Cowen takes first serious step in country's fight for survival

TAOISEACH BRIAN Cowen came into the Dáil yesterday repeating the mantra of social partnership but nothing could disguise the fact that his strategy of building a consensus with the country’s union leaders had come crashing down in the early hours of yesterday morning.

For the past two months Cowen and his Government have put off critical decisions on which the country’s future depends. They took that approach in the hope and expectation that union leaders, having been given a crucial say in the formulation of policy, would be prepared to buy into a consensus approach.

Given the huge concessions made to the public sector unions by the Fianna Fáil-led Government over the past decade, a reciprocal response in the country’s hour of need might have been expected. However, after days of agonising the union leaders appear to have lost their nerve.

One possible gloss on the outcome is that while the unions couldn’t formally accept the detail of the pension levy their acceptance of the principle of cutting the public sector pay bill means that opposition will be muted. The Taoiseach has certainly taken this interpretation emphasising again and again yesterday that social partnership is not dead.

Nonetheless, the collapse of that consensus strategy at the final hurdle is a cruel blow for a leader who placed so much faith in it. If his continued commitment to the partnership process is taken as a sign of weakness by the unions and the international financial markets then the country will pay a very heavy price for the past two months.

The fact of the matter is that, even if a social partnership deal had proved possible, the length of time taken to arrive at the end game had already resulted in a steady erosion of the public’s confidence in the ability of the Government to govern.

A less obvious and even more dangerous long-term development has been the collapse of confidence in the Government’s abilities in international capital markets.

Ireland went from being a normal member of the euro-zone economy a few months ago into the category of the sick man of the EU, trailing in alongside Greece in terms of international confidence in our capacity to deal with our economic problems.

The short-term consequence of that collapse is that the Irish exchequer will now pay higher interest rates on borrowing than other euro-zone countries. In the longer term it might be difficult to borrow at all.

Fine Gael leader Enda Kenny was obviously scoring a political point when he referred to the past two months of wasted time but it is hard to argue with his basic charge that “for the past two months the Government outsourced decision making to social partners. It is a most disgraceful abrogation of a leader’s responsibility in the politics of this country”. The Taoiseach and the leader of the Opposition clearly have very different views on the benefits of social partnership; the coming months will prove which of them is right.

Even Cowen’s presentation to the Dáil yesterday lacked the sense of urgency, never mind inspiration, that the situation so clearly demanded. Cowen does get criticised by the Opposition and the media when he injects passion into his Dáil performance but his speech yesterday could certainly have done with a bit of it.

His performance at a televised press conference in Government Buildings at which he succinctly outlined the scale of the problem facing the country and the need for the measures his Government had adopted was far better.

It was the kind of performance he needs to repeat again and again in the coming weeks if he wants to bring the country with him.

As to the package itself the pension levy was, as expected, the centrepiece of the Government attempt to reduce the annual public service pay and pensions bill which would have been close to €20 billion this year. While trade unionists and commentators will search out anomalies and hard cases the central thrust of the measure is long overdue.

The pension arrangements for the public service, a growing problem for the past decade which the Government has blithely ignored, could not have continued, even in good times, and given the scale of the crisis in the public finances it is something that had to be faced up to now. Some tinkering with the limits to cater for public servants on low pay may be justified but Cowen will have to stick with the measure, regardless of the level of protest from those affected.

One measure that might generate some support for the Government is the plan to save €80 million by cutting professional fees for lawyers and doctors by 8 per cent. If that measure was broadened out into a general cut in the fees both groups charge to the public, people might be more willing to accept austerity measures for themselves.

The Taoiseach has repeatedly emphasised social solidarity and fairness. Implementing that is easier said than done, but a concerted Government effort to force professionals to drop their fees would certainly show the public that the issue was being taken seriously.

The exchequer figures for January published yesterday, showing a continuing collapse in tax revenues, and the expected disastrous unemployment figures due out today should bring home to everybody just how serious the county’s current plight is.

The plan announced yesterday is just a step in the direction leading to recovery and it will take many more tough decisions in the months and years ahead to get there. Ireland is now engaged in a battle for survival. That message has to be communicated to the public and particularly to the public service.

Stephen Collins is Political Editor of The Irish Times