IT WILL take up to five years to get the public finances back on track, Taoiseach Brian Cowen has said. Speaking in advance of talks with the social partners, planned for the coming weeks, Mr Cowen told The Irish Times that the scale of the economic problem was so great that an attempt to deal with it in one or two years would do too much damage to public services.
"Because of the size of the problem if you go at it and try to deal with it over a 12-month period, or a 24-month period, you would create a lot of gaps in the services that you are trying to provide. So we need to find a credible timeframe in which to proceed," he said.
"I think we just have to, over a period of time more likely five years than three years in my opinion, bring that equilibrium back between the current spend and the tax revenue."
Mr Cowen reiterated his commitment to social partnership as a framework for dealing with the serious problems in the public finances after the exchequer returns for 2008 are published on Monday.
He said that the talks with the social partners would conclude by the end of this month and he was committed to getting agreement on the way forward.
"The end-of-year exchequer returns will show the deteriorating position for the public finances," said Mr Cowen. He added that the scale of the problem was so great it would have to be addressed in the same way as it was in the late 1980s.
"We have to talk to the social partners and say 'Here's the steps we have taken already. Here's the end-of-year position. To keep a current budget deficit as it is, and widening, is not a sensible or sustainable position and therefore we have to create a time frame in which to address the issue'."
Mr Cowen said that social partnership was not just a three-week process but involved structures such as a central review committee to monitor and implement the policies needed to meet the financial constraints that have developed.
"I believe it is the best method to get the buy-in you need for the road we have to travel. I believe it is a problem-solving process about how we collectively come forward with a strategy to deal with the issue."
Mr Cowen denied that the Government was avoiding its own responsibility to provide leadership, saying the social partnership process had worked in good times and bad. "Certainly, it is a challenge to us now given how quickly the turnaround had come. That is the big difference now. Compared to the 1980s when we had a steady decline over a period of years, to the point where people's room for manoeuvre was absolutely nil. It just had to be dealt with."
He accepted that there would be a drop in living standards in the year ahead. "Of course there will. The economy is in recession. Unemployment, unfortunately, will rise. We have got to minimise the impact of that in terms of jobs lost and looking at it in as creative a way as we can to keep as many people at work [even] if terms and conditions are different, even if it is not a full five-day week but a three-day or four-day week.
"We have to try and look at how you keep the maximum number at work, even if there is less activity in the economy. Rather than saying it is just a question of losing jobs, those that are in work at the moment need to be more creative and more constructive," said Mr Cowen.
He said that short-term measures would have to be taken this year in the health service and other areas to get better value for money and ensure that the first casualties would not always be those who required the services.
"That is a change of thinking between the State and those who provide the services that need to be demonstrably seen on the ground in the coming year, let alone in the longer-term future," said Mr Cowen.
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