fact that his stints in transport and communications have given him a feel for the kind of large-scale infrastructural projects that the National Development Plan will be rolling out under the Department of Finance’s watch.

Brian Cowen is currently Tánaiste and Minister for Finance but given the challenges ahead in finance, he may choose to split the honours up. Either way, a vacancy in finance will lead to a ministerial reshuffle, although the changes are likely to be limited.

Although Mary Harney has professed her loyalty to health, it is possible Ms Hanafin will be given a chance to prove her mettle there. There is also speculation that Micheál Martin could be moved to foreign affairs if Dermot Ahern gets the finance job and that Mary Harney could be moved back to enterprise where she previously served as minister between 2002 and 2004.