An agreement in principle on how to tackle the crisis in the public finances is a vital first step for Cowen, writes Stephen Collins
BRIAN COWEN has staked his Government’s reputation and the country’s future on getting a consensus with the social partners on how to deal with the crisis in the public finances.
As the talks finally move into their decisive phase, the indications are that the Taoiseach is close to the goal he has patiently been edging towards for more than a month.
If he manages to tie the social partners into a deal that actually delivers on the Government’s target of reducing public spending by €2 billion this year, Cowen will have cleared the first major hurdle towards finding a path out of the current economic morass.
Persuading public servants to accept pay reductions, in whatever form, and getting the wider public to accept cuts in key services will inevitably still prove difficult but it will be far easier for Cowen to cope with the political flak if he has the mantle of social partnership wrapped around him.
Fianna Fáil will at least have some political cover to get through the inevitable protest the measures will provoke.
For the past two months the Taoiseach and his Government have taken a battering from the Opposition and the media for giving the appearance of being paralysed by indecision in the face of the country’s mounting economic problems.
All along Cowen has insisted that he wanted to do everything he could to bring the social partners along with him to develop a common approach to the problem.
With the trade union leadership now agreeing in principle to the target of achieving savings of €2 billion this year, it appears his patience has paid off.
Whether the unions are prepared to accept significant savings in the public service pay bill will only become clear when and if a detailed package of measures is announced some time next week, but achieving agreement in principle was the vital first step.
“The Taoiseach is not committed to any particular cuts or savings. As long as the global target of €2 billion can be achieved by consensus he will be happy, and it looks now as if that can be done,” said a Government source.
In recent weeks, as the process dragged on with no apparent end in sight, there were signs of tension between the Taoiseach’s department and an increasingly impatient Department of Finance. The demand by the union leadership for significant tax increases on top of spending cuts was resisted in Finance. In the end the Government did accept the need for tax increases but in the longer term.
In the Dáil yesterday Cowen was careful to emphasise that the achievement of a significant reduction in the public service pay and pensions bill was only a realistic option if the burden of the adjustment now required was spread fairly across society.
“The proposed framework identifies some of the implications of such an approach. These include moderation in executive remuneration, in the banking sector in particular, and that those who benefit most from the economic boom make a particular contribution to the adjustment required,” he said.
How that will work out in practice only time will tell, but the Taoiseach’s use of language is designed to keep union leaders on side.
Dealing with the Opposition is another matter entirely, and Cowen has taken a decidedly belligerent approach in the Dáil this week to criticism from Enda Kenny and Eamon Gilmore.
There is no question of a political consensus emerging about what needs to be done to restore the country’s economic fortunes.
There was an air of unreality about the Dáil debate on the economic situation because the Taoiseach still did not have a plan to announce – everybody in the Chamber knew the key discussions on its shape were taking place elsewhere.
In any case, Fine Gael and Labour are determined to pin the country’s current woes on Cowen and those who have been in power for nearly 12 years. They are in no mood to join a consensus that will involve them sharing the blame with Fianna Fáil for the austerity measures on the road ahead.
The Taoiseach tried to skirt his Government’s record by insisting: “There is little point in looking back at how some of this might have been anticipated or avoided. The reality is that the present situation is unprecedented, and calls for clear thinking and resolute action.”
The Opposition was having none of it.
“From a Government that has been in office for 11 years, the Taoiseach has some neck to say there is little point in looking back; there is every point in looking back because the pilot who crash-landed this economy is hardly the pilot who will take-off this economy and lead us back out of this recession,” said Labour Party leader Eamon Gilmore.
Kenny made the same point. “It is no exaggeration, unfortunately, to say that the bubble economy created under Fianna Fáil is imploding before our eyes,” he told the Dáil.
The Taoiseach won’t be getting any help from the Opposition in his current political difficulties, but an agreement with the social partners would be an enormous boost as long as it delivered real spending cuts.
A contrast with Cowen’s consensus style of leadership has been provided in recent months by French president Nicolas Sarkozy, who likes to lead from the front.
Today Sarkozy will face a wave of strikes and protests from a variety of public sector workers, along with a swathe of private sector unions. The strikes are designed to force Sarkozy to reverse planned public service cuts and have been fuelled by growing anger at the government’s decision to bail out banks and industry while unemployment rises.
It will be interesting to note in the months ahead whether the Cowen or the Sarkozy approach to leadership proves more beneficial for their respective countries.