Lenihan’s retro analysis means its back to the future!

2FM’s Colm and Jim Jim have a quiz where the catch phrase regarding a competition where the prize goes up by €50 each day “Its going higher and higher”. Shortly after their morning slot Finance Minister Brian Lenihan was confirming what we all thought about government debt. It’s going higher and higher too as the tax base collapses. Every day it seems the Fianna Fail analysis of the economy is coming apart at the seams. The right wing neo liberal analysis, so beloved of the building mob, is shown for what it is, voodoo economics. Poor Brian has the appearance of an undertaker on his way to a morgue these days!! No wonder, Fianna Fail and the Greens are going lower and lower!

The reality is that we can’t keep on building houses or shopping centres that nobody wants, nor apartments for that matter. Stamp duty, VAT and corporate taxes slide. The FF view that this is the international credit crunch doesn’t explain away the fallacy of their neglect of investment in communities. Unlike the US or UK where their government tries to restimulate their economies by letting out some cash, all of ours was blown in the boom. There’s nothing left in the locker, so vulture capitalists will be encouraged on the boards of the banks, the national pension reserve fund the value of which must be in doubt since it was invested in infrastructure which is itself declining will be looted and borrowing will be maxed out as far as the ECB will let us go.

It seems to me that their initial response will be to attack the public servants but watch what will also be done; expect school building projects to grind to a halt, any project for which there has been no contract signed and thankfully we got our swimming pool through here last week will be long fingered and road projects such as the New Ross bypass will be frozen.

The government however by focusing on the short term are missing out on the wider issue and its this; is there any strategy to put in place an alternative road back to prosperity? The reality is that demand for housing and retail is satisfied for some time to come. Looking for growth into the future means finding something sustainable, going back is not an option. We’ve seen it can only go so far, to sustain it you must re-invent your economy. The government is sleep walking and the economy going down the tubes!

My view is that we should go down the road of developing R&D alongside the 3^rd level sector. Investing in education is something that the present Minister for Finance’s father understood when he was in cabinet. Indeed Brian Senior served as Minister for Education. A strategy is needed to be put in place where the key skill sets needed to drive imaginative ideas and innovation are focussed on our third level sector. Batt O’Keeffe should wake up to the other half of his portfolio which is science. I spoke with a third level science administrator in a college this week and her view of this minister was get out and march next Saturday!

So there you have it, a government as keen to participate as that woman who refused tickets to the RTE late late toy show! Being close to this government is now job for a mortician not a hairdresser or pianist!