Time of national emergency
IN THE long history of this State, it is a time of deep despair with the political system and parties. Mindful of the need to be conscious of the national interest, this is not said lightly. Ireland is being ridiculed, denigrated and attacked on an almost daily basis in the Financial Times, the New York Times, the International Herald Tribuneand other national newspapers and websites abroad. It is no exaggeration to say that we are in a state of emergency.
The public has adopted an extremely pessimistic and potentially damaging view of the State’s economic prospects. Even before the Government revealed details of the horrendous cost of rescuing the banks last Thursday, seven out of ten voters had concluded that the economic corner had not been turned and worse was yet to come. Their attitude was more downbeat than it had been last June.
With Government income and domestic business dependent on public confidence and a willingness by consumers to spend, these findings are a matter of serious concern. Three months ago, the balance between those who believed the worst effects of the recession had passed and those who believed the hardest days had yet to come stood at 31 and 60 per cent respectively. This week, that gap has widened, with 70 per cent of respondents taking a pessimistic view of the economy, against 20 per cent who believe the worst has passed, according to an Irish Times/IpsosMRBI opinion poll.
Uncertainty over the future is accompanied by a widely held belief that changing the Government would make no difference to Ireland’s economic prospects. This lack of confidence in the ability of the Opposition parties to extract the State from the financial morass is echoed by a general unwillingness to believe officials when they say Ireland’s bank liabilities are “manageable”. Seven out of ten voters believe bank liabilities are not manageable and this negative attitude is most engrained among low-income respondents.
As the Government prepares to reduce the public deficit by more than its earlier figure of €3 billion and increase taxes, there is particular concern among the low-paid and unemployed that the effects of fiscal correction will impact most heavily on them. Given the extent of its difficulties, the Government has little option but to broaden the tax base. The Commission on Taxation has recommended the introduction of property and water taxes, but politicians have been fearful of taking that advice. Such unpopular but radical action would, however, do what has to be done at some stage; steady consumer confidence and, by raising alternative revenue, protect our low corporate tax rate from EU interference.
Foreign investment has been the lifeblood of industrial development, bringing new ideas, methods and technologies. A low corporate tax was the main attractor. We need to retain that incentive. On the administrative side, costs must be reduced. But, above all, Taoiseach Brian Cowen must recognise that he does not have the authority to impose the detail of four budgets on Opposition parties at this time.