GNP growth targets are fanciful at best, deceitful at worst

IRELAND’S domestic economy is a bit like Raftery the poet: its back to the wall, playing music to empty pockets.

There is nothing in this budget to stimulate growth, making the Gross National Product (GNP) growth targets in this budget and the National Recovery Plan 2011-14 fanciful at best, deceitful at worst.

This undermines the entire budget. If the growth targets are not met, then the anticipated tax yield will not materialise. It looks like the dunces of Merrion Street have got their sums wrong again and this time we will pay, sooner or later, by having to default on our burgeoning national debt.

We won’t be able to pay the 5.7% interest rate on the €67.5 billion EU/IMF bailout. We will be paying €8.5 billion a year servicing the national debt by 2014 on the Government’s own projections. If the economy does not grow, we won’t be able to meet these payments and will be forced to default on the entire national debt, banks and all.

Europe want us to hobble along until the rules change on screwing all bond holders in a default situation are introduced in 2013. Then, and not until then, they will make us default. That will be two years wasted and billions down the drain.

Between now and 2013 Ireland will have depleted its €25 billion in cash reserves and committed the bulk of the National Pensions Reserve Fund to the banks. We will have no choice but to default, not only have the Government played bad poker with the EU they have failed to read the hand they have been dealt.

Its time to face reality and get rid of the German-imposed Stability and Growth Pact annual budget deficit target of 3% of GDP. The 3% is an arbitrary figure. Would it kill anyone if this was 5%? In a word “no”.

The crafters of this budget have shown as much imagination as lighthouse whitewashers. There is nothing that gives any real hope to the hard-pressed citizenry.

This savage budget will knock the stuffing out of consumers. It has been hard to separate consumers from the billions they have stashed away in low yielding bank accounts, but after yesterday’s budget the instinct to hoard will only be greater. And, those that do dip into their savings will be the families and individuals that have been forced to fall back on savings to meet day-to-day household budget requirements because of a combination of wage cuts and tax increases.

The hit on ordinary taxpayers has been fierce. Finance Minister Brian Lenihan failed the test of statesmanship and manliness when he failed to tell the nation, live in his budget speech, the detailed impact on people’s pockets of the budget cuts. This has been custom and practice on Finance Minister’s budget speeches, instead he referred people to the “Summary of Budget Measures”. He bottled it, and left it to the media and others to tell people just how severe this budget is.

Increasing education costs is a retrograde step and will result in people who should go to third-level institutions not getting the education their talents and this nation deserves. Many parents will not be able to afford to put their children through college, others will decide, selfishly, not to erode their standard of living to pay for their children’s education.

In the 1980s during the last severe recession, there was the outlet of emigration to the US and Britain, jobs in the banks and civil service to take many of the talented who did not get to go to college. These outlets are gone for now, and those teenagers and their parents who want, and fail, to get a third level education, will never forget being left behind while their peers surge past them.

It is worth noting that the IDA can only grant aid companies investing in Ireland to the same tune as other EU member states.

We have a lever we can pull to make us more attractive as a location for vital foreign direct investment. It has worked well in the past and can do so again, its called education. There is no cap on investment in education and it is a well educated workforce that will in the final analysis keep this economy growing.

Even if many of our graduates are leaving Ireland on the emigrant plane they are doing so with the ability to earn a decent wage and the potential to return as key movers and shakers in the years ahead.

We should not be sending them away with a bitter taste in their mouth.

We must now look to the future and it falls on each citizen to do what they can to make this a better place for all of us. That means working together and not having a go at each other.

Ní neart go cur le chéile.