Cowen's errors and bad luck are the stuff of nightmare

INSIDE POLITICS:BRIAN COWEN'S first year in office has been a nightmare. A mixture of bad luck, indecision in the early months of his tenure and an erratic public performance has fatally undermined his authority to lead the county through the most difficult crisis it has faced in generations.

The sudden plunge from boom to bust would have tested any leader to the limit, but the six months or more that it took for the newly-installed Taoiseach to really grasp the nettle and make a determined effort to get the public finances under control eroded public confidence in his ability to rise to the challenge.

Cowen labours under the huge handicap that he was one of the key figures in a Government that helped to create the economic and financial problems that now threaten to swamp the country.

The failure to take meaningful action to calm the property bubble and the parallel appeasement of vested interests through social partnership has turned the Irish economy into one of the worst performers in the developed world.

All the clichés about Cowen on the lines of “if he had ducks they’d drown” have been used to describe his annus horribilis. They are hard to avoid because, while he has been the victim of his own mistakes, he has also had an appalling run of bad luck.

The self-inflicted wounds arising from the property bubble and precarious state of the public finances were sent spinning out of control by an international banking crisis and the worldwide recession.

Random events like contaminated pig feed and contaminated banks heaped misery on top of misery for an already beleaguered Government.

Cowen’s run of bad luck started with the nature of his predecessor’s departure. Instead of simply resigning when the Mahon tribunal destroyed his credibility, Bertie Ahern announced his intention of going and then spent more than a month doing a lap of honour, culminating in his address to the US Congress.

The month or more that was lost while Ahern waved goodbye meant that the Lisbon Treaty campaign did not get the attention it required. It also left Cowen as taoiseach-designate twiddling his thumbs on the sideline as the economic storm-clouds gathered. When he finally took over on May 7th last year he then went on his own lap of honour around Offaly before settling down to the job. It was roses, roses all the way for the first few weeks, with good opinion poll ratings for the new Taoiseach and for Fianna Fáil.

Then the Lisbon Treaty referendum campaign suddenly turned into a disaster with a huge swing to the No campaign in the final weeks. The loss of that referendum in June exposed a fatal weakness in Cowen. He was not able to communicate to the electorate the importance of a Yes vote for the future of the country. His Government has never recovered from that defeat.

The serious nature of the problem with the public finances and the steady erosion of jobs began to manifest themselves immediately after the referendum.

Cowen and his new Minister for Finance, Brian Lenihan, responded quickly and made the first moves to deal with the issue by trying to trim public spending for 2008.

However, instead of pushing on from that, developing a coherent strategy and communicating the seriousness of the threat to the public, the Government made a fatal miscalculation.

It entered a new round of social partnership talks as if everything was normal. A previously-agreed 2.5 per cent pay increase for the public service was paid over without a murmur on September 1st, and that was followed a month later by the conclusion of a new partnership deal with pay rises for all of 3.5 per cent this year.

The flight from reality evidenced by the deal was a clear signal that Cowen, his senior Ministers and top civil servants had no idea what was happening in the real economy. It also encouraged mass public delusion, especially among protected public sector workers, about what needed to be done.

After that the roof caved in. The banking crisis hit and the Government came up with the controversial guarantee scheme in response. The 2009 budget, brought forward to October, provoked a revolt from pensioners that shook the Government to its core and yet came nowhere near the kind of tough decisions required to prevent the country sliding into bankruptcy.

It was not until the early months of this year that a coherent attempt was made to grapple with the problem through the pension levy on the public service, followed by an emergency budget containing further cuts in spending programmes and a steep increase in taxation. There was an argument about the balance between spending cuts and tax but at least the April Budget was a realistic attempt to deal with the chronic state of the public finances.

In the Dáil on Wednesday. Cowen put up a stout defence of the Government’s approach to the economic crisis. He pointed out that the Economic and Social Research Institute (ESRI) shared the view that getting control of the public finances was the first step on the road back to a healthy economy. He didn’t mention that the ESRI also pointed out that the effect of the Government’s budgetary policy has been to increase the incomes of the poorest fifth of the population by 5 per cent while cutting the top fifth by close to 10 per cent. Of course, that is not something that Cowen or Lenihan have been given any credit for.

The Opposition is in no mood to give Cowen a reasonable hearing but his real problem is that the public does not appear to be in any mood to do so either. The policy errors of the past few years and his 12-month tenure in the Taoiseach’s office have left him staring into the political abyss, even if he is doing the right thing now by attempting to sort out the public finances. At this stage Cowen’s only option is to plod on and hold fast to the course the Government has set itself since the beginning of the year. It is probably no consolation to him now that the popularity of the Opposition parties is based on the fact that they haven’t provided any coherent answers to the financial problems facing the country. In time that could prove to be their Achilles’ heel.

Cowen assessed by Miriam Lord

– WeekendReview