Cowen will get little credit for taking hard decisions

 

OPINION:WHEN BRIAN Lenihan gets to his feet to deliver his budget speech on Wednesday, it will quickly become clear the Government has indeed lived up to its promise and delivered the harsh measures it has promised for many months – €4 billion in savings in the public purse, a key component of which is a €1.3 billion cut in the public sector pay bill, writes HARRY McGEE

In normal circumstances, Government would hail it as a triumph. Well-trailed as this austerity budget has been, it is still very difficult to translate aspiration into reality. And, unlike the Charlie Haughey-led governments of the early 1980s, here is an administration that did not blink when it came to making the really hard decisions.

Unfortunately for Taoiseach Brian Cowen it will not be perceived as that.

As the dramatic events of the past six days have unfolded, what could have been seen as a brave budget delivered without regard to populist concerns has instead become another story about the Taoiseach’s communications weakness, alleged vacillating, and even about him not having the bottle to see his proposals through.

Those close to the Taoiseach believe the unions oversold their hand on Tuesday when giving the justification for calling off the strike. That led to a train of events that culminated in a furious reaction from his own TDs to the perception that Cowen had caved in to union demands and was no longer demanding pay cuts of €1.3 billion. Cowen took all the flak for that, said one Government source, even though he made it clear though his officials on Tuesday there was no deal.

Ipso facto, the Taoiseach has suffered political damage. Within Fianna Fáil there is always a rump who mutter mutinously about his performance as Taoiseach. But this time the usual suspects were joined by many TDs who have remained loyal to his leadership, some expressing doubt for the first time about his ability to handle such crises.

The standard narrative has it that the Taoiseach’s department, with its preference for a partnership model, would have settled for both the 12 days and a figure well south of €1.3 billion. And that Lenihan, who is not a fan of partnership, was being reluctantly dragged along. But this weekend a number of people close to the process have said it was more complex.

On Tuesday night it was clear there may have been compromise from targets (like the €1.3 billion) that had almost become sacrosanct in recent months. Several Government sources to whom The Irish Times spoke confirmed that the €1.3 billion was an opening figure. To make up that figure the Government was willing to include savings from the current moratorium on recruitment as well as putative savings from future reforms into the mix to add to the quantum of between €800 million and €1 billion that would result from public servants taking unpaid leave of absence.

Paradoxically, all those who were privy to the talks say the parties were tantalisingly close to the prize. There was the prospect that the €4 billion in savings could be achieved; that the cuts in the public pay purse of €1.3 billion would be permanent; that the unions would be onside; and that there would be fundamental reform of the public service. How close were they? They were certainly within €100 million, says separate sources.

It is true that there were elements within Government who were implacably opposed to the leave of absence idea which they considered unworkable. “It stinks to high heaven,” said one senior source on Thursday.

However, the Department of Finance was more willing to make a deal than is generally acknowledged. Lenihan believed that the reforms that were being promised by the public sector unions was not merely rhetoric but were potentially far-reaching in substance. The change in the ordinary work roster in the health services to 8am to 8pm was seen as significant.

Once the dust settles, and if the rift with the unions is not unbridgeable, it is understood Lenihan believes there is a strong basis for constructive talks on reform in the New Year without the hindrance of the controversial 12 days leave of absence acting as a monkey on the back in terms of negotiation.

To be sure, the main difficulty was always going to be the 12 days unpaid leave. It presented challenges on Tuesday but the Government certainly did not give the impression they were insuperable. However, by Thursday the hue and cry from the wider public and from Fianna Fáil backbench TDs had made it redundant. “At the end of the week, the 12 days proposal was a complete non-runner. It was toxic,” said one source.

The unions persisted with it. The Government, by this stage, could not go with it. The narratives of the two sides diverged at this point.

David Begg yesterday reiterated the view of the unions as to how it all fell apart. He said on Tuesday morning the only reservation expressed by Government was whether or not the unions could “bridge the gap” between what it offered and the €1.3 billion required.

At that stage the unpaid leave was worth €750 million, he said. The unions upped the offer to €986 million by getting higher paid public servants to take bigger deductions. The shortfall would be made up of savings from the 2009 recruitment moratorium (€150 million); and the first eight hours of overtime to be paid at normal rates (€94 million).

Government sources conceded that all of this was on the table and that the “extras” could be in the mix if the figures stacked up. The talks fell down, they say, because the sums did not add up (unpaid leave gave no more than €800 million).

Sources in Government say the Taoiseach’s position was unwavering. “He played it well. He got it to the line. He had to take a hit but was never going to agree to a fudge.”

Unfortunately for him, that is not the way the public will see it. The budget may be a prelude for a period of industrial unrest not seen since the 1980s. This week’s events have also affected his political stock internally. There may have been no fudge but some of his colleagues certainly believed they were looking at the beginnings of one.


Harry McGee is Political Correspomndent