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Оглавление4 THE BATTLE TO RESTORE FISCAL STABILITY
CATHY HERBERT
AT A CONSTRUCTION INDUSTRY conference in Dublin Castle in June 2008, a month after his appointment as Minster for Finance, Brian Lenihan mused laconically, and not a little wistfully, that it had been his misfortune to have been appointed Minister for Finance just as the building boom was grinding to a ‘shuddering halt’.
All hell broke loose. He was accused of throwing a wobbler, of wallowing in self-pity, of talking down the economy. For months, one national newspaper referred to him as the ‘gaffe-prone’ Minister for Finance.
At this remove, it seems extraordinary that such a blindingly obvious observation would cause such a furore. But it was the beginning of a pattern. Throughout his two years and nine months as Minister for Finance, Brian Lenihan coaxed a reluctant public and his fearful government colleagues to face the unpalatable truth about the extent of our economic crisis and to accept the need, however grudgingly, for the toughest budgets in our history.
Around the time he made his unguarded remark, he was finding out just how bad the figures were. He quickly realised the severe shortfall in tax revenue required an immediate response. On 13 June 2008, as news of the defeat of the Lisbon Treaty was filtering through from count centres around the country, he walked across to the Taoiseach’s office to brief him about the need for emergency measures to address the rapidly deteriorating budgetary position. It was a dark day for both men. Back in his office, Lenihan’s natural ebullience had given way to a deep gloom about the task that lay ahead. He was shaken by the gulf that lay between the triumphalism of the crowd that had drowned him out during a brief visit to the count centre in Dublin Castle and the harsh reality of the budgetary position outlined to him by his officials in the previous month. He despaired that he could ever bring a population that believed it could defy the expressed will of 500 million fellow EU citizens to accept the difficult decisions he knew he would have to make.
He did what he always did when he was worried: he telephoned a list of people – colleagues, close friends, acquaintances and people whom he barely knew but respected – and discussed the sorry position upside down and inside out until he could see a way through to the next step. This habitual, informal consultation process with a variety of touchstones was his coping mechanism throughout his torrid time in Finance.
On 8 July, he announced a series of measures to achieve immediate savings of €440 million. It was the first of six bouts of increasingly painful budgetary correction in his constant battle to stabilise the public finances. Two years and four months later, he lost that battle. But his dogged efforts made our bailout programme considerably less drastic than it might otherwise have been.
It became clear almost as soon as the July package was announced that it was inadequate. In September, it was decided to bring forward the budget by two months to October. That decision has since been blamed for the controversy that the budget provoked, swiftly leading to a number of high profile reversals. It certainly was an inelegant budget but it is doubtful that more time for greater deliberation would have made the kind of measures that needed to be taken any more palatable. Our position was pretty dire and our choices severely limited. We simply had to tax more and spend less: there was no painless way to do either, particularly after seven years of giveaway budgets.
As Lenihan was grappling with this budgetary dilemma, he was also dealing with the mounting liquidity crisis in our banks, which had intensified following the collapse of Lehman Brothers on 15 September. Two weeks later, the Government made the decisions to guarantee virtually all of our banks’ liabilities.
Notwithstanding the enormous consequences of that decision for our economy and for the Irish people, it was the alarming growth of our budget deficit that was uppermost in the minds of most of us in the Department of Finance in those weeks leading up to Budget Day on 15 October. The extent of the solvency issues in the banks had yet to emerge and the ferocity and depth of the international financial crisis could not have been foreseen. By contrast, the threat posed to our financial stability by our ballooning deficit was real and pressing.
Lenihan had hoped that bringing forward the budget would demonstrate to the public the gravity of this threat. In that respect, at least, it certainly failed. Almost all of its elements were deemed unacceptable by those affected and the consensus was that the budget was unfair and picked on the most vulnerable. Few put their heads above the parapet in defence of a politically toxic but economically necessary set of measures. October 2008 was a lonely month in Merrion Street.
The decision to abolish the universal entitlement to medical cards for over seventies was derailed by protesting pensioners, the most effective political lobby group of this long and deep recession. The fact that the State pension was increased by €7 in that budget made no impact at the time and has long since faded from memory.
The truth is, in late 2008, the public and the political system had yet to grasp the full extent of our economic difficulties. To be fair, neither was the severity and depth of the recession fully appreciated internationally and forecasts everywhere turned out to be wide of the mark. The Department of Finance forecast of a mere 1 per cent contraction in GNP in 2009 was in line with the projections of the ESRI, the Central Bank and the IMF. There was an expectation that we would return to growth as early as 2010 and that unemployment would peak at just over 7 per cent.
Never having served in an economic ministry and having no background in economics or business, Lenihan had no special insight into the likely twists and turns of an international crisis. But he was obsessed with one thing: the need to bring public spending back to levels that reflected our available resources. In the summer of 2008, he had watched from the sidelines as decisions on public service pay, the biggest element of public spending, were being taken in another arena across the courtyard from his office. Although officials from his Department took part in the talks, the Department of the Taoiseach was firmly in the driving seat. Privately, he was aghast that the rituals of social partnership were being played out, the actors apparently oblivious to the deteriorating economic backdrop. But a mere two months in his role as Minister for Finance, I suspect he was more reticent about his views around the cabinet table: social partnership was at the core of the political process and had become the preserve of the most powerful figures in the administration.
In the event, the talks broke down, earning the Taoiseach sharp criticism for his failure to do what every other Taoiseach had done since 1987: cut a deal with the unions. There was little acceptance either in the media or among the opposition that our circumstances had changed utterly. The talks reconvened in September and within days of the collapse of Lehman’s, the Government conceded an award of 6 per cent over twenty-one months. I recall Lenihan asking two of his senior officials if we could afford the pay increase. If it was the price of industrial peace, he was told, it was worth it.
The exchequer returns at the end of 2008 showed a drop of more than €8 billion in tax receipts over the year. In January, the Government said immediate savings of €2 billion would have to be found. In early February, five months after it was granted, the pay increase was suspended and the Government introduced a public sector pension levy, which amounted to an average cut of 7.5 per cent in the pay of public servants without the agreement of the unions. A short time later, the social partners walked away from the process.
Lenihan had been in cabinet for just under a year when he was appointed Minister for Finance. I had worked with him since January 2006, just after the Office of the Minister for Children was set up and, as its political head, he began to attend Cabinet meetings. He was fascinated by the business of government and had an in-depth knowledge of how the system worked, much of which he learnt from his father, who had held seven different portfolios in his long political career. It was as if he had been training to be a minister all his life and when his time came, he was completely at ease in his role and supremely confident in his exercise of ministerial power. He loved Justice: as a well regarded lawyer, he was a natural fit and he knew many of the personnel, having served in that Department as a junior minister.
By contrast, the Department of Finance was more reserved and hierarchical. The offices with their doors closed; the echoes of footsteps on the marble floors: he used to say it reminded him of a monastery. Although he never said so, he must have found it daunting. Critics, and there were many, especially in the first year, pointed to his inexperience in cabinet and his lack of knowledge of financial matters: although some of the most experienced figures in finance and politics around the world lost their footing in this most intractable of crises. The criticism did not bother him much. He had a job to do and he set about his work in the Department with alacrity.
Finance was now centre stage having been sidelined during the boom. The Department was under the media spotlight as never before. Scarcely a day went by without some negative piece of commentary. It had come to the point where at least one official said he had stopped telling people where he worked. Merrion Street had been knocked off its stride by the speed and depth of the crisis.
Inevitably, a siege mentality took hold and there was defensiveness. But there was a healthy self-doubt and questioning at senior level that made it an interesting work environment. The idea of setting up an independent review of its performance over the previous decade came from the Department. The hubris for which Finance was known was gone and in its place was a refreshing honesty. I recall one senior official saying to Lenihan about some banking matter: ‘Minister, we cannot advise you because we have never been in this position before.’ In the white heat of the crisis, there was no time for ‘Yes Minister’ games.
Those officials, senior and junior, who worked closely with the Minister, strove incessantly to meet the unrelenting demands. Against a background of intense criticism in the media, a strong camaraderie developed and relationships strengthened. The younger group of senior officials in Finance and in the Department of the Taoiseach recognised the political imperative of communicating the seriousness of the crisis to the public and of providing a rationale for the actions that had to be taken. As never before, civil servants and political advisers worked together on communications strategies for the budgets.
Lenihan held most of his senior officials in high regard. A small number were slightly bemused by him: the messy state of his desk and the fact that he conducted his meetings mostly from his armchair – he only ever sat at his desk to take an important phone call. His notorious timekeeping was another source of annoyance.
They seemed surprised by his openness and informality. His often hilarious post-cabinet debriefs, were something of a novelty. His agile mind and his capacity to scrutinise issues through different lenses made him wonderful company, but sometimes difficult to manage, especially when officials were under time pressure to get decisions. A few never really adjusted to what they regarded as his unorthodox way of doing business.
He consulted widely outside of the department among economists and business people. From an early stage, he had regular meetings with, among others, Patrick Honohan, then in Trinity College and his colleague Philip Lane, Jim O’Leary, Colm McCarthy and Alan Ahearne, whom he later hired as an economic adviser. Some in the Department were uncomfortable about these meetings; one official remarked that the Minister was being too liberal with budgetary detail.
He went to the ESRI offices to exchange views and discuss policy options, apparently, the first Minister ever to have done so. That annoyed some in the Department, who read it as an indication of his distrust of their advice. In fact, Brian Lenihan was simply doing what he always did: taking soundings from a broad spectrum of opinion before coming to his own conclusions. He had a list of people he used to telephone most Sunday afternoons to discuss whatever was current or on his mind.
Among his confidantes was Ray Mac Sharry, the last Minister for Finance to have dealt with a major fiscal crisis. It was from one of his many conversations with Mac Sharry that the idea of a reprise of the Bord Snip exercise emerged. Apart from the obvious benefit of seeking out waste and inefficiency, Lenihan saw it as a powerful symbol. Bord Snip of the late eighties had gained an almost cultish status as a no-nonsense purge of a sclerotic system. Key to that reputation was the plain speaking economist Colm McCarthy, Bord Snip’s public face. By asking McCarthy to do national service again, Lenihan hoped to leverage that reputation.
In effect, An Bord Snip Nua, as it quickly became known, was a souped-up, rolling estimates process under the baton of Colm McCarthy and his fellow Bord members. For officials in the Department of Finance, who did all of the leg work, it was an opportunity to resurrect all the cuts they had been proposing, however ineffectively, throughout the boom years. Lenihan was aware the subsequent report by the Bord would make politically unpalatable recommendations, which would never have a chance of being implemented. But he believed a forensic, independent, critical analysis of all public spending was needed to open up a debate and create a climate that would strengthen his hand in framing future budgets. He had also taken the precaution of committing to the publication of the Bord’s report at the time of its establishment lest there be any danger of it not getting into the public domain.
There was little appetite in Government for An Bord Snip Nua, either at ministerial or senior official level and not everybody shared Lenihan’s enthusiasm for the Colm McCarthy effect. But it resonated with the public mood and, and when its report was published in July 2009, it was a bestseller.
Lenihan had always been something of a fiscal conservative. As Minister for Justice, he resisted demands for a Court of Civil Appeal, at least in part because he believed the solution lay in making the existing structures more efficient, rather than creating an additional costly judicial layer. As Minister for Children, during discussions about the proposed amendment to the constitution on children’s rights, he firmly ruled out the idea of independent legal representation, or Guardians ad Litem, for children in legal disputes. It was, he said, a lawyer-fattening exercise. (Both these ships have since sailed). So, when he arrived in the Department of Finance, he already had a developed sense of fiscal discipline and an unerring nose for a vested interest.
A number of themes ran through his budgets. One was the need to serve the common good. In December 2010, he told the Dáil: ‘The job of the Government on behalf of the State is to ensure that the common good is served: that requires saying “No” at least as often as saying “Yes.”’ Those in power, he believed, had a duty to interrogate all demands to ensure they did not damage the State’s ability to provide for all citizens.
In one discussion on this subject, he instanced the Hepatitis C scandal of the mid-1990s. It was his view that Michael Noonan, then Minister for Health, had been treated badly by the political system, including by Fianna Fáil. While allowing that the controversy had been handled disastrously, he argued that all Noonan had been endeavouring to do was to protect the interests of the State, which was his duty. Lenihan’s view was that no matter how deserving or worthy the cause, in a world of limited resources a government had to act proportionately in the best interests of all the citizens.
Another theme of his budgets was the principle that everybody should pay some direct tax. This went against the prevailing orthodoxy that low income earners should be kept out of the tax net. It was his firmly held belief that citizens only feel they have a stake in the State if they pay, according to their means, for the services it provides. In this context, he referred to the bin charges strike in his own constituency in the late 1990s. His analysis was that those engaged in the protracted protest at that time regarded the State as alien precisely because they had no sense of ownership.
He believed a broadly-based tax at a low rate should be applied to all income. He first introduced this concept in Budget 2009 when he brought in a levy on all income earners starting at 1 per cent up to €100,000 and at 2 per cent on income above that level. There was widespread criticism of the measure and the social partners lobbied successfully to have those earning less than €18,304 excluded. In Budget 2011, the Universal Social Charge which replaced the income and the health levy was applied to all gross income above €4,000. Despite all the opposition at the time, the charge continues to apply, although the threshold has been raised to €10,000.
At the other end of the spectrum, he was appalled when he was lobbied on behalf of one multinational to allow its PRSI bill to be written off against R&D tax credits. ‘For God’s sake, this is a social insurance tax. Do these people not see the need to pay any tax at all,’ he reacted. He was genuinely shocked by a paper written by one of his senior officials, which documented the cumulative impact on the tax system of the reductions and reliefs that had been introduced over the previous decade. The erosion of the base and the imbalance in the sources of taxation had left the economy mercilessly exposed when the property bubble burst.
He occasionally expressed his frustration at the narrow focus of his job on cutting the deficit. It annoyed him that it fell to him to look after ‘the financials’ while others in government drew up a strategy for economic growth that he regarded as unconvincing. The ‘Smart Economy,’ the buzzword of the time – or ‘An Eacnamiochta Glic,’ as he liked to call it – cut little ice with him. He was deeply sceptical about the ability of the Science and Innovation strategy to deliver a return on the very considerable amount invested in it.
His own strategy for economic growth was to concentrate on our three biggest indigenous sectors: agriculture, retail and tourism, which, he believed, would be the engine for balanced economic growth across the country. He did what he could, with the limited resources available, to support them through government initiatives and the taxation system. That is why he reversed the VAT increase introduced in his first budget: he had been dubious about the measure at the time and soon afterwards admitted it was a mistake. In Budget 2010, he ran the gauntlet of the anti-alcohol lobby when he reduced excise duties on drink in order to stem the flow of cross-border shopping, primarily driven by the availability of cheaper alcohol in Northern Ireland.
As Minister for Finance, he never got a lucky break. The ever-deteriorating state of the banks continually undermined his consistent efforts to deal with the growing imbalance in the public finances. But he did have one piece of good fortune: he had no direct responsibility for the management of the economy in the previous ten years. He used to joke that Bertie had, after all, done him a big favour by keeping him out of the cabinet for so long. And the idea that he had been excluded by Bertie Ahern appeared to have seeped into the national political consciousness. The public seemed, by and large, not only to have absolved him of any blame for the collapse, but also to have placed considerable trust in him.
He, in turn, understood that to gain acceptance of the very unpalatable steps that had to be taken, the public had to be given a comprehensive explanation of our economic difficulties. A key aspect of his budget speeches was a forthright analysis of what had gone so badly wrong in the Irish economy. In his Supplementary Budget, in April 2009, he was going out on a limb within his own government when he offered this diagnosis: ‘With the benefit of hindsight, it is clear that more should have been done to contain the housing market. We became too reliant on the construction sector for growth and tax receipts.’ So, when, in February 2010, he commissioned Klaus Regling and Max Watson to do their Report on the Sources of Ireland’s Banking Crisis, he was already well on his way towards the conclusions they were to reach three months later. Reacting to the publication of the report, he told RTÉ’s Morning Ireland he was not surprised by its findings and that he had been living with the consequences of the mistakes made over the previous decade since his appointment as Minister for Finance.
Understandably, this led to some tensions between himself and the Taoiseach as well as some other government colleagues. Any critique of the causes of the collapse implied criticism of his predecessors. It was tough medicine for Brian Cowen, in particular and, to his credit, he never flinched from taking responsibility or from defending the difficult decisions taken by his Minister for Finance. Most members of the Government were in a politically impossible position because they were identified in the public mind with the decisions that caused the crash. In the end, and especially when it came to banking policy, it was mostly left to Lenihan, Eamon Ryan of the Green Party and a group of able and ambitious junior ministers and backbenchers to fight the government’s corner. Not many queued up to sally forth for the government side on the increasingly hostile airwaves.
Notwithstanding these tensions, Lenihan and Cowen worked much more closely together throughout the crisis than is commonly understood. They respected each other and were both acutely conscious of their duty to work together in their respective positions in government, in the interests of economic recovery whatever the political cost to themselves. The stories of deep divisions between them circulating at the time were wide of the mark: part of the soap opera that surrounds leaders in times of crisis.
Certainly, there were clear political differences between them. For instance, Cowen was a strong believer in social partnership while Lenihan was not convinced the unions were prepared to play a part in solving the crisis.
Cowen had a strong attachment to the accretion of social policy that had been built up under the partnership process. At a Saturday morning meeting to discuss the Four Year Plan in late autumn 2010, he made known, in no uncertain terms, his deep unhappiness with the proposal to cut the minimum wage, which he described as a clear breach with traditional Fianna Fáil policy. Lenihan saw the level of the minimum wage as a barrier to employment, particularly in the hospitality and retail sectors, both of them on their knees at that time. It was not that Cowen was not seized of the need to respond to the economic crisis; he just seemed to jib at the idea that market forces or economic imperatives outside of our control should dictate the pace and the specifics of the required changes.
Notwithstanding these differences, there was no evidence of any personal rancour between the two men and they stood together on whatever decision was reached. Lenihan often remarked upon the support he got at Cabinet from the then Taoiseach and was very grateful for it. Both were political professionals to the end.
Lenihan’s talent as a communicator was an enormous asset to the Government in dealing with the crisis. His ability to go into a studio in the most difficult circumstances and deliver a top class performance was exceptional. He set out the Government’s strategy for dealing with the crisis with clarity and authority.
As the crisis went on, he formed the view that the Taoiseach and senior members of government should brief newspaper and broadcast editors on the Government’s strategy. When he took it upon himself to do so, it became a source of contention with some in Government Buildings. In certain instances, they had a point: Lenihan was never good at circumspection and there were times when he should certainly not have returned journalists’ telephone calls. But there is no talking to a politician with a headline in his sights.
He generally liked journalists and counted a number of senior members of the press among his friends. He would telephone them, on occasion to take issue with something they had written, but more often to exchange views. Sometimes, he was on a fishing exercise. He understood how the media worked and was acutely conscious of its influence even at times of enormous personal difficulty.
Within two days of his cancer diagnosis in December 2009, his thoughts had turned to a strategy for dealing with the inevitable media reaction. From the outset, he accepted the public’s right to know, but he wanted to avoid intrusive regular updates. He prepared himself for those who would argue that he should resign and the accusation that he was hanging on to office. ‘Don’t worry,’ he said, as I tiptoed around these delicate issues: ‘I saw all this with my father. I know what to expect.’
We agreed that a frank interview with Sean O’Rourke on RTÉ’s News at One in the first week of the New Year was the best way to put the matter into the public domain. Those plans were scuttled by TV3’s decision to broadcast the details of his illness on St. Stephen’s Day. He greeted this development with extraordinarily calm: by comparison with his precarious medical condition, TV3’s editorial decisions must have seemed a trifling matter. With characteristic magnanimity, he quickly put the whole business to one side. It was left to the rest of us to bear a grudge on his behalf.
Budget 2010, delivered just a week before he became ill, had been well received as a tough, decisive budget that had grasped difficult issues, such as public service pay and reductions in social welfare, while also introducing much needed reform of public sector pensions. The deficit was reduced very slightly for the first time since the crisis began. His declaration at the end of his speech that we had ‘turned the corner’ was thrown in his face in many a subsequent debate. It did not bother him unduly. It was right at the time, he argued, in his indefatigable way. And it is true that the Greek crisis in the late spring of 2010 changed everything.
The seriousness of our economic position was, at this stage, by and large, well understood. The measures introduced were certainly very difficult and it is easy to forget the magnitude of the adjustment that had been visited on the country: between July 2008 and December 2009, savings and taxation measures amounting to €14.6 billion on a full year basis had been achieved. But amid all the bitterness and the anguish of the public discourse, there began to emerge that remarkable stoicism which characterised the response of the majority of Irish citizens to the crisis.
The perilous state of our banks remained a constant worry and absorbed an increasing amount of Lenihan’s time. But, at least until the late spring of 2010, it looked as if the plan to bring stability to the public finances was finally working. Then the backwash of the constantly mutating international crisis, this time with Greece at its epicentre, rolled in on our shores. In May 2010, interest rates on Irish government debt jumped in response to the Greek crisis and from then on, it was all about the spreads on our bond yields which ebbed and flowed all summer. Following a downgrade by Standard and Poors in August our bond yields rose sharply and events began to take on a momentum of their own.
Returning to the Department after a summer holiday, the anxiety was palpable. ‘I’m afraid that after all our efforts we are going to end up in the place we have been striving so hard to avoid,’ an official confided. As the economic indicators rolled in, it became clear that the hope in the spring of a nascent recovery had melted away. Lenihan became worried about the politics of the crisis. He was deeply concerned that the Government had no mandate for the action that he feared would now need to be taken. Very early in September, he went to the Taoiseach to argue the case for calling an immediate general election, but Cowen was firmly of the view that it was the job of government to bring forward a budget and deal with the fallout.
For the next two months, Lenihan and senior officials engaged in almost constant discussions with the Commission and the ECB on our budgetary preparations. This oversight by Brussels was partly due to changes introduced earlier in the year increasing surveillance of individual member states’ budgetary planning. But it was also a clear indication of the growing concern in Europe about our budgetary position and the state of our banks. Lenihan hoped that by embracing their involvement in our budgetary process we might avoid the need for a formal Programme. The Government’s lack of a democratic mandate continued to worry him as he tried to make his way through uncharted waters.
He forged ahead with the decision to publish a four-year plan, which would set out in detail the measures to be taken to restore order to our public finances. He wanted a plan that could be read and understood by every citizen. He believed our own people, as much as the international markets and our masters in Europe, needed to be given certainty about the immediate future and confidence that we had a coherent strategy to get the country back on track. In effect, Lenihan’s plan was to become the blueprint for our bailout programme. Adherence to it over the last four years has played no small part in the improvement of our economic outlook.
A small group was given responsibility for writing the plan and, in between his constant engagement with Europe and the ever-worsening position of our banks, he would meet with us to review progress. Meanwhile, events were gathering pace: as our borrowing costs continued to rise, we withdrew from the international markets; the adjustment required to return us to a deficit of 3 per cent of GDP by 2014 went from €7.5 billion to €15 billion; the cost of bank recapitalisation increased; the ECB became ever more uncomfortable about its level of exposure to Irish banks; and Angela Merkel and Sarkozy made unhelpful comments at Deauville. There was beginning to be an inexorability about where these events were leading us and a feeling that we were losing control.
In early November, Commissioner Olli Rehn paid a brief visit to Dublin during which he endorsed ‘convincing measures’ by the Government and the parliament to deal with the crisis. Within days, Commissioner Rehn, who had travelled from Dublin to the G7 meeting in Seoul, rang Lenihan to say a lot had changed since his visit to Dublin. The precarious position of our banks had been discussed by the finance ministers of the largest economies in the world and they were worried. There followed ten days of rumour, international manoeuvring and some heavy media manipulation. It was difficult not to conclude that we were being railroaded into a programme. On 18 November, three days before the Government announced its intention to request financial support from the EU and the IMF, the Governor of the Central Bank, Patrick Honohan, rang RTÉ’s Morning Ireland from Frankfurt to tell the nation that arrangements were being made with external agencies for a Programme of Assistance for Ireland.
However irritated Brian Lenihan might have been by the Governor’s interview at the time, he bore him no ill will. In a conversation soon afterwards, he said Patrick Honohan had his own dilemmas and he understood that he did what he felt he had to do.
The whole business was badly handled: more information should have been made available to the public at an earlier stage. But in the Government’s defence, the circumstances could not have been more appalling. We were being swept in the direction of a bailout, even though we had access to funding; some EU member states were taking the opportunity to throw our corporation tax rate into the mix; and there was no agreement with the ECB about how our banking crisis should be addressed. The fact that media outlets were being briefed by sources in various European capitals made it particularly difficult to devise a communications strategy. The Government was in a very difficult position. But whatever about accusations of ineptitude, suggestions that it was playing for time to save its own political skin were unfair. Those at the most senior Government levels had no illusions about their political prospects: they already knew their goose was well and truly cooked.
Just over a week after the formal application for external assistance, Lenihan delivered his fourth and final budget speech. He presented the arguments in favour of the bailout he had fought so hard to avoid and he pointed out the Joint Programme was based on the four-year plan, which had been produced by his Department under his direction. He finished on his customary optimistic note: ‘A Cheann Comhairle, there is every reason to be confident about the future of this economy and this country if we could only have confidence in ourselves.’ As he frequently said: ‘you have to give the public hope.’
He had a routine in the hour or so before delivering his budgets. Having run through his speech with a few key officials, he would then regale them with the reply he would deliver were he in opposition. He would deconstruct his own arguments with great rhetorical flourish and heap derision on the Government: his way of relaxing before the big occasion. For some reason, I missed the performance in December 2010, but an official who was present later described how, from his reclining chair, he delivered a highly entertaining but hard-hitting attack on himself and his Government. He must have wondered if he would ever get to deliver that budget reply for real.
This essay is an account of my observations of a man with whom I worked for five years and held in the highest respect and no little affection. It’s not an exhaustive account of Brian Lenihan’s budgetary policy; nor is it impartial. Others will, in time, provide a more objective perspective. But whatever critical analysis there will be of his legacy, partial as I am, I remain convinced that no other political figure could have done more to stabilise our public finances.
