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Friday 17 August 2018

Dan White: Five things the new government must do in the first 100 days

As the current Government finally comes to an ignominious conclusion, all eyes will soon be focused on its successor. After years of dither and drift there is an urgent need for swift, decisive action. Here are five key measures the new government must take in its first 100 days of office.

1 Tear up the Croke Park deal. Yes, public sector workers have already taken it in the neck with the pension levy and wage cuts. But even after all of this we will still spend €18.6bn on public sector pay and pensions this year. This compares with projected government borrowing of €17.6bn in 2011.

The bottom line is that Ireland's chaotically managed public services are going to have to learn to do a lot more with a lot less.

2 Cut social welfare rates. Even after the cuts announced in last December's Budget the basic weekly social welfare payment in this country is still €188 a week. While poverty campaigners will no doubt point out that this is hardly an extravagant amount, it is still way out of line with welfare rates in wealthier countries.

The weekly social welfare rate in the UK is stg£67 (€78) and just under €83 in Germany. With social welfare spending set to top €20.6bn this year, there is an urgent need for further, even deeper cuts.

3 Renegotiate the EU/IMF deal. By taking the axe to public sector pay and social welfare spending we will drastically reduce our borrowing requirement. If we no longer need to borrow as much money as we have been doing over the past couple of years, we will be in a far stronger position to renegotiate the terrible deal the outgoing government did with the EU and IMF last November.

And make no mistake about it, this deal seriously needs renegotiating. While the IMF is charging us just 3.1pc for the €22.5bn it is lending us, we are paying the EU's, European Financial Stability Facility a penal 5.8pc interest rate.

Meanwhile the EFSF is borrowing this money at less than 2.9pc. That is loan-sharking pure and simple.

4 Sort out the banks once and for all. It is now almost two-and-a-half years since the Government unconditionally guaranteed the deposits and senior bonds of the Irish-owned banks and almost two years since it first announced its plans for the NAMA "bad bank", but the Irish banking crisis still rumbles on. In fact it has got worse, with deposits continuing to flee and the Irish banks now utterly dependent on loans from the ECB and the Irish Central Bank. Enough time has already been lost.

The new government must move to disentangle the financial problems of the Irish banks from those of the State. This will mean drastically reducing the number of Irish banks to just one or two.

The new government must also ensure that the ECB, which lent €70bn to the Irish banks to pay off senior bondholders, primarily mainland European and UK banks, shares the pain of any Irish bank restructuring.

By lending the money to financial institutions which it must have known were insolvent, the ECB shares at least some of the blame for the Irish banking disaster. Now it's payback time.

5 Set up an economic crimes tribunal. Labour Party leader Eamon Gilmore famously accused Taoiseach Brian Cowen in the Dail of "economic treason". If Gilmore is correct then Cowen is not the only guilty party. Ireland's road to ruin was facilitated by a raft of Government ministers, senior civil servants, bankers and property developers.

Between them they squandered the greatest boom in Irish economic history, bankrupted the State and condemned another generation of our young people to economic exile.

These guilty men and women must be held to account. No, I'm not talking about some namby-pamby tribunal but a real court with the power to hand down real sentences.

Maybe new Taoiseach Enda Kenny should follow the Second World War example of Eamon de Valera, who replaced judges with army officers. Now that's a thought to savour.

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