INSIDE POLITICS:Times are tougher than they should be, thanks to the Government's refusal to face reality about the economy, writes Stephen Collins.
THE TAOISEACH'S warning at the beginning of the week that the country was facing "a hard year", because of the downturn in the American economy, was Bertie Ahern at his disingenuous best - appearing to accept the reality of the situation while subtly shifting the blame to forces outside his control.
The fact is that while country is certainly facing hard years for the foreseeable future, the impact of the looming worldwide recession on Ireland has been exacerbated to a considerable extent by the manner in which his Government has managed the economy for the past four years or so.
In particular, Fianna Fáil's love affair with the construction industry inflated the property bubble to dangerous heights making the inevitable downturn far worse that it need have been. All the indications are that we are still in the early stages of the collapse in property prices and it is impossible to predict the scale and impact of the crash.
It was, however, certainly possible to predict over the past few years that it would all end in tears. Instead of adopting policies designed to rein in a runaway property market, at a time of record low interest rates, the Government piled fuel on the fire with a range of incentives that enabled construction companies and property speculators to make undreamed-of profits.
The other side of the coin is that hundreds of thousands of Irish citizens were forced into paying exorbitant prices for houses and apartments which may not recover their value for years to come. The impact of that on the living standards of the entire community is going to be severe, the only question is how bad it is going to be.
Although it didn't take an economic genius to see what was coming, the Taoiseach and the Minister for Finance, Brian Cowen, not only failed to take the appropriate response, they set out to label anybody who tried to get them to face the facts as doom merchants attempting to talk down the economy for their own ends.
In the past week the starkness of the situation has finally been accepted by the Government. Of course Ministers can hardly keep their heads in the sand any longer with the rise in unemployment last month being the sharpest on record while the ESRI report published yesterday predicted the lowest rate of economic growth for 20 years in 2008.
The real seriousness of the situation is also reflected in the fact that Irish banking stocks have lost almost 50 per cent of their value in the past six months. The fact that the Irish market is performing much worse than most other stock markets in the developed world may appear to be academic to most people but it is a harbinger of tough times ahead.
The rapid deterioration in the public finances since the beginning of the year is an equally ominous indicator and that is something that is directly under Government control. With spending rising and tax revenues falling, the only question is the scale of the problem that will face the Government as the year rolls on. Given the refusal to face reality for so long, the critical question is whether the Taoiseach and his Minister for Finance are capable of guiding the country through the very difficult times ahead.
Of course the primary reason the Government refused to acknowledge the scale of the looming crisis was its focus on winning the general election last year. In a remarkable replay of the 2002 election Fianna Fáil denied any problem existed but suggested that, if something did go wrong, they were the only ones equipped to deal with it.
At least in 2002 the Government moved swiftly after its election victory to curb public spending. This time they have acted like rabbits in the headlights and have not yet taken any remedial action. When the response finally does come it will almost inevitably target services to the public, particularly the most vulnerable. The sheltered public service will protect its own terms and conditions and the axe will fall elsewhere.
Meanwhile, the Opposition, with the notable exceptions of Richard Bruton and Joan Burton, have continued to miss the point. Last week in the Dáil the focus of Fine Gael and Labour was again on the health service rather than the economy. When will they get the message that the health service does not win or lose elections? Fine Gael fought the 2002 election on health and was destroyed. The party fought the 2007 election on health and recovered lost ground but still failed to win power. The party has focused on health at almost every election all the way back to 1989 and has lost six times in a row.
Opinion polls that repeatedly show health as the major political issue are simply misleading. Of course health is a hugely important issue for most people but its political importance is limited. People complain about it in the way they complain about their weather. They don't think that it makes much difference which politicians are in charge of the system.
Before, during and after the last election the Opposition seemed to be putting all its energy into attacking the Minister for Health, Mary Harney. They are continuing with this tactic at a time when she is making inroads into some of the underlying problems in the system. The impact of significant reform will be slow to make itself felt but there have been improvements and more are on the way.
The Government will not lose power and Fine Gael and Labour will not win it on the issue of health. It's years since Bill Clinton coined the phrase: "It's the economy, stupid."
If Fine Gael and Labour don't get the message now and start attacking the Government's economic record with the same vehemence that they have applied to health they deserve to languish in Opposition." Government Ministers have acted like rabbits caught in the headlights and have not yet taken any remedial action