To borrow a phrase, Minister
IN WARTIME, careless talk costs lives. In peacetime, careless talk by government ministers on fiscal policy at a time when the State’s very solvency is at stake can prove extremely damaging. It creates doubt and uncertainty in financial markets among those that most matter, the bond investors from whom the State hopes to borrow again next year.
Minister for Transport Leo Varadkar, by suggesting Ireland was “very unlikely” to resume borrowing in 2012 and might need a second bailout, was not simply speaking out of turn. He was undermining his Government’s efforts to do two things: to reassure bond markets that it would meet the targets set in the European Union-IMF rescue plan and, above all, to distance and to differentiate Ireland from Greece. Because Greece has failed to achieve the targets set for it, a second bailout seems likely – and sooner rather than later – if a debt default is to be avoided.
Taoiseach Enda Kenny and Minister for Finance Michael Noonan have sought to repair the damage caused by Mr Varadkar’s remarks. Mr Kenny ruled out any question of a second bailout while Mr Noonan hoped the State could return to the bond markets “in a small way” next year. However last week in the Dáil, Mr Kenny again found himself clearing up more confusion on a related matter involving another Minister – Brendan Howlin – whose remarks on debt rescheduling, the Taoiseach said, had been “misinterpreted”.
It is time for the Taoiseach and his Minister for Finance to address matters and assert their authority. A coalition of two parties in government should speak only with a united voice on this aspect of fiscal policy which has major international implications, particularly for the rest of the euro zone. The Government must articulate only one policy position, the collective view that Ministers have already agreed and accepted. The Taoiseach or Mr Noonan are best placed to state that view. In this respect, the role of other Ministers is to reflect and defend government policy in their public comments. It is not to make policy themselves or to misrepresent the Government view by failing to inform themselves properly of it. Mr Varadkar should mind his own department’s business, and not speak for Government about matters outside his area of responsibility.
As the euro zone debt crisis has unfolded, Ireland has lost credibility and sustained major reputational damage at various levels – government, public service, banking and business – which the Fine Gael Labour Government is attempting to regain and restore. This was best exemplified last November when talks about an EU-IMF bailout were under consideration while Fianna Fáil ministers issued public denials. It will take some time to re-establish trust in what governments say and confidence they can deliver on commitments made.
But the challenge, as Mr Kenny has said, is to meet the targets set by the EU-IMF plan while repaying loans and without restructuring debt. That remains the key to national economic recovery and to restoring some lost credibility.