Ministers must face up to some tough decisions

INSIDE POLITICS: There are worrying signs that some Ministers still don’t understand the scale of the problem facing the country

DECISIONS TAKEN in the next few months will determine whether the Fine Gael-Labour Coalition succeeds or fails in the Taoiseach’s stated ambition to restore the country’s economic sovereignty by 2016.

There are worrying signs that some Ministers still don’t understand the scale of the problem facing the country and instead of embracing reform are resisting the fundamental changes required to get the country back to economic health.

Some Government TDs privately regret that they did not go for a much bigger belt-tightening exercise immediately after they assumed office in March of last year.

At that stage they would have been able to blame Fianna Fáil for everything and would have been farther along the road to recovery at this stage.

When Ministers gather in Government Buildings on Tuesday for the first Cabinet meeting after the summer break, Michael Noonan and Brendan Howlin will have to impress on them the need for serious engagement in devising the reforms and spending cuts that are required if the December budget is to meet its targets for 2013.

There is a lazy assumption among many Coalition TDs that the Government will inevitably run its full term until 2016 but if the budget targets start to slip and the troika programme goes off the rails things could spin out of control very quickly.

The European Commission, in its latest comments about the implementation of the bailout programme, warned that “despite the substantial progress made so far, the programme’s ultimate success remains subject to important risks”. Some of those risks, like the return to international economic growth, are outside the Government’s control but the commission expressed concern about the lack of progress to date on some of the things directly within the Government’s remit. It was critical of the continued failure to implement the kind of sweeping reforms in the welfare system which it believes are vital in the battle to tackle the unemployment crisis.

Changes in the welfare system in Germany in the late 1990s are widely recognised as having played an important part in the creation of the economic miracle that has made that country the dominant economic power in Europe in the early 21st century.

The reforms, introduced by the Socialist-Green coalition led by Gerhard Schröder, provided incentives to take up paid employment and broke the outdated notion that people should be entitled to welfare payments only if they didn’t work.

The system required a fundamental shift of perspective on the part of the public servants operating the welfare system as well as those who had become accustomed to living on welfare benefits. The reforms transformed the labour market and were widely copied in other EU countries.

Changes in the welfare system, to save the exchequer money and to incentivise work, form a fundamental part of the troika programme, but the indications are that Minister for Social Protection Joan Burton and her officials have yet to make a serious attempt to implement them. The department has produced an important document, Pathways to Work, which says all the right things – but the big policy decisions to underpin it have still not been taken.