Unlike the Labour Party – Fine Gael’s potential partners in Government Enda Kenny and his colleagues have accepted at least some of the challenges that face this country.

Fine Gael agrees with the Government, the EU Commission, The European Central Bank and the IMF that the best way to put Ireland’s public finances back on a sustainable footing is to introduce a €6 billion adjustment in this year’s budget.   The Government and Fine Gael agree that it is important to get public expenditure under control and to balance the books.

The Labour Party like Sinn Fein are both in denial, neither has produced a workable strategy to deal with our economic position.   That’s less surprising in the case of Sinn Fein than it is in the case of the Labour Party.

There are a number of key elements in the Fine Gael proposals that don’t add up

The biggest single problem for Fine Gael is that many of the key assumptions on which the party bases it’s alternative budget just don’t add up.
 
For example, Fine Gael assumes that the bulk of savings from ‘reform' measures will become immediately available in 2011.  The assumptions are not realistic.

Fine Gael’s assumes that the funds from its proposed sale of state assets can be brought into the public finance ‘mix’ from day one: this proposition is nonsense.

Surprisingly, Fine Gael which has access to lots of banking advice claims they would have wound down Anglo immediately – a populist stance. However if there was any attempt to wind Anglo down overnight it would have cost the Irish taxpayer approx  €71 billion. 

Making the bondholders pay & restructure the banks

Fine Gael is being less than honest with the voters when it talks about ‘burning the bondholders’. If Ireland were to unilaterally renege on its debts then we would not be able to borrow for the foreseeable future.  Fine Gael is talking out of both sides of its mouth on this. 

Speaking on Prime Time on 30th November, Michael Noonan accepted that this was neither realistic nor possible “I think it would be very imprudent for Ireland to proceed without the umbrella of the ECB if one was negotiating to get a discount on bank debt.”

The former Fine Gael leader Dr. Garrett Fitzgerald has said such an action “could prejudice our capacity to continue to borrow from international markets.”  He adds “who would want to lend any more to us if we repudiated the senior bonds of our banks”.  A default as advocated by sections of the media and by Fine Gael would cause havoc.

Argentina defaulted on debts in 2001. It has still not regained access to international markets. The only international borrowing that Argentina has been able to do since then was a bilateral loan from the Venezuelan government at 11%.         
      
Jobs

In terms of job creation the central plank in Fine Gaels strategy is the party’s NewERA policy document. That policy document has been rubbished by both
Michael Noonan and Richard Bruton.

Michael Noonan said “Simon Coveney was the author of that particular policy document and if you look at it, the figure of “100,000 jobs doesn’t appear anywhere in it; that seems to be some kind of a public relations add-on that enthusiastic people attached to it.” Richard Bruton said “The essence of the proposal (NewEra) isn’t creating jobs.” NewERA is now the Fine Gael jobs plan: hardly inspiring!

Its bad enough that Fine Gael is depending on a document that two of its own
senior members have derided, incredibly the partys budget strategy fails to mention continued investment in the job creation and research agencies, IDA Ireland, Enterprise Ireland and Science Foundation Ireland.  The Government in contrast has published an integrated five-year jobs strategy that aims to generate 300,000 new jobs and boost exports by one third. That plan sets out specific actions to spur further improvements in competitiveness across all sectors of the economy including measures to cut costs in energy, waste and transport, broadband infrastructure, professional fees, property and labour.

Close the HSE and FAS

A key part of Fine Gael’s “recovery strategy” is to cut jobs in the public sector. It has proposed closing the HSE and FAS, agencies which are understandably unpopular with the public. The ‘policy’ is good for a sound bite but there are some problems. Who will take over the training function of FAS? What will happen to the HSE staff?

In the case of the HSE Fine Gael assumes that the 28,000 staff who will loose their jobs under its proposals will be taken on by the private insurance companies who will operate insurance health packages. There is no basis for this assumption.

Enda Kenny was asked on RTE’s This Week on 7 November where would the HSE personnel go for jobs. His response “these people would be offered jobs I’m quite sure”.

If FG health policy were to be put in place it would mean that private sector Insurance companies some based outside Ireland would be calling the shots: Whether someone can have an operation in Dublin will be decided by an administrator based in the UK! Hardly progress. 

Overall The Fine Gael budget policy is like the curate’s egg good in some bits and bad in others.  A number of its key assumptions just don’t stand up to scrutiny.  Most importantly of all it runs directly counter to the policies of its potential government partners – the Labour Party.