AS TALKS began between the Government and social partners on how cuts of €2 billion in public spending can be achieved this year, Taoiseach Brian Cowen said last night that a consensus would bolster confidence in the Irish economy and improve its image on international markets.
However, Fine Gael accused the Government of basking in pious platitudes about partnership at a time when people’s jobs, businesses and houses were on the line.
The social partners including Ictu and employers’ body Ibec agreed yesterday to begin detailed talks on the basis of a framework document that includes a commitment to finding spending cuts of €2 billion this year.
Mr Cowen thanked the social partners for their strong commitment to developing “an unprecedented approach to tackling the immediate economic challenges”. He said that stable public finances were essential for the future of the economy.
Mr Cowen said that intensive talks over the next few days would address steps to be taken under the headings of public expenditure, taxation, fostering an equitable approach, and delivering fiscal stabilisation.
“I believe it imperative that we pursue a collective approach,” he said. “Indeed, with adjustments of the scale envisaged, establishing a degree of consensus on a credible framework will help bolster confidence internally and externally. This will help our position vis-a-vis international markets and investors as well as boosting confidence at home.”
The general secretary of the Irish Congress of Trade Unions, David Begg, said last night that the Government had not yet put forward any specific proposals on how the €2 billion in cuts sought would be achieved.
It is expected that taxation and equity issues will be discussed during the talks today but the issue of public sector pay is not expected to be reached before the weekend.
Fine Gael finance spokesman Richard Bruton said the framework was full of pious platitudes but devoid of decisions. “The framework does not chart the courageous course . . . it is a document designed to get everyone inside the tent, even the most disgruntled. The Taoiseach seems to have become so obsessed with the process of social partnership that he has lost sight of the objectives that he has to achieve,” said Mr Bruton.
He said it was long past the time for ritual dances. “People’s jobs are on the line, people’s businesses are on the line, people’s homes are on the line. The warm glow that will come from the signing of this agreement will be quickly overwhelmed by the chill winds of economic reality. We need a government that will make decisions, not stretch language to accommodate every possible interpretation of their intentions.”
Last night the country’s largest public sector union warned its members that unpalatable measures would have to be contemplated if cuts in basic pay and pensions are to be avoided.
In a memo to members, Impact general secretary Peter McLoone said that the Government’s preferred option for generating savings of €2 billion seemed to be cutting public service salaries by 10 per cent.
He said that if the Government was to be persuaded not to impose a blanket pay cut it was likely to seek one or more of the following measures: significant additional pension contributions; changes in premium and overtime pay; changes to travel and subsistence; the deferral of the national pay deal.
Union sources said that a Government commitment to extra taxation would be crucial. They are looking for evidence that the wealthy will be asked to pay more tax and they want it to happen this year. An income-related property tax and a windfall tax are among the objectives.
Another issue of concern to the unions is the re-engagement of the Construction Industry Federation (CIF) in the talks. They are seeking a commitment that the organisation accept the national pay deal agreed last autumn before it can come back into the process.