A general election may be needed for the public to appreciate the scale of the economic crisis, writes Noel Whelan
IT'S JUST not sustainable. This country cannot continue to operate the low-tax, high-welfare, big-government model which has been the legacy of the Ahern era.
We just can't afford it.
This peculiarly Irish model was built in the last decade, and in the later years it was funded from the tax receipts generated by the property boom.
Those property tax revenues have now dried up. The amount of tax we pay in this country can no longer meet both the pay and pensions of a public sector big enough to provide the level of public service which we have come to expect, while also funding welfare entitlements at such a high rate to so many recipients.
Ireland's tax base is too narrow and our tax rates are too low. Our inheritance taxes are negligible, our corporation taxes are among the lowest in the world, and our domestic homeowners pay no property tax (except when they buy a house, which very few are currently doing).
Householders in Northern Ireland pay, on average, the equivalent of €1,200 a year in local rates but in Ireland they pay only nominal refuse charges.
Our consumption taxes are relatively low, and in Ireland, unlike in many other countries, these taxes are not charged on food and most clothes.
Our motor taxes are also low except when we buy a new car (which very few are currently doing).
Even after the new income levy is applied, our income taxes will still be among the lowest in Europe, and we are unusual in excluding those on the minimum wage from our income tax system altogether.
Ireland's public expenditure is too high.
When measured as a percentage of GDP over the last couple of years it may have been comparable to euro norms but now that our growth rate has gone into reverse it is relatively high.
We can no longer afford to keep the pupil-teacher ratio as low as we had managed to reduce it to in recent years, especially if we continue to pay teachers at the same rate without any increase in their classroom hours.
We certainly won't be able to do so if large chunks of the education budget continue to be spent on State subsidies to private secondary schools or on funding universal free third-level education.
Neither can we continue to pay the same level of farm subsidies and grants while tacking such low taxes on larger farm incomes and imposing no taxes at all on land or farm assets.
In summary - we cannot have it all.
Ireland will borrow at least €4 billion next year just to fund the shortfall in current public spending.
This country is painfully and slowly going to have to realise that it has real choices to make.
This week saw much shrieking on the streets, screaming on the radio and shouting in the Dáil, none of which did much to advance public understanding of our economic problems or the search for solutions.
We now need to have a genuine national political conversation about our new economic circumstances.
The generalised and simplistic cry that the vulnerable and needy must be protected is inadequate and dishonest because too often those who throw it out fail to define who the truly vulnerable and needy are.
Does it include everybody over 70 irrespective of how wealthy they are?
Does it incorporate every secondary school student including those in private fee-paying schools?
Does it include all small farmers?
When this country last faced an economic crisis it also experienced dramatic political convulsions.
In the 1980s one government fell on its budget and another government fell because it couldn't agree a budget. Fianna Fáil suffered a series of leadership heaves. The Progressive Democrats emerged as a new political party.
In all there were five elections in nine years, three of them in the one 18-month period.
Many of us had dared to hope that unlike the 1980s our political system and public debate would be better able to tackle the economic crisis this time around.
After this week there is much reason to worry that it may not.
The real concern is not that the Government made a bad decision and was forced to reverse it, but that it may now be afraid to take the other necessary decisions.
It doesn't help that the last general election was fought on a false premise as a contest about how we spend the surplus generated by the boom.
In 2007 each of the parties sought to outbid each other in an auction of lavish tax cuts, increased public services and enhanced benefits.
Now, however, our politics must be about managing the recession and on whom we impose the burden of plugging the deficit.
It may be that we will have to have another general election in order for the electorate to appreciate the scale of the economic crisis and for the politicians to be honest about the harsh solutions.
It might actually be a good thing if it came sooner rather than later.
An election campaign would require the parties to publish and argue for alternative budgetary policies rather than just criticising every cutback.
A new mandate would liberate whichever party or parties are in government from the need to pander to every interest group.