NEWTON'S OPTIC:AFTER ANOTHER magnet meltdown at the European super-collider, the following article has popped into The Irish Times's archive from a parallel universe. We trust that it will give the Taoiseach some quantum of solace, writes Newton Emerson.
Dublin, December 2006: Brian Cowen unveiled his third budget as minister for finance today, promising to secure the legacy of the Celtic Tiger. Warning the Irish people that property prices cannot rise exponentially forever, Mr Cowen announced a range of policies to restore sensible lending and bring the housing market down to a more realistic level.
His main proposal is to cap mortgage finance at three times personal income, restraining house prices while strengthening bank balance sheets. This will be accompanied by a new stamp duty schedule kicking in at three times the average wage and escalating steeply to 50 per cent.
Mr Cowen added that measures to control house prices would be ineffective without matching proposals on land ownership. He announced a new UK-style "planning gain" tax, levied at the standard rate of corporation tax to target speculative holdings.
The minister advised the Dáil that gradually falling house prices will impact on other sectors of the economy and measures must be put in place to minimise negative effects. Although land and property prices have not reached the point where a sudden decline could destabilise the financial system, as a precaution the Central Bank will review exposure of main institutions and enforce stricter credit terms with developers.
An inevitable slowdown in the construction industry will be offset by bringing forward projects in the National Development Plan, funded by the temporary boost to revenue from the planning gain tax and the new stamp duty schedule. All construction firms bidding for these contracts will be required to retrain their staff. The board of Fás has promised to review support programmes when it next returns from Miami.
Mr Cowen announced additional protection for savers and investors exposed to the international stock market. A 1 per cent income levy will be introduced to create a properly funded guarantee scheme for bank deposits and private pensions, further enhancing the stability and reputation of the Irish financial system.
Finally, just as house prices cannot rise forever, Mr Cowen observed the public sector cannot outpace the economy forever.
To prepare the ground for unavoidable reform, he limited spending increases across all departments to projected gross national product growth, while promising a general review of staffing, benchmarking and senior salary levels ahead of the next social partnership negotiations.
As Mr Cowen concluded his budget statement, TDs from all parties rushed forward and tore him limb from limb.
His dismembered body was carried out of Leinster House and thrown to a cheering mob in St Stephen's Green, which strung its various parts up on lamp-posts along the length of Grafton Street.
Tonight, at an emergency meeting of Dublin City Council, it was unanimously agreed Mr Cowen's severed head will rest upon the Spike "for as long as this city stands".