Labour figures mark a U-turn whatever way you look at them

SURGERY and not butchery. The scalpel rather than the hatchet. Labour published its revised economic strategy yesterday, calling for less cuts and less taxes. But it got badly exposed in the process — telling the electorate something completely different to what it had been saying just a few short months ago.

Think back to the infamous “all party talks” between the Government and the main opposition parties last October.

The Greens, seemingly terrified at the ongoing economic collapse and the risk of taking most of the blame for it, had floated the idea of a “national consensus” on a way forward. Their senior coalition partners, Fianna Fáil, were sceptical but reluctantly went along to keep the Greens happy.

Fine Gael and Labour were sceptical too, because there was no way on earth they were going to be seen supporting a government that was dreadfully unpopular and on the verge of collapse.

So the talks produced nothing — except a reinstatement of what all the parties involved had already agreed: that a €15bn fiscal adjustment was required between then and 2014.

It wasn’t as if the parties had any choice: €15bn of spending cuts and new taxes was the only way Ireland could reduce its deficit to 3% of GDP by 2014. And the 2014 deadline had been set by the EU. Any responsible party either in government or seeking power could not afford to thumb its nose at Brussels.

So Labour signed up to the 2014 target. Absolutely needs to be done, Eamon Gilmore said. Labour would meet it, he pledged. But despite what he said, Labour had a problem with both the sums and the politics.

By that stage the party had been engaging in something of a reverse auction with the Government for two years on the economy. If the Government said it was going to cut X amount, Labour effectively made a lower bid, saying it would cut only Y.

In March 2009, for example, as the Government was preparing its emergency budget for the following month, Taoiseach Brian Cowen made clear the scale of adjustment required would be in the order of €4.5bn.

Too much, said Eamon Gilmore. He argued that the economy could sustain only €2.5bn of an adjustment.

So back to last October. By this stage, the €15bn target had been laid down for some time and the Government made clear it would “frontload” the pain by making €6bn of an adjustment in the December Budget as a first step.

Too much, said Eamon Gilmore. He argued the economy could bear only €4.5bn of a cut.

But those sums left him with a problem. If only €4.5bn of a cut was made, that left another €10.5bn to go over the following three budgets in December 2011, December 2012 and December 2013 — a vast sum.

But Labour got off the hook in two ways.

Firstly, the EU and IMF arrived in town to bail the country out, and Brussels agreed that Ireland could have another year — until 2015 — to meet the deficit reduction target.

Secondly, the Government decided to stick to 2014 anyway, and so persisted with the frontloaded €6bn adjustment, leaving only €9bn to go over the next three years.

So, courtesy of the Government, Labour was facing less of an adjustment to make. And courtesy of the EU, it was facing more time in which to do it.

It sought to take advantage of both factors yesterday in nakedly political fashion.

That €9bn adjustment over three years? Too much, said Eamon Gilmore. The economy could only take €7bn, he argued.

And the implication of that for the 2014 deadline? No bother, he said. We’ll just extend it out to 2016 — in other words, going another year beyond the EU deadline.

He said this with confidence because he now knows there is a possibility of renegotiating at least some elements of the bailout deal within a wider EU solution to the continent’s debt crisis. In addition, it’s arguable that Labour’s policy is the correct one — given that the Economic and Social Research Institute previously warned that a €15bn adjustment by 2014 could tip the economy into a “protracted recession”.

Yet, it’s very hard to avoid the conclusion that Labour has been politicking all along in something very close to a con job on voters.

The Government says a €4.5bn adjustment is needed? Labour says €2.5bn.

That EU deadline? Labour says it will meet it.

The Government says a €6bn adjustment is needed? Labour says €4.5bn.

That EU deadline? It’s looking like Brussels will give some leeway.

The Government says a €9bn adjustment is needed? Labour says €7bn — just a few months after it was advocating a situation where €10.5bn of an adjustment would have been required at this stage.

Undercutting is the name of the game. Make both the Government and Fine Gael — which still agrees with the 2014 deadline — sound callous. Present itself as caring. But voters know a U-turn when they see one.