Budget must show wealthy elite are not untouchable

INSIDE POLITICS:The reaction to next Wednesday’s budget will inevitably be dominated by howls of outrage from those who feel most affected by the measures. Just to make things even more difficult for the Government they will be amplified to maximum decibel level by the media.

Some of the complaints will be justified and some will be exaggerated out of all proportion, but whatever the scale of the rumpus, it should not blind people to the fact that the country is now very close to getting out of the hole it dug for itself in the Celtic Tiger years. If Michael Noonan meets his targets for 2013, then 85 per cent of the painful measures required since 2008 to save the State from bankruptcy will have been implemented. Getting to the finishing line will not be easy, but the end is now in sight as long as the Government keeps its nerve.

What is steadily coming into clearer focus is that the prophets of doom who attracted such enormous publicity throughout the crisis by urging suicidal options like debt default and exit from the euro have been proved wrong.

The current wrangling in the US courts over Argentina’s debt default in 2001 is proof, if any were needed, that defaulting on our debts would have put this country on the road to perdition.

Whatever its limitations, the Irish political system, with a little help from its friends in the troika, has managed to chart a way out of the terrible mess it got itself into. The pain is not over yet but by 2015 the State’s finances should be back on a sustainable basis.

The budget will contain a list of things that many will find unpalatable. A comprehensive property tax, higher income tax, more stringent conditions for social welfare payments and a cutback in the many entitlements available to pensioners will affect almost every person in the country.

Former taoiseach John Bruton, in an interesting blog during the week, attempted to give some context to the “austerity” policies that have seen Irish people suffer a fall in incomes through pay cuts and tax increases and a big reduction in the value of their assets.

He pointed out that while real gross national product is now back to the 2004 level, it is still 90 per cent higher than it was in 1997, and while consumer spending is back to its 2006 level, it is still 80 per cent higher than it was in 1997.

Adjusting ourselves to living on the level of income we had six or seven years ago is not easy, but even when the adjustment has been made we will still be among the wealthiest countries in the world with some of the highest paid public servants and relatively generous welfare payments.