Told You So
Well, I did.
Budget 2009 seems like a long time ago. Things have gotten a hell of a lot worse since then. But all the warning signs were there, and the Government’s failure to address them has been astonishing. Still, in February, they’re only talking about doing something.
As I said back in October, what people want is a plan. Some sign that there’s an end to this, and that the Government has even a vague notion about how we’ll get there. If there’s an end in sight, even if it’s distant, people will be far more likely to take a bit of pain in the interim. At the moment, people are being asked to take pain with no particular reasons being given. It’s no wonder they’re not happy.
So, Budget 2009 has come and gone (at least until next week, when Brian Lenihan starts reversing decisions, and March, when he needs a mini-Budget because all the income predictions are wildly optimistic).
That was my opening line in October, and I stand by it. It only took them a week to start reversing on medical cards and other, less controversial decisions. Still, there was no reversal on the prize money for the dogs. No turnaround on wealthy people paying less PRSI.
Today, the social partners (to the total exclusion of the elected representatives of the people) are deciding what pain should be administered, and who should feel it. Of course, that’s not IBEC or ICTU’s fault. They’re being told to pick from a menu of cuts, which the Government will then try to deny all responsibility for. This is a total abdication of duty by the Government. These decisions needed to be taken this time last year, when it was clear to us all what was gonig on, rather than now, when Ireland’s reputation is in the toilet. I was in Brussels last week, and people there are literally shocked at what we’ve done. And at what we plan to do. As one former Prime Minister, also a leading economist, said to me, cutting spending and making people unemployed in this situation “is like throwing petrol on a fire.” There are only three countries in the EU doing nothing right now – Greece, Denmark and Ireland. And Ireland is the only one planning to get itself out of this situation by making the situation worse.
Since when has the best solution to rising unemployment and a lack of money in the economy (because those are the two real factors at the moment) been to sack a load of people and cause the rest to have less money in their pockets and fear for their futures?
Regardless of the PR war that’s likely to ensue between employers, unions and Government (which the unions will inevitably lose because they’re terrible at PR), it’s likely that the outcome will require changes to the tax base, so my prediction of a mini-Budget in March is well on the way. Even if the end result doesn’t require a mini Budget, the Department of Finance’s quarterly numbers in April sure as hell will.
The only thing that’s going to get us out of this situation is a plan. A realistic, reasonable plan that has defined targets for the end of each of the next five years, and strategies and tactics to get us to each. It is only when people feel confident of the future that they will start spending money again. A particular problem at the moment is those who have money and safe jobs, but are unwilling to spend because they fear for the future. We must get those people spending again.
Fear is generated by the unknown. By a lack of control. By the feeling of helplessness. We need to remove those with clear, concise and realistic planning for the recovery. And we need to do it now.