While just over a week ago the Government lacked resolve, it has now introduced the harsh measures needed, writes STEPHEN COLLINS
THE RELATIVELY calm response to one of the toughest budgets in the history of the State has come as a huge relief to the Coalition which has now made it intact through one of the most gruelling few months ever faced by an Irish government.
There were a number of times since the summer when it appeared as if the Government might lose its nerve. Less than a week before the Budget, it was on the point of a deal with the trade unions that threatened to destroy its credibility, as well as its budgetary strategy, but somehow it managed to get back on the rails.
Minister for Finance Brian Lenihan must take a lot of the credit for the fact the Coalition screwed its courage to the sticking point and took the necessary painful decisions, regardless of the political consequences. The Government didn’t lose a single TD or any of its Independent supporters in the vote on the first cut in social welfare rates since Ernest Blythe’s budget of 1924. That is a tribute to the skill with which the public was softened up for the measure and the way it was packaged and delivered.
Ultimately, of course, the broad acceptance which greeted the Budget is a tribute to the good sense of the electorate, which knows that tough decisions are necessary now, to give the country a reasonable chance of a prosperous future.
Those most affected by the cuts are not likely to forget they suffered because of Fianna Fáil misrule from 1997 to 2008. That day of reckoning will come at the next election but, in the meantime, its basic instinct for political survival has managed to buy the party of near permanent power some more time.
One of the most surprising features was the way in which the Fianna Fáil backbench TDs stiffened the resolve of their Ministers. In the run-up to the Budget, there was a lot of speculation about whether the backbenchers would be prepared to support the necessary tough measures. In the event, it was the Taoiseach who seemed on the point of losing his nerve until the backbenchers, spurred by public outrage at the proposed fudge on unpaid leave for public servants, revolted and told their leaders to stand their ground.
Nobody had expected the threat to the Budget would come from backbenchers who thought it might be too soft.
While it is not clear what went on between Tuesday and Friday of last week, the backbench revolt strengthened Lenihan’s hand in ensuring there was no backsliding. It meant that when the measure was unveiled, it was broadly what Government TDs wanted and what the public had come to expect.
Of course it will not be all plain-sailing in the weeks and months ahead. Public service unions are likely to take industrial action and those affected by the welfare cuts will make their voices heard but, in immediate political terms, the worst is over for the Coalition. Since the summer, it has managed to get the Lisbon Treaty passed, a new programme for government put in place, Nama finally established and now the Budget passed by the Dáil. That’s a lot more than many people expected back in September.
The Opposition parties were somewhat taken aback by the fact the Budget turned out to be as tough as predicted. Fine Gael didn’t appear quite sure how to respond. The party has been insisting for over a year that the correct approach to getting out of the crisis is to cut public spending rather than increase taxes. While it objected to many of the details, the party was not able to offer any serious criticism of the overall approach.
One of the key things the main Opposition party has going for it is the standing of its finance spokesman Richard Bruton. He was one of the very few people who forcefully pointed out main errors of Government policy during the boom years. Even his own party did not take him seriously enough and in the last election campaigned on the state of the health service rather than the economy. He gives his party credibility, even when it feels obliged to do the things oppositions do and try and pretend there is some easier way of cutting €4 billion from public spending.
Labour did not even bother to come up with any serious suggestions about how spending could be cut. The party notionally accepted the need to reduce Government spending by €4 billion but opposed both the public service pay cuts and the social welfare cuts. The only alternative to those cuts is to increase taxation and the party should just bite the bullet and say that.
One Labour TD who did point up a serious flaw in the Budget was Seán Sherlock from Cork East who attacked the Government for placing so much of the burden on young people: “This budget was drafted by silver-haired politicians and mandarins who have their mortgages paid and children reared for the most part, it shows blatant disregard for school-leavers, college students, graduates and young, low-income families.”
The contrast between the pain being inflicted on young people, whether public servants or unemployed graduates, contrasts sharply with the kid-glove treatment being given to well-heeled public service pensioners. Lenihan’s eagerness not to follow the entire Ernest Blythe strategy has exacerbated an already serious imbalance between serving and retired public servants.
There is a political adage that governments are never quite as unstable or as stable as they look. Having moved into the stable category with the passage of the Budget, the Coalition would be wise not to relax too much.
The real impact of Nama on the banking sector and the wider economy is still the big unknown. The decision to bail out Anglo Irish Bank at an extraordinary cost to the Irish taxpayer may in time prove to be the real Achilles heel of the Coalition.