THOUGH the December budget is still nearly five months away, and because it will have a negative impact on every household in the country, it is already getting the kind of attention few budgets of recent decades have attracted.
This is provoked by the realisation that it will be a vital set-piece in our attempts to reconstruct a viable economy. It is fair to say that it will be more important than any budget in recent memory.
Unfortunately, as we all know by now, we do not have the luxury of measures that do not immediately confront the fundamental and systematic failings in our public finances. Just as many households, businesses and individuals struggle to come to terms with a very heavy debt burden by living within their means Government must face that reality too.
The Cabinet spent yesterday at Farmleigh House as part of a process that must end with a package that will save €3 billion. It does not require an exceptional imagination to see that it might have been a difficult and possibly disheartening meeting.
However, just yesterday the Economic and Social Research Institute suggested that the Government should consider cuts of €4bn, arguing that lower interest costs would be worth the short-term pain. This proposal will send shivers down many spines, especially amongst those who argue passionately that we should take a longer term view, restoring some sort of balance to our finances eventually rather than immediately. This idea has many attractions but it does not seem to meet the requirements of the day. It seems more wishful thinking than realpolitik; more Greek than German.
Though a cut of €3bn – or even €4bn – is an enormous challenge it is insignificant compared with the €18.5bn we borrow every year just to keep the State functioning.
However Finance Minister Brian Lenihan proposes to move forward he will meet opposition from some quarter and, like more or less everything in life, timing is important. So too is communication.
In one of his earlier budgets his proposal on medical cards for the over 60s met with fierce and unanticipated resistance. He had to change tack but lost considerable face doing so.
As these are exceptional times maybe exceptional measures are required. And maybe the time as come to be more open about what is being considered. Consultation might pay greater dividends than secrecy.
Legend has it that some of Charlie McCreevy’s budgets were as much a surprise to Bertie Ahern as they were to the rest of us. Though that’s hardly credible that kind of autocracy would not be accepted in these far more straitened times.
This budget will have a far greater chance of success if it is shaped by consensus rather than just handed down from Cabinet. If by being more open about the options or what is being considered makes the process easier and the targets more achievable then why not?
Earlier in his career, defending social partnership, Brian Cowen said a modern country could not be ruled by fiat. There could hardly be a better time than right now for him to take his own advice.
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