Budget day has arrived — I just hope I’ll be able to sleep tonight

I HOPE you get a good night’s sleep tonight. I have an awful feeling this is going to be a bad day, and that not a lot of good will come of it.

I’ve had an uneasy feeling for a while now that we’re all going to be in a bigger mess by the end of the day than we are right now.

I’m just about old enough to remember the Cuban Missile Crisis, and the air of foreboding there was when we all heard that John F Kennedy was going to address the nation. In fact he spoke to the world, and even though I didn’t really understand a lot of what he said (I was 12), I can still remember that sense that a clock had started ticking as soon as his speech finished.

It was only a matter of hours after Kennedy’s address that the Russians gave in, and the world breathed a sigh of relief. But it was a long few hours.

I don’t want to give the impression that this is a doomsday moment, as that was (or seemed to be, anyway). But it is, I think, the Government’s last chance to get it right. If today’s budget is a mess, it may be many years before we get back on any kind of track to economic recovery. Above all, if there isn’t a coherent sense of a government putting a strategy together, if it all looks like they are still floundering around, we’re in serious trouble.

You could argue that the mess we’re in now started to be created almost exactly a year ago this week. Bertie Ahern announced to an astonished and somewhat relieved nation that he was going to call it a day. And then he didn’t — not for a month anyway.

We had more farewell appearances than Frank Sinatra, and all politics was suspended to allow it to happen. I doubt if there was any serious government work done during that month, even though the clouds of an economic tornado were gathering over the hill.

And then we had a month of celebrations for the new Taoiseach, chosen by acclamation by his party and then easily elected by the Dáil. By the time he became Taoiseach, the economic twister that was to wreak such havoc was clearly visible, and it was heading our way. Brian Cowen was nominated for the office of Taoiseach by Bertie Ahern in the Dáil on May 7 last — less than a year ago.

In seconding the nomination that day, the Green leader, John Gormley, said: “We now enter uncertain times, with rising oil and food prices, the credit crunch and climate change all posing major challenges to governments all over the world. The Minister for Finance, Deputy Brian Cowen, is ideally placed to tackle these challenges and to turn them into real opportunities for this country”.

In his speech to the Dáil accepting the job, Cowen referred to turbulence in financial markets, and inflationary pressures associated with the market for commodities, especially oil and food. And he talked about how, here at home “we have the reality of an economy in transition to lower levels of growth”.

But the whole tone of his speech that day was to suggest two things. First, that he recognised that the economic realities of the previous 10 years were changing. But second, that he believed Ireland was well-placed to deal with whatever came along under his leadership. That day — and don’t forget, this is less than a year ago — he believed in the theory that we would have a soft landing.

Before the Dáil rose for the summer recess on July 10 last year, the Taoiseach spoke on an economic motion in the house, and once again demonstrated his belief that things weren’t too bad. Although the global slowdown had hurt us — it was still all the fault of international conditions — the fundamentals in Ireland were still strong, and the economy, he said was still capable of significant growth.

“Those intent on talking down our economy,” he warned, “at a time when we want to maintain confidence in this country, against the background of a general global economic slowdown, diminish themselves and their cause.”

And then the Government went asleep. The month of April was spent celebrating Ahern’s departure, the month of May celebrating Cowen’s arrival, the month of June reading themselves in to new jobs — and apparently all convincing themselves we could survive the economic tornado by hammering a few extra nails into the woodwork. And then the months of July, August and September on holidays.

And by the time they came back, the tornado had struck. It had ripped the roofs off houses, it had flattened banks, it had destroyed the capacity of a number of sectors of the economy to function.

The Government’s response was its disastrous budget of October, and we have been lurching from one disaster to another ever since.

There are people who earn huge fees and large incomes from telling us all how to do strategic thinking.

But actually, strategy isn’t that hard. If you want to put a decent strategy together, you have to be able to answer three questions. Where are we now? Where do we want to go? How are we going to get there? The first of those questions has to be answered with honesty, the second with vision, and the third with a lot of hard work. And of course, if a key to your strategy is to bring people with you, you have to put a lot of hard work into communicating as well.

They are the tests that need to be applied to this afternoon’s budget speech — does it tell us honestly where we are right now? Does it offer us a clear set of choices about future direction? Does it start the job of getting us there — step by painful step, maybe, but nevertheless with some coherence about the things we need to do and how they will all add up to recovery?

There isn’t a huge amount of point in my trying to tell Brian Lenihan what specifics he should have in his budget speech.

All but the tiniest finishing touches were put to the speech over the weekend anyway. We know there are going to be significant tax increases — if there weren’t, we wouldn’t need a budget, because you can cut spending without the advance approval of the Dáil.

But if any lessons have been learned from the ham-fisted approach so far, the tax changes announced this afternoon will be seen to have a greater impact on higher earners.

That’s actually not easy to achieve, because of the way the system is structured (especially after the McCreevy years).

But over and above that, today’s budget has to tell a story. That story has to be about how we are going to strengthen our defences against the tornado, and even more convincingly still about how we can rebuild once the tornado has passed.

If I hear that story today, no matter how painful the specifics, I’ll go to bed a little happier tonight.

I’m not too hopeful, but I’m keeping my fingers crossed.


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