The emergency budget - Defaulters’ wealth must be considered

THE reactions to the emergency budget were as varied as some were distressed and angry. Amidst the fear there was an acknowledgement that it may represent a start to a long process to rejuvenate our plundered economy.

That sliver of optimism must be tempered though. The unfathomable reluctance to significantly cut State expenditure of e64 billion while on an income of e34bn is a lot more than a hostage to fortune. It remains the festering elephant in the corner, the one that, in time, may well trample us all.

This visceral fear — or is it just misplaced tribal loyalty? — of undoing the Ahern/McCreevy/Cowen spend-and-be-dammed lunacy must be overcome if the pillaged incomes, the attritional tax hikes, the reductions in benefits, the great emotional stress, are to achieve anything in this battle for our survival.

Strangely, though predictably, some of the angriest reactions came from people who had not accepted or even realised that we could no longer live so very far beyond our means.

We should, and Minister Brian Lenihan should too, take a smidgen of comfort from the European Commission’s reaction. Though the commission was involved in budget preparation its support is, and has been, invaluable throughout this crisis. “Ireland appeared to have taken decisive action to contain its ballooning deficit amid an economic crisis,” said the commission.

Yesterday’s reaction is in stark contrast to the rebuke administered by the commission in January, 2001. Then Finance Minister Charlie McCreevy cut taxes and increased spending in defiance of European Council guidelines. Naturally enough, we were outraged that the “economic policy” of a “sovereign state” was questioned. How foolish we were.

Let us hope that yesterday’s reaction is as justified as the 2001 intervention was.

There is hardly an income in the country that will not feel the effects but let us hope — and, if you’re a believer, prayer might not be amiss — that the great step into the unknown represented by a State-owned assert management agency asked to resolve the banking crisis does not, in time, reduce those incomes further.

It is unnerving to think that public funds are involved in a rescue attempt on about e30bn tied up in foreign property — and €60bn more at home. What those properties are worth now is anyone’s guess.

If Government is to retain the moral authority required to complete the process it began yesterday it must accept that some of the old rules went out the window when the indifference and greed of the bankers and developers was revealed.

The traditional secrecy option is out. We can no longer be fobbed off with junior counsel threats about commercial sensitivity. We must be told which developers have defaulted. Not only that but mechanisms to sequester personal wealth must be introduced — no matter where that wealth is salted away.

It would be immoral and utterly unacceptable if defaulting developers were allowed keep personal fortunes amassed, in some instances, on back of reckless gambles that make last Saturday’s backers of the 100/1 Grand National winner Mon Mome look normal. After all the principle exists as Mr Lenihan has insisted that there will be a levy imposed on banks to make up any eventual shortfall in these transactions. What’s sauce for the banker must be sauce for the developer.