What does Olli Rehn know?
Reading Commissioner Olli Rehn's comments today, it would seem that we're suffering from European 'group think' in relation to our budgetary strategy. Either they're getting it from us or we're getting it from them, but the lack of critical examination of the €15bn target over four years is worrying. Particularly as this large figure only recently slipped into the discourse, almost without question.
What does Olli Rehn know? He has backed the government's four-year budgetary strategy. But no strategy exists that I know of, save some very vague idea of saving €6bn with the coming budget, followed by further savings of varying amounts over the next three years taking us to a total €15bn. Is there any further detail and has he seen it? And if so, why has he seen it before the main opposition parties or even the Irish people?
His calls for 'broad consensus' on the budget and the four-year strategy ring hollow here. We are wrong to so easily trust the figures from the government given how casually they have morphed from their original projections only one month ago. We 'give or take' billions so frequently in these estimations it undermines people's confidence in the 'final' figures each time they are released. No wonder the bond markets don't trust us. The opposition would be wrong to trust the government too.
On a couple of occasions during his visit, Commissioner Rehn has stressed the need for Ireland to stick to the Growth and Stability Pact – the rules governing the European Monetary Union. This means bringing our debt down to 3% of GDP and is integral to the €15bn in cuts being planned over the next four years until 2014. In fact it underlines the whole 'strategy'.
But the Growth and Stability Pact has never worked, being violated by members even in the 'good times', France and Germany among them. Given the recent crisis it is now questioned whether or not this is the most appropriate way of keeping eurozone economies in line. The three per cent target, if it can be achieved through cuts alone (and it can't), certainly won't grow the economy. And if we do manage to get back to decent growth rates then it will be almost irrelevant whether or not the actual figure is 3, 4 or even 6% in 2014. Because we will be growing, making money and the debt will be affordable. Then we can look at a longer term strategy for bringing it back to more responsible levels.
I would also question why Commissioner Rehn is meeting with the social partners. Where is their mandate in all of this? We have our elected representatives and they are responsible for the decisions of the day. Why include this elite to the exclusion of others?
Perhaps most significantly, if we take the longer-term view, are the Commissioner's comments regarding the need for Ireland to become a 'normal tax country' in the European context. Our social model is very different from our European neighbours. It is very much a debate we need to have, particularly in the context of the current crisis and the new financial reality that confronts us. But let's have that debate, explicitly and out in the open. Let's not attempt to reconstitute our notion of society by stealth through a four-year tax and cut plan.
One of the first tasks post-crisis must be to have an open discussion on our position in the EU. Through our monetary union we have been brought under a political structure or hierarchy whereby our decision-making on financial and budgetary matters is no longer solely up to us. This is clear from the influence of the Commission on Ireland's financial affairs, so aptly illustrated in the tone of Commissioner Rehn's visit and comments.
This may be good or it may be bad, but it must be openly and explicitly recognised that this is how things are now. And we have to decide how much further along this line we care to go. This must be chosen. And it is a choice that will soon come. Because the days of the economic arrangement around the EMU as we know them are numbered. A new financial and political reality will have to emerge to accommodate the single currency in the post-financial crisis world if it is to survive and thrive. We need to decide if we are ready to be a part of it because it has significant implications for our concept of sovereignty.