Taoiseach Brian Cowen said today it was “increasingly obvious” to him that the current economic difficulties and the political dilemma posed by the rejection of the Lisbon Treaty were linked.
Mr Cowen was speaking at a meeting of the Fianna Fáil parliamentary party in Galway, where he said he wanted to send a clear message that the Government was determined to chart Ireland’s future through the current uncertain economic times.
He said we were now in “new economic territory” and that all decisive action necessary would be taken to manage the downturn, which he said was likely to continue for “some time yet”.
“There has been a rapid slowdown in the global economy arising from turbulence in global financial markets and the credit squeeze, faltering economic growth in the major economies, exchange rate shifts and the sharp rise in oil prices.
“No one yet knows what the full extent of these adverse developments will be or how quickly stability can be restored to the financial and equity markets worldwide,” Mr Cowen said.
“As we’ve seen only this morning, the continuing crisis in the global banking sector adds greatly to the complexity of the problems we face. These are unprecedented times in that respect.”
The Taoiseach said hindsight was “a wonderful gift, but it is a mythical one”.
“You can only make choices on the basis of the best information available to you at a point in time. The government will have to take tough decisions because of the economic slowdown.
“No politician likes doing so but we are not going to try to buy short-term popularity and put at risk all the gains of the past decade. By taking the right decisions, we will actively protect the interests of all the people of Ireland now and also be ready to benefit from any economic upturn when it comes.”
He told party members the economic rationale for the decision to bring forward the Budget to October 14th was to “provide confidence to both investors and the taxpayer with a view to providing a solid basis for economic recovery whenever world economic conditions improve”.
Mr Cowen said all Ministers were undertaking a detailed assessment of their spending to ensure that public money is spent “effectively and efficiently”.
He warned that the Government “will not countenance” expanding public expenditure at a rate that the economy cannot afford.
The Taoiseach said the task now was to focus on initiatives that would improve competitiveness, including the attraction of inward investment, cuts in public spending, public sector reform, up-skilling in the construction sector and the removal of barriers to effective competition.
He said all capital investment programmes in areas such as schools, housing, roads and public transport were being reviewed and that those projects which would make the economy more competitive would be prioritised.
“This will help provide employment, assist industry and enhance the competitiveness of the economy. There is an opportunity in more difficult times to get better value for money through more competitive tendering for state projects. We must get more for less,” he said.
“It's important, when things are as difficult as they are and when the reasons are as numerous and as complex as they are, that we do everything possible to maintain confidence and sustain investment at this difficult time,” Mr Cowen said.
Minister for Finance Brian Lenihan has already told his Cabinet colleagues they must shave 2 ½ per cent off this year’s figures when compiling their 2009 spending priorities, in advance of the October 14th Budget.
At this afternoon’s session in Galway, the party will examine Ireland’s place in Europe in the aftermath of the rejection of the Lisbon Treaty.
“We failed to address some people’s genuinely held concerns and we failed to get the message through that a rejection of the Treaty could exacerbate the already tough economic situation we find ourselves in,” Mr Cowen said today.
“We need to address these failings in getting more of the people to see the imperative for Ireland to be fully engaged with our partners in the European Union.”
Tomorrow, the party will discuss the health service and preparations for the local and European elections next year.