Last Monday, Tánaiste and Minister for Finance Brian Cowen gave the Indecon Public Policy Lecture in Dublin, writes Noel Whelan. He used the occasion not only to flag some things he would and would not do in his forthcoming budget, but also to identify what he regards as Ireland's key economic medium-term priorities.
Those looking for an idea of what "Cowenism" is, should look closely at what he had to say.
The timing of his lecture and the political context in which he delivered it are important. It was at a point two weeks from his fourth budget and six months after the general election in which he emerged as the Taoiseach's heir apparent.
It was a lengthy text - running to almost 7,000 words - and was complex and considered in contrast to the usual rabble-rousing address Cowen delivers to political gatherings. Much of its analysis of Ireland's economic condition was impenetrable to those of us without an economic insight, and I will leave the analysis of its economic significance to others. However, some of what Cowen said is of particular political significance and worthy of focus.
He identified the Northern Ireland peace process, reduction of high levels of unemployment and eradication of forced emigration as the State's key achievements. He credited these accomplishments to the Irish people but argued they were facilitated through a framework of sound policy initiatives set by successive governments.
He then identified three key new challenges for Ireland's economic policy: high productivity, enhanced equity and safeguarding our environment.
Cowen's choice of priorities bears some attention because, as of now, he looks like the politician most likely to influence economic policy in the next decade.
He warned that there would have to be an acceptance of the need for ongoing structural change in our economy and a realisation that what he called "jobs turnover" will always be with us, suggesting that as the nature of employment changes there will be news stories about job losses and factory closures as well as stories of new job announcements.
While emphasising the need to create an environment which attracts more high-skilled employees, he made reference to the need to work harder to harness the untapped potential of many of "our newly arrived workers".
He devoted a considerable part of the speech to the need for public sector reform, saying that we need not just an improvement but a "rapid growth" in productivity in the public sector. While much of his comment on the latter was broad brush, he clearly emphasised the importance of the forthcoming Organisation for Economic Co-operation and Development Review of the Public Service in Ireland.
He implied that if he gets the top job, the Cowen era will be one of "major" public sector reform. He promised a "no tolerance" approach to vested interest actions which affect the public, open recruitment for an increasing number of public service posts and the dilution of boundaries between agencies, departments and local authorities. He also promised a redesign of rules of accountability and of incentives for performance in the public service.
His speech also made it clear that if he becomes taoiseach we are likely to see policies on public finance and taxation identical to those he has pursued as Minister for Finance. He talked much in his speech about the need for the tax system and the management of public finances to be conducive to enterprise and investment.
In was in this context that he gave strong indications of what will happen in the budget, suggesting in particular that growth in public expenditure - which has averaged at more than 12 per cent in recent years - will be reduced to 8 per cent next year. He went on to say he expected to have to moderate the rate of increase in expenditure even further in future years.
However, on the capital side he will not confine himself to an 8 per cent increase. The need to expand capital investment was a key theme of his speech and he appears prepared to borrow, perhaps substantially, if needs be to meet this priority.
Last December, Cowen reduced the top rate of income tax from 42 per cent to 41 per cent and said, circumstances permitting, he would reduce it to 40 per cent this year. In Monday's speech he indicated that the reduction will not now happen.
Many of his Cabinet colleagues were unenthusiastic about the reduction in the top rate last year and saw it as a concession to the then newly-elected Progressive Democrats leader Michael McDowell. They would have preferred to concentrate tax reductions at the lower rate or increasing tax bands. In circumstances where revenue has tightened this year, Cowen has shelved the idea of a top-rate cut and has indicated that available resources will be targeted at keeping those on the minimum wage out of the tax net.
The latter portion of his speech was devoted to the equity challenge. Cowen recognised that not enough had been done to ensure equality of opportunity. He promised to maintain expenditure on health and education but also spoke about addressing areas where existing systems have failed people, particularly in term of access to services.
For some, access to services had, he said, been "inappropriately delayed or denied" and he cited a failure to adapt and inflexibility from some vested interests as being partly responsible. One difficulty about which he spoke was the fact that some people had not benefited from secondary education and had passed through the system unable to master basic literacy and numeracy skills which suggests initiatives in this area may also feature in the budget.
No doubt his opponents will be critical of Cowen's failure to achieve some of his priorities already. However, it is significant that he took the time to set out his stall at this time.