He has taken a relatively optimistic view of how the Irish economy will perform. The more the economy grows, the higher the tax revenue will be and the lower the spending cuts will have to be to close the gap and get us to the 3% target for borrowing.
In fact, built into Lenihan’s figures is the calculation that growth over the next four years will mean a cumulative increase in output of 11%. He is predicting economic growth of 1.75% next year followed in 2012 by growth of 3.25%, with more to follow.
As far as I can see the Irish economy is flat-lining at the moment, and it’s very hard to see even half of Lenihan’s predicted 11% growth over the coming four years becoming a reality.
I hope I’m wrong about this, but if the growth does not happen then tax revenue will be lower and the cuts in spending will have to be even higher to get the deficit to the promised 3% of GDP by 2014. So the cuts in the coming years may be considerably higher than Lenihan is predicting.
Public reaction to cutbacks on this scale has yet to be tested. There’s been a lot of talk about the public understanding the situation and accepting the inevitable, but when the €6 billion in cuts in December’s budget actually start to happen it will be a different story. It remains to be seen whether we can get through this without major social conflict.
Not a good sign was the mass protest in Dublin last week by college students from all over the country. Around 20,000 of them marched on the Dail to protest about proposed hikes in college fees.
College education in Ireland has been free for years, now but there is an annual registration fee which has crept up in recent years to €1,500 euro. Leaks suggest that this may be doubled in the upcoming budget. This would still only pay for a fraction of the cost of college education and seems reasonable.
But the students are furious, and the demo last week ended in a bloody confrontation with Gardai (police) in riot gear when a hundred or so students and radicals broke off from the main protest and started throwing things.
Some of them occupied the lobby of the Department of Finance and were promptly cleared out by the Gardai, resulting in a few sore heads and bloody noses. This made dramatic pictures in the papers the next day, but it was pretty harmless stuff really.
The students -- supposedly the bright young minds of the next generation -- just don’t get it. We can’t afford completely free college education anymore. Instead of attacking the government, the students should be asking where all the billions the Irish state spends on college education every year go.
The fact is that over 80% of it is eaten up by pay for college lecturers and professors, most of whom earn far more than their counterparts in Britain and work far less hours. Irish colleges are riddled with duplication and inefficiency (how many MBA courses does one small country need?), and they are way down the world rankings of universities.
What students should be agitating for is the reform of our college sector so that the reduced funds we have to spend will go further. Pay levels in colleges should be cut and linked to performance and global college ranking.
Instead of that, the student argument is that doubling registration costs will exclude poor kids from college. This ignores the fact that the abolition of fees over 20 years ago has never changed the fact that 95% of the kids in Irish colleges come from middle class families.
With the recession, some of these families will find it difficult to pay the extra €1,500 for a kid in college. But at least they don’t face the huge fees that college kids in many other countries (including the U.S.) have to pay.
The present generation of college kids here grew up in the Celtic Tiger boom, so they’re used to having things easy. Their J-1 visa beer swilling image does not help either. They will have to learn that it’s a tough world out there in which nothing is really free, including college education.
The trouble here last week over proposed minor adjustments in the cost of going to college shows just how tricky it’s going to be to get the huge but necessary cutbacks in state spending accepted.
College costs are just one part of the overall education bill, which itself is just part of the overall budget for state spending every year. If the students and their very well paid teachers don’t get it, what hope can there be that the rest of the country will?