In the normal course of events, the Minister for Finance would have thrown a wobbler if confronted by an extra €I billion pay bill in the present economic climate. But Charlie McCreevy decided to do his fighting behind a closed Cabinet door, later today, and he delivered a holding statement, noting the cost of the exercise and the fact that it would affect 230,000 workers, writes Denis Coghlan
He had little option. The Taoiseach had gone out and set the scene last Sunday when, after describing the leaked benchmarking report as a "horrendous bill", he talked about cutting back expenditure in other places so as to balance the Government's books. There would be a need, Mr Ahern said, to reduce Government spending "until the storms of some difficulty, not recession - the storms of some difficulty - blow over."
Health, infrastructure and education were three areas into which the Government wished to put more resources, he said, but they would have to tighten up in other areas. The alternative was to raise taxes, Mr Ahern said. And he would prefer not to do that.
Given that Fianna Fáil and the Progressive Democrats had just won a general election on a promise to keep taxes unchanged, or to reduce them, you could understand where the Taoiseach was coming from. But the fact that he revisited Mr McCreevy's veiled Dáil threat of higher taxes - delivered last week - was, in itself, significant.
The subtext of future negotiations with the public service had been established: if they aren't reasonable in their pay demands, income taxes will rise for everybody.
Make no mistake about it. The public finances are in rag order. And the writing has been on the wall since long before the May election was held. Driven by political necessity, however, Mr McCreevy chose to deny that reality and took no remedial action. Later today, there will be no hiding place when the Exchequer returns for the first half of the year are published.
A transformation in the economic situation has occurred since public sector militancy brought about the creation of the benchmarking process. Schoolteachers, in particular, had their status and living standards challenged in the year 2000 when recently-graduated students returned to visit, encumbered by showy, dotcom-bought cars and big houses.
The dotcom bubble has since burst and many cars have been repossessed because of failures to make payments, but the anger of those days persists in some quarters. As the Celtic Tiger's roar turns to a purr, however, the employers' federation, IBEC, is spelling out the realities of the big, bad world.
Having participated in the benchmarking process, it is hanging tough. But IBEC wants value for money. Specifically, it wants the balance of the pay awards - one quarter will be paid immediately, backdated to December 2001 - to be spread out over the longest possible period. Now that the public sector has been accorded parity of treatment with the private sector, it must also accept the private sector "inability to pay" clause.
And, just in case public servants had forgotten the protected nature of their permanent and pensionable status, IBEC noted that 10,000 jobs had been lost in private industry during the past year. The old system of relativities had to disappear forever. And quality of service, flexibility and value for money had to become the new watch-words.
Fine Gael's Richard Bruton sang off the same hymn sheet. He worried that it would take a 2 per cent increase in income-tax rates to pay the benchmarking bill, and said the deterioration in public finances meant that any extra Government spending had to be matched by extra revenue.
The deputy leader of Fine Gael found reassurance in the fact that three-quarters of the pay awards were conditional on improved services and work practices. In good times, the Government had failed to introduce reforms.
The Labour Party was all for it. The deputy leader, Brendan Howlin, gave the thumbs up to trade unions and called for the immediate payment of the 25 per cent. The Government should then sit down with ICTU and agree arrangements to implement the rest of the report, he said.
The Green Party flexed its muscles and disagreed. The findings of the report were "perverse", Dan Boyle declared, because higher grades were paid more than lower ones. It would sow seeds of discontent and he expected the situation to be exacerbated by Government provocation in honouring "these modest levels of increase".
Even the ICTU wasn't so bold. In advance of a formal meeting to consider the report tomorrow, prominent congress figures saw the major challenge as early implementation of its findings. It was noted that the awards came on top of pay rises exceeding 18 per cent.
Denis Coghlan is Chief Political Correspondent of The Irish Times