Debt deal mooted - Another reason to be optimistic?

It is far, far too early to celebrate the announcement that the European Union is considering an extension of Ireland’s debt repayments scheduled over five years or more, but it may not be too early to hope this development means the tide may really be turning in our favour.

That European finance ministers will press the EU-IMF troika to finalise a deal adds to that sense of possibility. A note of caution is necessary though — agreement has been reached in principle to extend the payback window but the extent of any new deal and the minutiae of how that might be achieved remain unknown.

It is also, if such an extension is eventually confirmed, another significant victory for Finance Minister Michael Noonan and his team. Coming so soon after the very welcome deal on crippling bank debt, it proves again that a good case, combined with patience and determination, and advanced by a skilled politician nearly always prevails in the end. It is also, and so many strident opponents of the EU’s role in our affairs may find this difficult to swallow despite the obvious reality, another vindication for those whose faith in EU solidarity endured even through the darkest moments of our difficulties.

As in all of these matters there is a certain high-wire delicacy in how things are progressed but now at least Mr Noonan can proceed in the knowledge that the support made public in recent days represents a very comforting safety net.

How much happier Government might be if another safety net was strung under the Croke Park extension process, especially as any deal on repackaging debt will be influenced by how successful or otherwise the Government is in reducing expenditure.

Yesterday afternoon another union — Unite, with around 6,500 members, mainly in health and local authority sectors — joined the refuseniks saying the proposals were a “a sugar-coated poison pill”.

This once again brings into sharp focus the tensions between achieving deficit targets agreed with the troika and reducing the public sector pay and pensions bill but all the while maintaining industrial peace. The scale of that challenge is underlined again in one simple detail — it is estimated that something around €750m — 75% of the €1bn savings sought under Croke Park II — will go to public employees entitled to tax-free lump sums if they retire in the next two years. Details like this show again the Sysiphean nature of the challenge involved in reducing the public sector pay bill but also show how very important it is that it is.

Speaking at the British-Irish Parliamentary Assembly in Donegal yesterday ESB chief executive Pat O’Doherty defended pay levels in that semi-state organisation. The ESB, and some other semi-state companies, pay wage rates easily in the top bracket, compared with their international peers. For a long time these employees have had the best of both worlds — pay based on commercial principles, despite being a state-owned monopoly, but with all of the protection and security enjoyed by civil servants. At this point in our history that seems at least inequitable. That situation deserves to be considered, because it can hardly be justified.


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