Taoiseach Brian Cowen has said that the €2 billion in public spending cuts announced today was the start of a "fightback" by the country to bring it back to future growth.
During a course of a press conference this evening in which he outlined the details and rationale behind the cuts, Mr Cowen contended that the Government had no choice but to day-to-day spending.
He also asserted the leadership role of the Taoiseach and the Government saying a political decision was made that the saving on pension levy of €1.4 billion. While defending the partnership role he also strongly contended that the Government need to adopt a strong position on achieving the necessary cuts.
Outlining the background to the decision, he said that overall State spending for 2009 would be in the order of €55 billion with revenues projected to reach only €37 billion. He said that that left an unsustainable gap of €18 billion.
"We are borrowing half of our day-to-day expenses in this country for the courts of this year," he said.
Mr Cowen said that everybody, including the social partners, had agreed that public spending had to be taken out of the system but in a way that did not impact on essential services for the elderly, pensioners and those in healthcare. "Therefore, we have to ask those employed by the State to make a contribution of paying for the pension," he said.
In a departure from his usual presentation at press conferences, the Taoiseach's opening remarks, which were carried live on television, were unscripted and delivered extemporaneously. Senior Government figures said this was deliberate.
He said that this year's cuts were only the start of a 'fightback' that would continue until 2013 and yield €16.5 billion in savings. He said that in 2010 there would a a systematic review and the creation of a new tax base. He said that the State would continue to reduce its expenditure and that every item would be reviewed and cut if necessary.
"People understand that we all have to make an adjustment and a contribution commensurate to our ability to do so."
He added that he was aware that there were people who were being affected. "We will do all we can and look at anything afresh to see how we can support those people who are falling on hard times or who find themselves unemployed," he said.
"That is our obligation," he added.
Mr Cowen warned that if the harsh measures were not adopted the State would find itself returning to the situation of the 1980s when the country experienced high tax, low competitive status, high unemployment and high emigration.
Striking a positive note he said referred to the strengths of Irish people in creating a good business and enterprise culture, a strong sense of community, and the value of the education system.
"We can do it if we pull together to make sure we get over this unique difficulty."
Asked about the inherent fairness of the pension levy in terms of its effect on teachers or nurses already paying a levy, Mr Cowen accepted it was a difficult situation but said that everybody agreed that the cuts had to be made on the pay and pensions side.
He disagreed with the proposition that the Government had delayed taking a hard decision while the economy deteriorated and with persisting with social partnership. In what was seen as a strong defence of that process, he said: "It was the right thing to do. The sincerity and quality of that engagement was necessary," he said.
"We did not agree the details [of the deal]. But they [the unions and partners] respect that Government has to govern. We had to make that decision."
He said the Government would continue to work in cooperation and not isolation but said that those in a leadership position should have to lead from the front. "People will not thank us if we defer the necessary decisions now and do not take those decisions," he said.
Later, he insisted "partnership was not dead".
"Social partnership is alive and well in Ireland and it's fundamental – I say that sincerely – to solve the scale and magnitude of the problems that we face," he said.
He agreed that the actual cuts during 2009 would amount to €1.8 billion but said that that was because they would be implemented from the end of February, a period of 10 months. He said in a full year it would amount to €2.1 billion.