The next six months will be a major test of Brian Cowen's ability to lead during tough times, writes Harry McGee,Political Staff.
The prevailing mood of gloom surrounding the economy – and the week-long build-up to today's press conference - certainly gave the Government's cutback package announcement a sense of major occasion.
In form and theme – and make no mistake about it, austerity was the theme – it reminded you of Charles Haughey's famous “we are living beyond our means” speech in January 1980.
But there the similarities ended. The press conference was low-key, almost anti-climactic.
There have been moments of deep crisis for this Fianna Fáil-led Government over the past 11 years in which Brian Cowen has been wheeled in to put on dominating and politically-charged performances. Today was not one of them. His mood and demeanour were decidedly downbeat at the press conference this afternoon. Perhaps the Government wanted to give an impression that he and Minister for Finance Brian Lenihan were dealing with the difficult circumstances in a sober and serious manner.
But the opposition in the person of Labour deputy leader Joan Burton claimed that despite wearing make-up for the cameras both looked pale and in shock at the scale of the economic problems the country faced. Fine Gael deputy leader chimed in with similar criticism, saying that both looked dazed and confused and overwhelmed by the crisis they find themselves in.
For sure, the announcement represented a huge test of Mr Cowen and Mr Lenihan's wherewithal as they tried to tackle the headache of a €3 billion shortfall in the Exchequer tax take this year and an economy teetering on the precipice between growth and recession. And there has been some muted, yet unmistakable, criticism surrounding Mr Cowen. He was the ideal deputy when Bertie Ahern was Taoiseach but, say some, he has displayed some uncharacteristic brittleness since he assumed the top job.
Whatever about the demeanour of the two senior ministers, the actual cutback measures announced today looked strong on the face of it. A total of €440 million in savings during 2008 and a further €1 billion in 2009 will emerge from these cuts, say the Minister.
There was the big-ticket “tough” measure of a 3 per cent reduction in the public sector pay roll next year. That will essentially mean a freeze on recruitment as well as a new-found thrifty disposition within the public service. It will lead to clamp downs on overtime pay, expenses and premium pay awards and bonuses. If the Government presses ahead with it is likely to lead to showdowns with the unions.
The rule will apply across all departments, agencies and local authorities. But some of the gloss was taken away by the announcement that the 3 per cent rule will not apply to the two departments with the largest payroll bills, health and education.
That said, the Finance Minister did say that the Government would now purse a "targeted scheme to reduce surplus staff in the HSE as soon as possible".
"We'll address those issues in those negotiations. But apart from questions of pay and conditions of service and remuneration, the target is a 3pc reduction in the pay bill and I've outlined a number of measures there in relation to targeted redundancy scheme in the HSE and also in relation to a strict control in the number engaged in the public service which will secure that 3pc reduction", Mr Lenihan said.
But some of the gloss was taken away when Mr Lenihan admitted that the 3 per cent cut will have a minimal effect next year and will yield no more than €250 million.
The lack of specific detail in the plan lent itself to opposition criticism. Labour leader Eamon Gilmore said that the figures didn't add up. His Fine Gael counterpart Enda Kenny said that there no breakdown and that the measures announced would not add to the total €1.5 billion in cutbacks promised.
Mr Lenihan did display a knack for eye-catching and populist initiatives. While the savings will be relatively minor, the Government will benefit from the “optics” of the decision to "pause" the controversial decentralisation process.
The reverse of the very generous pay rises awarded to ministers and to 2,000 other senior public servants last autumn – including judges, senior gardai, semi-state bosses and university bosses – was also widely anticipated. As was the decision to reduce soft spending on PR on consultants and on advertising.
Another announcement that was well-flagged was the intention to merge or abolish some of the 1,000 or so State agencies to reduce duplication and excessive costs. However, no firm decision will be taken in relation to that until the autumn.
Mr Lenihan insisted that no decision had been taken on any of the major capital projects planned under the National Development Plan. He rejected speculation that Metro North or the Western Rail Corridor were in jeopardy.
But Richard Bruton of Fine Gael made the point this evening that to achieve the targets, some of the cuts will have to come from the capital side.
Perhaps to allay doubts about his mettle, Mr Cowen told the conference that he would never abdicate his responsibility "to take decisions that are in the best interests of the Irish people".
What made Mr Haughey's famous 1980 speech so memorable was his failure to live up to its lofty promises. The next six months of the year will tell us a lot about Mr Cowen's capacity for taking decisive action in the face of tough circumstances.