Bailout teaches what we should have learned years ago

INSIDE POLITICS: The big question is whether the Opposition really understands the decisions that have to be taken in office…

INSIDE POLITICS:The big question is whether the Opposition really understands the decisions that have to be taken in office, writes STEPHEN COLLINS

ONE OF the most depressing features of the debate since the EU-IMF bailout was announced is the apparent failure of so many people in political life and in wider society to come to terms with what has happened to the country and why it happened.

Like the Bourbons of old, it seems that we have forgotten nothing and learned nothing from the events of the past decade, which culminated in the memorandum of understanding committing the Government to a detailed programme of reform to get the budget back in balance by 2014 or the following year at the latest.

“This is a sellout of our country. It is a surrender by the Government of this country’s sovereignty, of its right to make its own decisions, determine its own budgets, and the Labour Party, whoever else will want to be bound by this, will not be bound by this document,” declaimed Eamon Gilmore in the Dáil on Thursday.

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Of course the Labour leader is entitled to a bit of political grandstanding. Laying all the responsibility firmly at the door of Fianna Fáil leadership for the disastrous state of the public finances and the collapse of the banks is perfectly legitimate. To suggest, however, that the bailout is a foreign imposition on the Irish people and that its terms can simply be ignored by an incoming government is not merely wrong, it is potentially dangerous.

The simple fact is that the EU and the IMF are giving us €50 billion to keep this State and its public services, public service salaries and welfare payments going for the next four years. The interest rate of 5.8 per cent is a bit higher than we were paying on the open market for our borrowing during the boom, but it is far less than we would have to pay from the financial markets now.

To present the deal as some kind of war reparations being bled from a conquered people will do serious long-term damage to our relationship with our EU neighbours and, more importantly, to ourselves. The reversion to the “most oppressed people ever” frame of mind is the last thing this country needs and will certainly do nothing for our recovery.

The big question is whether there is a real understanding on the Opposition benches about the kind of decisions that will have to be taken when they are in office.

It is noticeable that the two senior figures from the 1980s, Michael Noonan and Ruairí Quinn, who actually know the score have given fewer hostages to fortune than many of their colleagues.

John Gormley gave a startling insight into what it is like to arrive in power unprepared for the reality of hard times. “I warn those other parties that they should know when they enter government during this crisis, they will be entering an asylum.

“They will have to endure the sleepless nights, the no-win situation and the non-stop criticism,” he told the Dáil. While many on the Opposition laughed at Gormley last Tuesday, when he gave vent to his frustrations, they are unlikely to find it as funny in a few months’ time.

The tendency of politicians to play the old point-scoring game has obscured the fact that the bailout happened because this State, through the foolish policies pursued over the past decade and more, has lost the capacity to borrow money. While the ultimate responsibility certainly rests with the Government, many elements of society, particularly the trade union and employer leaders, were complicit in the decisions that led down the slippery slope.

There was some irony in the fact that the union leaders, who were directly involved through social partnership in framing the policies that bankrupted the State, led last Saturday’s protest march against the EU-IMF bailout. Union and employer leaders had more influence on the budgets of the 1997 to 2007 period than most ministers, never mind the government backbenchers whose ability to influence events was negligible.

One of the warning signs that those in charge of the country had lost the plot was the report of the review body on higher remuneration in 2007 which recommended that the Taoiseach should become the highest paid political leader in the democratic world, with senior public servants, judges and semi-State bosses being put in a similarly exalted position by comparison with their international peers. When the crisis began to unfold in the autumn of 2008, the Government missed a glorious opportunity to slash salaries at the top by eye-catching amounts and to give up perks of office like State cars in order to bring home to people just how serious things were. They have taken pay cuts since then, and will do so again on Tuesday, but they have got no thanks from the public because they did not do it in time.

Even after the bailout, our political leaders are still very well paid, while our hospital consultants, diplomats and semi-State bosses are among the best paid in the world. Lower down the scale, middle-ranking public servants, teachers, nurses and gardaí are all well paid by international standards.

The Croke Park deal is designed to protect those with relatively good pay and entitlements. Younger people joining the public service, if they are lucky enough to get a job, will be paid less and will have far less generous pensions, while those in receipt of welfare are about to be clobbered.

One of the striking things about the EU-IMF bailout is that the outside experts were wary about unpicking domestic policies like the Croke Park deal. Their timetable for the creation of real competition in the area of legal and medical fees was a step in the right direction. But imagine the reaction if they had insisted on bringing public sector salaries and pensions in line with the EU average.

Ultimately, the terms of the bailout simply require us to do some of the things we should have been doing anyway. In return we are getting the money to run the country. Hopefully, those who are likely to be in government in a few months actually realise the kind of choices that await them, and what they are at now is pre-election rhetoric. If not, they are going to start feeling like John Gormley before they know it.