THE UNSUSTAINABLE gap between public spending and tax revenue must be confronted if Ireland is serious about maintaining control over its own affairs, Taoiseach Brian Cowen warned.
Mr Cowen said the €18.5 billion deficit should put the cost of resolving the banking crisis in perspective, and a four-year budgetary plan would address “realities” when it was announced in November.
“We can’t take our eye off the ball of where we are going as an economy in terms of what we spend and what taxpayers have been in a position to pay thus far.”
As he began his speech at the Irish Business Employers Confederation (Ibec) HR Leadership Summit at the Aviva Stadium in Dublin yesterday, Mr Cowen said he was going to depart from his script, “given the morning that’s in it”. The announcement by the Financial Regulator of the figures needed for distressed institutions ensured “we can put a line under the banking problems that we’ve had and move on from here”, he said.
The ongoing debate about the economic crisis had failed to acknowledge it was not possible to “decouple” economic recovery and job creation from the need to reform and restructure the banking system and the economy.
“The deficit of €18.5 billion puts in perspective perhaps, albeit in no way to diminish, the horrendous story that the domestic banking crisis has unveiled to us.”
Unless public finances were brought into order, confidence that needed to be built, both domestically and internationally, would “ebb or fade and certainly dilute”, Mr Cowen said.
Asked by reporters at the event whether the Croke Park deal on public sector pay could be reopened, Mr Cowen replied: “Well obviously there has been an agreement reached at Croke Park, the provisions of that agreement talk about a review of that situation next May and I’d like to stick to terms of the agreement, but what our circumstances will be at that time will obviously will require a very realistic and honest appraisal of whats in the best interest of protecting jobs.
“But we’re not in the business of going beyond the arrangements that we have.”
Mr Cowen appealed to his audience not to have a defeatist attitude to the problems facing the country. “Let us face into this challenge not on the basis of some air of defeatism that says we cannot succeed. We must and will succeed and we will succeed because we have faith in the future of our economy and the resilience of our own people.” He urged business leaders not to underestimate their ability to instill a sense of faith in Ireland’s ability to overcome its current economic problems.
“We have faced difficulties as big as this in the past – perhaps not quite as big as this, in fairness. But we have many strengths in our economy now that we didn’t have when other recessions came to hit us,” the Taoiseach said.
“A smart economy . . . is not about white coats and PhDs – it’s about having a high productivity right across the board. It’s as important for the girl working in the supermarket or the person working in the supermarket, as it is for the person working in the science lab.”
Mr Cowen said there were signs of economic recovery, including an improvement in competitiveness, more favourable exchange rates and a reduction in unemployment this month.
He did not wish to deliver a history lesson, but reiterated the Government’s view that Anglo Irish Bank was of systemic importance and if it had been allowed to fail it would have had a “contagious effect” across the banking system.
The National Asset Management Agency had “proved to be a very rigorous exercise despite the criticism that it got before it even got off the ground”.
