The public reaction to today’s cutting budget, one in a series of at least three to 2013, will determine whether or not Ireland continues as an economically independent state or is forced into a humiliating surrender to the IMF or an EU bail out.  Here’s ten things Brian Linehan must get right;

1. Tell the people the truth, outline a three year programme. Reason; So the misinformation and propaganda that has characterised self- interest group campaigns is diminished by the scale of what we must face together.
2. Create urgency and a common spirit to act together. Reason; At least a year and several billions have been lost by political cowardice and a failure to lead from the front with clear communication. When there is a leadership vacuum, people in distress will follow just about any clown who steps up to the microphone.
3. Do not raise Income Tax or PRSI any higher; Reason; It destroys the profit incentive that creates jobs. The system is already tipping over from top rates well above 50%, raise it to over 60% and revenues will collapse from less work, the black market will surge, talent will emigrate and foreign executives will go elsewhere to create jobs.
4. Deliver a multi-faceted plan that involves targeted stimulus Reason; To create wealth that grows employment. Our deficit can only be made up with real growth in wealth, cutting and taxing won’t work. Focus on energy efficiency, green energy and a cash- for- clunkers scheme for low emission cars. Lots of new 2010 cars on the road will help lift morale and boost consumer spending elsewhere.
5. Implement the pay cuts but protect public sector workers on low pay and those struggling with repossession. Reason; It’s a simple question of leadership and fairness. The Cabinet has to be seen to take the biggest cut but rates must come down to European competitor levels. Look closely at public sector resistance and the real heat is coming from the combination of levies and mortgage costs for young workers who bought at the top of the market. Implement a scheme of support for any struggling low income family being squeezed by banks that involves equity sharing, refinancing and rent back arrangements.
6. Address the tax wedge that discourages low paid jobs in favour of the dole. Reason; To avoid the biggest mistake of the 80’s. That means protecting core social welfare benefits like the old age pension but adjusting dole down by part of the deflation rate and cutting employer PRSI for new jobs. It must pay to work.
7. Do not reform private pensions without first reforming public service pensions. Reason; The pension gap is already astronomic, cut relief to 33% but tax pensions at over 50% and the private pension model will be destroyed.
8. Clamp down on remaining tax avoidance schemes favoured by the ultra high net worth and tax exiles. Reason; Anything that’s not handsomely repaying its worth must be eliminated to help create a sense of fairness.
9. Adopt Fine Gael’s insightful strategy to create economic revival by reforming and refocusing semi-states acrossenergy, broadband, water and smart metering. Reason; It’s the best thought-out strategy in town, keeps the extra borrowing needed off the mounting deficit and will create jobs in crucial sectors.
10. Outline a plan to broaden the tax base. Reason; We can’t afford our State services on Ahern’s dangerously narrow income tax model where 50% pay no income tax and most of the remainder pay the lowest rate. That means gradual widening to include more workers paying income tax but also a broadening into carbon, water and property taxes.

To Public Sector Readers;

I’ve consistently aimed my fire at Ahern and the unions who led workers up the garden path with inflated pay levels that could never be sustained when the property cycle turned. I have close friends and clients among nurses, doctors, teachers and gardai, just as I had family members and clients in the retail sector when campaigning against the Groceries Order. Throughout I have never criticised the excellence of the work done by the best in it, just the system, how much we’ve overpaid and those responsible for it. The cut today is not your fault but their legacy. It’s going to hurt, I wish it wasn’t so but it’s unavoidable now.