euro-ireland

Its that time of the year when we make great resolutions to get healthy again. The combination of seasonal overeating and over drinking and the arrival of the New Year jolts us into making firm resolutions to reduce our weight, stop eating fatty foods and get healthy and fit again, and ready to face the world with confidence and competence. Some of us don’t just go on a crash diet and informal exercise regime, but sign up for the gym and embark on a full fitness programme. However, very quickly many of us lose focus, break the rules and take the easy option of temptation and indulgence. It is a familiar story.

Four years ago, Ireland went on a strict fitness regime. We had no choice. The Troika forced us onto the treadmill and the running mat. The country had become massively overweight and unfit, bloated on the inflated tax-take of a property bubble and rampant overspending. We had binged so badly that, when the international economic climate changed, we crashed, first with our banking crisis, and then with a full blown financial crisis. But the overall picture was one of over indulgence : bench marking, huge salaries, and soaring public and private debt. Think of it as over-eating in a way that we couldn’t afford, and that was not healthy or sustainable for our human body.

We binged in all areas. The property boom, for example, fuelled a massive increase in social welfare spending, with the value of weekly payment rates to recipients rising by 52% in the five years 2004 to 2009. This increase far exceeded the consumer price inflation in that period. Even now, welfare payments rates are 40% higher than a decade ago, and yet in the same period, consumer prices have increased by 15%. However, cuts have been made in 2011 and 2012 and on top of higher utility bills and endless stealth taxes (not to mention water charges) people are now understandably angry about the erosion of their spending power.

But most of us accepted, in 2010, that we had to get healthy fast, and a substantial national crash diet was necessary to prevent a full blown heart attack. However, the decision was made for us, which is just as well, as on our own we are as likely to sneaking to the fridge for more ice cream and cheesecake, rather than fasting and jogging.

Huge budget cuts were put through, first by Fianna Fail and then by the current government, and after a strict programme, the country is coming round and the economy is moving again, with jobs being created and confidence on the rise. All appears to be going well.

However, just like the rest of us after Christmas, the discipline suddenly seems to be going. We have slackened. The feeling that ‘ah well, we’ve done enough slimming and exercising already, let’s take it easy’, seems to have prevailed. Of course, thus is fuelled by a volatile political scene and the drop in popularity of the Government parties. Desperate to curry favour, with an election less than 15 months away, the Government has told us we can cut back on the gym visits and have a bit more chocolate and crisps. We ‘deserve it’, they say.

Thus, two weeks ago, we heard the Taoiseach simultaneously offer a cut in the Universal Social Charge as well as a rise in the minimum wage, even though businesses say it is unsustainable and will possibly will ruin our competitiveness. Meanwhile, the Labour party is encouraging these goodies, and taking credit by them.

Interestingly Mary Lou McDonald, the leader of Sinn Fein, which is now our largest political party, dismissed these offers as political electioneering – and yet in the same outburst, she urged the Government to completely scrap the water charges. As if this wouldn’t be electioneering! Clearly, For Mary Lou, there is no need for a dieting regime at all and SF believe we can have everything in the fridge.

But it is not just the political parties. There have also been loud calls to ease up on the slimming regime by the employers organisation, IBEC, and various trade unions, especially and and predictably, the main union body SIPTU. Although IBEC Chief Executive Danny McCoy said it is vital that pay demands are ‘moderate’ after years of pay freezes and some pay cuts, unions have already begun winning wage increases worth many multiples of the near zero rate of inflation.

jacko_lib

As for SIPTU, no sooner had our fitness instructor, the Troika, gone out the door last year, but SIPTU’s Jack O’Connor (above) was first out of the traps last year demanding pay increases in the public sector and a loosening of the purse strings – and the cookie jar. This was at a time when the State was still spending 7 billion more than it was taking in tax revenue. Nor has O’Connor stopped his demands. Along with the public service unions, he wants a restoration of most of the pay cuts made under the Croke Park deal which are actually the hard-won gains made by our national diet. This is Operation Transformation in reverse!

And although the economy is recovering, it is not as if the situation is completely rosy. Yes, the most recent tax take is 1.24bn ahead of schedule, but the other story is that, with big overruns in spending in Health and in Justice, the budget deficit is in fact 4% of gross domestic product, not the 3.7% that it is supposed to be. So we still a considerable way to go. Yes, we have lost the flab and have a more healthy regimen but there is work to be done. So why throw it all away now, just for the sake of complacency and a few easy goodies, with little concern for the overall situation?

But as with personal dieting and obesity, there is a huge level of denial going on. When international experts appear at our current banking inquiry and say that yes, Irish society did ‘party’ recklessly in the boom years – including unions, developers and public sector workers – we still get angry and dismissive. It is like a recent Red C poll, where almost four out of five people in Ireland believe they have a healthy diet, and yet almost four in ten also believe they are overweight. But the World Health Organisation statistics tell a starker story, estimating that up to 57% of Irish people are overweight, and yet many of them are in complete denial about this. Interestingly, those in the 18-24 age bracket are least likely to accept that they are overweight.

The lesson here is that people do not like the full truth. Our fitness instructor, the Troika, had to force us into the gym, when our bodies imploded from over indulgence and neglect and now that the Troika has left, we are in danger of stepping off the treadmill and slipping into our old ways. Again the psychology of slimming comes in : the feeling that one little pay rise here, or one little spending indulgence (like the one cream cake or the one day’s skipped exercise) wont harm things and undo the good. But it all adds up : one pay rises leads to another, laziness creeps in, and soon budgets are blown again, and we are sliding back to where we were. With any diet, the crucial thing is discipline and seeing the process, and the results, through.

The danger is that having got ourselves so far in terms of being fit and lean again – a proper Celtic Tiger- we will slip back into how we used to make policy in this country. With the economy recovering, we can hear the usual vested interests clamouring for the sort of perks and rises that will only drive investors away. Instead of ignoring them and staying the course, this Government is now looking at the opinion polls and conceding to the demands to abandon the national diet that has created our recovery. The advice of the Independent Fiscal Advisory Council, set up to ensure the populist politics of the past would never be repeated, has been disregarded, as have repeated warnings of the IMF and the European Commission – our fitness experts from afar.

architecture-Google-Dublin

Picture : Google offices, Dublin

Meanwhile, we see a return to our old ways with the creation of Irish Water, a super Quango, with 4,000 staff members rather than the 2,000 it requires, and a 12 year cosy deal between the local authorities and Irish Water.  The result is that Irish Water is in danger of becoming a sprawling monster – inefficient, unresponsive and unmanageable. Its establishment resembles the old style ‘social partnership’, ie collusion between Government, trade unions and State agencies to stitch up pay agreements at huge cost to Irish taxpayers, just when we had hoped that a new era of sensible fiscal prudence and transparency would ensure that the days of such cosy secret deals were over.  The Irish Water stitch up will cost Irish taxpayers, already at the end of their financial tether, an additional €2 billion euro for the next 12 years.

But the Irish Water creation is just the most brazen example of a larger pattern, of slipping into old ways, and coming off the necessary dieting programme and getting fat and lazy again. As a nation, we need to do what we do in our personal life, stick to a programme to stay trim and healthy, stay within our means and don’t let all the hard work and sacrifice be thrown away by coming off the programme just when we have got competitive again and when the real rewards are actually in sight.

Advertisements