Kenny's 'recovery' is a grandiose PR exercise

The claim that Enda Kenny and his governemnt have inspired some kind of recovery is just plain wrong. By Vincent Browne.

The cover story in the European edition of Time magazine on Ireland's "Celtic comeback" pioneered by Enda Kenny was a public relations triumph, for which Kenny himself deserves credit.

Time enthused: "Kenny inherited a kingdom of derelict developments (because of the reckless policies of its predecessors in government). Credit, until recently too easily available, had dried. Scores of the country's brightest youths were voting with their feet, leaving at rates last recorded during the Great Famine in the 19th century.

"Kenny has not yet staunched that desperate outflow, and despite the exodus, unemployment has risen to 14.8%. Yet, on several other measures, his country's turnaround looks compelling."

The "compelling" news was how the government had stuck by the Croke Park agreement, how Kenny had cut his own and other ministers' pay; the plans to protect homeowners; the pending property tax; the interest rate reduction on the EU bailout loans; a growing economy; and the absence of civil strife.

All this was conveyed in an interview with Kenny that was so warm and soapy that even some of the practised soft-focus merchants of RTÉ could learn something from it (and that is no faint praise).

Kenny and his political valet, Eamon Gilmore, have consistently spun the mantra of inheriting a country ravaged by the policies of its predecessors, of how they courageously grappled with the crisis, never "flinching" from the hard decisions (that was Gilmore's proud boast at the Labour think-in), stabilising the public finances, rebuilding Ireland's reputation abroad and restoring the country to economic growth.

The only pity is that almost all of this is untrue.

Yes, the policies of the previous government were reckless, to say the least - but Kenny's only criticism at the time was, essentially, that the policies were not reckless enough.

In all his speeches on the annual budget after he became leader of Fine Gael in 2002, he complained that taxes were too high and government spending was too low.

For instance, on the 2003 budget, he criticised an increase in Vat and the failure to index the tax bands. On the 2004 budget, he denied he had ever complained that the government was spending too much.

On the 2005 budget, he said Fine Gael "completely understands the importance of a low personal tax regime". In 2006 and 2007, he urged changes to stamp duty that would have inflated the property bubble even further. And Fine Gael backed the bank guarantee of September 2008 - without reserve.

Labour was almost as bad. It and Fine Gael also inherited a fiscal plan from the outgoing government, for which that government had done much of the heavy lifting in the budget for 2011. Fine Gael and Labour accepted this blueprint almost in every detail.

So the claim that this government put the country on the road to recovery is false. It was the late Brian Lenihan who did that in his 2011 budget - not that it, or anything this government has done, was likely to lead to recovery in any sense other than a fiscal recovery, and even that is questionable.

As for the "growing" economy, the only reliable measure of our economy, gross national product (GNP), is projected to contract yet again this year by 0.4% (according to the most recent quarterly report of the Central Bank). It contracted by 8.1% in 2009, grew by 0.9% in 2010 and contracted again by 2.5% last year.

I am not saying this is the fault of Enda Kenny or his government, but the claim that he has inspired some kind of recovery is just plain wrong.

As for restoring Ireland's international reputation, this is a self-serving refrain of Gilmore, the Minister for Foreign Affairs.

If it is true that Ireland's reputation has been restored, even somewhat, it is based on several falsehoods, including the following.

  • That nobody in this government had any part in promoting the policies that caused the crisis (they egged them on).
  • That this government set us on the road to recovery (it was the previous government).
  • That Ireland has a "growing" economy (it remains in contraction).
  • That the drain of emigration has ceased (87,100 people emigrated from Ireland in the year to April 2012, of whom 46,300 were Irish nationals, according to the CSO).
  • That employment prospects are improving (the labour force declined by 1.4% in the last year and the pace of employment decline is increasing, according to the Department of Finance economic bulletin this month).
  • That the credit squeeze imposed by the broken banks has eased (the recent Central Bank report reveals, for instance, that outstanding loans to households decreased from €128 billion in July 2011 to €107 billion in July 2012, and outstanding loans to companies declined from €89 billion to €88 billion).

On top of all this, the promise held out in the last election by the two parties now in government - that there would be a significant write-down of the bank debt - now seems fanciful in the extreme.

Aside from the austerity imposed on those least able to bear it, and the further austerity for the same group in the coming budget, Minister for Social Protection Joan Burton's promise that the core rates of social welfare would not change in the budget - and then her refusal to state which rates were regarded as core - is as eloquent a commitment to cause more harm as there is likely to be.

It is flattering that some in the international community think we are getting our act together. But what will be the consequences when the international community finally finds out the truth?