WE NOW have greater clarity concerning the depth of the crisis affecting the public finances, following yesterday’s publication of pre-Budget estimates. But the Government’s response to this situation, by cutting back on various aspects of expenditure, will remain vague until next month’s Budget.
This is how we traditionally deal with budgetary and financial matters even though we are not in a traditional year. Other EU states do things differently. They bring political haggling and compromise to budgetary issues long before final decisions are taken. Taoiseach Brian Cowen nodded in that direction when he challenged Opposition parties to identify savings during next week’s special Dáil debate. It may prove to be political grandstanding. Creative exchanges are unlikely to occur in the absence of political reform.
The conflicted situation in the Dáil has been replicated on the streets. Tens of thousands of public service workers marched in protest against any interference with their pay and conditions. They plan to do so again. Their anger is understandable. Nevertheless, no group in society can be insulated against a fall in living standards occassioned by a significant economic decline.
Government and public sector unions are involved in discussions about how savings might be made. At the top level, pay for politicians and civil servants are so entwined that a conflict of interests exists. Lower down, different groups of workers are dependent on increments, allowances and overtime payments. So, trade unions are unlikely to agree a set formula. This compounds Opposition party difficulties. They are expected to pronounce on a complicated, evolving situation while being kept firmly outside the negotiating door.
Ictu president Jack O’Connor has been particularly critical of the Government’s intention to save €1.3 billion in its public sector pay and pensions bill without offering any realistic alternative. Public services are not only for the public sector. The cutbacks in the private sector – in terms of jobs, pay and working conditions – have been so severe this year that it is difficult to see how the public sector should not share the pain if fairness is their objective.
A €4 billion cut in expenditure will represent a first firm step towards recovery. The next move should involve a broadening of the tax base. The Commission on Taxation’s report is not, by any stretch of the imagination, a radical document. At a minimum, its proposals for a fairer system should be implemented.