In the Eye of the Storm

Brian Cowen’s tenure as Taoiseach may have started on a buoyant note in May, but the feelgood factor has since thoroughly evaporated.

Over the past six months, Cowen has had to come to terms with a sequence of disastrous events, some less within the control of the government than others: the rejection of the Lisbon Treaty, the alarming downward spiral in the economy, the near collapse of the Irish banking system and the recent controversies surrounding the budget – the latter provoking two TDs to resign their support for the government, primarily as a result of the medical card debacle.
The Taoiseach, still relatively young for a head of government at 48, had only just returned from China when I met him for final part of the Hot Press interview last week. Arriving home from that trip, he was faced with the additional bleak news that the latest opinion polls showed a dramatic slump in support for his government.
He was in good spirits nonetheless. “Obviously, it’s not the basis on which you’d call an election,” he quipped.
We last met at his home in Tullamore, back in August, to clarify key facts for a biography I was close to finishing*. After we had finished discussing the book, the Taoiseach brought me into his kitchen and switched on the kettle to make a cup of tea. As we waited for the kettle to boil, I asked him if he’d do an interview for Hot Press. Typical of the easy-going character of the man I know, he told me to switch on the tape recorder and fire whatever questions I had at him.
Over the next hour and more, he offered his own no bullshit perspective on the social and political issues of the day. He may be a Fianna Fail man through and through, but with Brian Cowen, what you see is what you get. As I was leaving, he agreed that I could come back with some follow-up questions prior to publication, to ensure that the article would be fully up-to-date with current events.
Unfortunately, the turmoil that was unleashed in the meantime meant that there were far more immediately contentious issues to be dealt with when I called again. He didn’t shirk. True to his word, he gave the time needed for the questions I felt that people would want to see asked.
Whether everyone will be satisfied with the answers is another question. But what’s clear is this: no-one will be able to accuse Brian Cowen of taking an unrealistically optimistic view of how things are. Time to put the kettle on again, I reckon, and listen to what the man has to say...

JASON O’TOOLE: The general consensus is you got it spectacularly wrong with the medical card controversy.
AN TAOISEACH BRIAN COWEN: I can understand people coming to that conclusion. If that’s their view, that’s their view. Yes, a lot of people reacted negatively to it. We live in a democracy and people have a right to protest. But we have now put forward a proposal where 95% of people with a card will keep their card. That’s the ultimate decision, which was us responding to the public concern that was expressed.
A lot of people, especially the elderly were deeply insulted and upset by what the Government did.
I want to take this opportunity to reiterate the government’s regret in causing any anxiety, as that was never our intention. I very much regret that, and I apologise for it. This controversy is against the background of how we had been – quite rightly – expanding entitlements for our elderly in a whole range of areas. We are particularly proud of our record in social welfare and of doubling the pension, over a relatively short period. So, we’ve been doing a lot of good work in that area – but obviously this particular proposal was a negative against that positive background.
Who came up with this brainwave? Was it Mary Harney’s idea?
No. It was a government decision – and the government has to take full responsibility for that decision. It’s our job to explain to people what’s going on. At a time of reduced resources coming into the State Exchequer, then those who are in a position to contribute are being asked to do so. If you look at the limits that we have now set for a married couple – €1,400 per week gross – if you are under that you get a medical card. That’s a greatly enhanced eligibility limit. We have addressed the substance of the complaint and, at the same time, found ways to make savings that are necessary. The other point I’ll make is that health, education and social welfare make up three quarters of the total daily spend of the government. And given the size of our problems – in terms of the public finances and the deficits that we now have – it’s not realistic to suggest that you can come up with solutions which keep those areas of expenditures immune from changes or cuts.
Surely, it must have been obvious it was going to be a PR disaster?
That was caused by the failure to properly communicate the fact that over 70% of pensioners would have been completely unaffected by the original proposal. Look, I quickly recognised that this proposal didn’t meet with wide public acceptance and I worked on a solution. But you have to recognise that the country next year, on day-to-day expenditure, will be spending €4,700 million more than what’s coming in, in taxes – that’s not a sustainable position. What we are trying to do, in the first instance, is stabilise the public finances and then – over a period of time – set out a strategy for economic recovery. So, while I’m trying to explain that we are living in very challenging and difficult times – and we are certainly not out of the woods yet either in relation to the banking and financial crisis or anything else – the fact is that this government under my leadership is prepared to make the necessary decisions. Decisions like that are not taken for any gratuitous purpose to offend anybody. They are being taken to bring order to our public finances as quickly as possible – whilst taking off the table far more unpalatable decisions that were being considered.
“Far more unpalatable suggestions” – what are they?
We simply had to find savings in the health area and – while there has been an increase in the budget for health – obviously there are ongoing costs that have to be reviewed. It’s a question of finding a balance. The general medical card scheme as it was structured would not be, in my opinion, sustainable in the longer term – therefore we had to take some measures to address that. We have also set up a committee, under a person who is well qualified in the area, to review all of the prescribing policies of GPs – and whilst obviously continuing to protect patient care – to address the question of escalating costs of drugs. The committee will study if the numbers and type of drugs that are being prescribed are all necessary or not. There will be an initial report on December 1 and I think the Irish Medical Organisation will agree that there is a lot of scope for savings in that area.
Fintan O’Toole has accused the government of picking on pensioners and school kids. How do you answer that charge? 
That is a typical but inaccurate assessment of what the government is about. We have built up a lot of improvements in services for children – for working families with young children in school. For example, child benefits were increased by 500% since we came into office. We’ve doubled old age pensions. We’ve improved services provided to our elderly in terms of better community care programmes, community nursing and reforms in the whole nursing home area so that everyone is treated equally. Our record in these areas is very good. What we’re trying to do is sustain – to the greatest extent we can – the services we’ve built up, on the basis that we’ve less revenues now than we used to have. So, therefore there have to be some policy changes.
One of your backbenchers, Joe Behan, resigned over this fiasco. Now that the changes have been made, will he be rejoining the party?
He’s written to me in a way that suggests he’s made an irreversible decision, unfortunately. That was a big decision on his part. I’m very sorry to see him take that decision. It’s a pity that we didn’t have the opportunity to sit down and talk about it before he made up his mind. On a personal level, I wish him well. Politically speaking, the issue on which he resigned – which was the medical card issue primarily, although he mentioned other local issues – I felt was a premature decision, as I spoke on the evening news that night to state that I would address it over the following days, which I did. We have now provided for the great majority of pensioners.
A lot of people feel your credibility, as well as that of the Minister for Finance Brian Lenihan, has been seriously damaged because of the medical card issue.
Our political opponents would say so. There’s been plenty of name-calling going on and plenty of propagandising. That’s just superficial stuff. I’m confident in my own abilities. Obviously, I’m mindful of the fact that there are many in the public who would rather see us adopting different types of policies or would like to think that we’re living in a different world than the world we’re living in. We’re not. I’m in the very same position as other people in my position in other countries. None of them are exactly top of the popularity charts – but that’s not the issue really. I believe it’s in the public interest that we continue to see a stable and strong government in place – and implement these policies. And in due course, people can make their judgements on it. But I’m focused on the job at hand – which is to manage our way through this issue and to explain to people what’s going on and to seek their support in our effort to do so.
A recent Sunday Business Post Red-C poll (published on Oct 26) revealed a dramatic fall in support for Fianna Fail. Are you worried by this?
Obviously, it’s not the basis on which you’d call an election (laughs). We are at the start of a four-year budget cycle. When you are in a new economic situation – when you’re facing into a recession – it’s our job now to get better value for what we are spending and, in some cases, insist on reductions in levels of spending so that we can get back to a balanced budget and ensure that we can create jobs again in the future so that Ireland will grow again when the upturn comes. If we are to do our job properly, it should be about setting out these realities for the people – and confronting them. There will be, in the short-term, reductions in our popularity because we are taking decisions that are necessary which people would rather think were avoidable – but they are not avoidable. Leadership is about getting on with the job which needs to be done in the country’s interests, whilst obviously having to take criticism from some quarters for doing that. The bottom line here is – it’s the next three or four years in which my performance will be judged. The real test, at the end of the day, is when we go back to the people for a mandate. That’s the test.
But your own popularity has taken a real hit...
Fine. I’ve been in governments before that have been more popular or less popular – it goes up and down. You can’t expect public opinion to be static. Public opinion reacts to various things. There are adverse reactions and positive reactions. You didn’t have to be a rocket scientist to tell if you held an opinion poll last week the government wasn’t going to be very popular.
Are you worried about the Greens coming under pressure to pull out of the coalition?
To be fair, the Green Party have recognised at Cabinet level – and indeed throughout their party level – that we have a new economic situation. They know that they can make a contribution in government, and that they can influence policy within government, in a way that they can’t influence it outside government. There are real issues of the day – very much on their agenda – which make it important for them to be part of this government. These include our energy policy, our transport policy, our policy in terms of climate change and how we work with other EU member states on dealing with those issues. These are huge issues. But certainly in terms of influencing and shaping events, I think both their Ministers – Minister Gormley and Minister Ryan – have shown a capacity to advance the government agenda along the lines of the Programme for Government, which they negotiated with us in good faith last year. The only way in which everyone will get a fair assessment of one’s impact in government is to serve the full term, to go through decisions that have to be taken, and to be able to say, ‘We were also able to advance our agenda in government rather than only talking about them in Opposition.’
Your government is facing another crisis now over cutbacks in education. Will there be – like there was with the medical card controversy – another u-turn here?
There’s an increase in teachers’ pay next year that the Minister has to provide for – it’s unavoidable. It’s an extra €300million. A lot of money. There’s also an increased €40million for other people working in the education system as well. About a third of a billion has to be found just to stand still. What’s being asked here of the teaching profession, who I hold in high regard, is that we go back to the teaching schedule of September 2007 for the school years of 2009 and 2010 – that we increase the pupil-teacher ratio by one, both in primary and post-primary. The teaching schedule of 2007 is far better in terms of number of teachers per students etc. that was the case five or ten years ago. It will not undermine the ability to continue with the very high standards of teaching and learning that are being provided in our schools. I believe that the teachers’ unions should sit down with the Minister, work through the issues with him and come up with the implementation of the proposals so that it can work on the ground.
A lot of people disagree with that analysis. Is there going to be room for negotiation?
There isn’t room for negotiation in terms of the fact that the Minister has to provide savings to balance the increased spending he has to now contend with. He has to find savings and he’s outlined the way he can find them. I would make the point that in other departments – as part of getting the public service to contribute to payroll cost-savings as well, which is happening in the private sector where people are losing jobs to try and cut costs – we’re saying that in many departments there’ll be a 4% savings on payrolls and pension costs. The Department of Education is asking for something less than 1% in payroll savings in education. We can’t have a situation where people are saying, ‘Our area is such that it has to be immune to savings’. The scale of our problem is such that that argument doesn’t hold, given the budgetary realties that we have to deal with. We have to manage our way through this recession and get out of the far side of it with more revenues coming into the Exchequer because we will have to continue to invest in education. We all recognize the importance of education. There are thousands of more teachers now in our classrooms and millions of euros have gone into building better schools and refurbishing schools. There has been a huge investment programme in education and that will continue. In fact, there is a 25% increase in our capital budget for education next year.
There is some criticism that you were very hasty in bringing the budget forward to October when you’d have been far better to have taken your time...
I wish there was an easier way, but what we are talking about here is addressing as quickly as possible the size of the problem that the government has to confront. The government has confronted this on behalf of the people – the taxpayers who are paying into a system and are entitled to demand the best possible value, who are entitled to expect that we work within our means to the greatest extent that we possibly can, without dislocating those services unnecessarily. We are not addressing all the problems in one go here. We are starting to stabilise the situation and then move on to further measures that will be necessary if growth in the economy can’t be created. And, as I say, next year looks like a particularly difficult year internationally. There’s financial turmoil out there, from which we cannot go on thinking we are immune. There are some countries facing very serious problems – look at what happened in Iceland and look at how the IMF had to provide a package for Hungry, which is a member of the European Union. There are similar proposals for the Ukraine this week. The Korean economy is under severe pressure this week and its currency dropped 30%. Every economy seems to be going into recession – and we have to make adjustments accordingly.
Isn’t the point that you decided on measures and then had to back track? Would it not have been better to get it right in the first place?
My attitude is – if we can find a better solution to address public concerns on issues, or at the same time getting the savings that have to be met, than it’s only commonsense to do that. The important point – from the government’s perspective – is that the money we are seeking to save in these areas is, in fact, saved. But, by the same token, that does not mean – as the Opposition will contend – that we have changed the budget parameters. The same savings that were envisaged in all these areas have to be found elsewhere within those departments and within those limits that we set ourselves. And that will be the case.
The opposition’s interpretation of the deficit differs from your government’s…
Enda Kenny has brought forward an alternative budgetary strategy through his finance spokesperson Richard Bruton, which says that our deficit should be 5.5% GNP and not 6.5%, as we have presented it. That’s another €2,000 million in cuts, or higher taxes. He hasn’t identified where those cuts are to come from – although he’s berated me for any cuts that we’ve brought in. The second point is that his spokesperson for finance also said that they wouldn’t raise taxes – that’s another €2billion he has to find. Now, if he’s not increasing borrowing and he’s not increasing taxes, the only place he can find that money is more expenditure cuts. They’re the only three options you have.
There are whisperings of a so-called mini budget next year. Is there any truth in this?
We are just finishing our budget for 2009. However, it is true to say – and let me make this point to be straight with people – that every budget is based on economic assumptions. And we are making the best call we can make based on present circumstances. This time last year there was no financial institution or economist that suggested we’d have negative growth in Ireland this year. The most pessimistic forecast was about 2.7% growth from the ERSI and the most optimistic forecast might have been from the Central Bank at 3.5% percent. We ended up suggesting it would be 3%. It was none of those figures. It was minus 1.2% or 1.3%. Economic forecasting by its very nature is not an exact science. This major shock has come during 2008. It’s a huge economic shock. The one thing we can say is, the financial crisis and its impact on the real economy – its full impact – is not yet fully known by everybody. We have to work our way through this situation, week by week, month by month. And make whatever decisions are necessary in the interest of keeping the reputation of Ireland high, as a place to do business, that is open for business, and that has the policies and the framework in place that is recognising the new situation we’re now in.
You make it sound like there’s more unpleasant medicine on the way.
It’s the taxpayers money we’re spending and therefore we have to get the best value for that money. It’s not an infinite resource, unfortunately. I’m confident that if we set out for the people what the realities are – and I intend doing that in a way that is clear and as transparent as is possible – then people are prepared to take the necessary adjustments so that, at the end of the day, we get back on track as soon as the world economy picks up again. What’s clear is, if we don’t do that – if we try to ride out this recession as if it’s not affecting us or shouldn’t affect us – then we won’t be competitive, we won’t be able to increase our exports, we won’t be able to generate the wealth to get us back on track. As I say, this is the beginning of a process of adjustment – this isn’t the full process of adjustment by any manner of means – and that’s why we need to have that debate and dialogue with the public so that everyone understands what it is we are facing into and why we should confront it.
Does the government intend to borrow even more next year?
We’ll be borrowing €13 or €14 billion next year, but that’s on the basis of a very significant public capital programme, which is all about investing in schools and roads and hospitals and public transport. We are trying to protect, to the greatest extent possible, the very many achievements from good times, as we face into these more difficult times. Our national debt will rise because of the fact that we have to borrow €8 billion to invest in our capital programme – but that’s the right thing to do because there will be a return on that investment. Next year we face into another year in which economic growth will be very hard to create and that will have its impact on revenues again. The government has to paint this picture sufficiently vividly for people. Next year you are going to see an increase in unemployment – it could be over 70,000, at least. So, if you tax too highly on that side you could be increasing the number who lose their work. Some people say, ‘Tax more!’ We are already increasing taxes by €2billion in this budget, but obviously we have to keep an eye on trying to maintain employment to the greatest extent possible.
Why not just raise the 41% rate to 42% or 43%?
The levy we brought in – the 1% up to €100,000, which excludes those on the minimum wage, and 2% on those over €100,000 – is on gross income. In other words, that levy is the first call on all income, which means that you get everyone to pay – including those who are well able to pay. If we attempt to address this issue by simply increasing the rates you won’t generate as much money because what happens is people are able to shelter some of their income. There are various reliefs – mortgage relief, pension relief and various other reliefs – that would allow people to shelter some of their income before that tax rate is applied to what’s left of the income. The most effective way – and the surest way – of getting a proportional amount from those who are well off is by imposing a levy on gross income, which is a levy on all income.
But why not tax the so-called fat cats more? A lot of people made fortunes that weren’t taxed effectively during the boom.
There’s a lot of taxation going on in a lot of those areas. Look at the closing off of tax expenditures on property relief that happened under my watch as Minister for Finance. The tax incentive sector, of course, in the past served a purpose in trying to stimulate economic activity when we had no activity. We have a commission on taxation, which is due to report this coming year – it’s the first commission that has been established in 25 years – and that will look at all areas of taxation. The commission on taxation should provide us with the pointers for the future as to what sort of tax decisions we have for the next 10 or 15 years. It might be quite different from the one we’ve had for the last 10 or 15 years because of the new demands and changing nature of the society we are living in.
What areas will it be specifically looking at?
It will be looking at local authority funding – looking at how do we fund our services locally. It will be looking at the whole question of environmental taxes. The whole question of a carbon levy. The need for us to look at expanding our economy without affecting the environment. These are big questions for the future and the commission on taxation will be setting out for us, I hope, a template of how we would move – and in what areas we would move – for the future. We need to look to where we can use the tax system as a means of incentivising investment in areas that are important.
A lot of people believe that public service pay is the biggest problem, especially when the hugely privileged pension arrangements of public servants are taken into account. Are they right?
Public service payroll and pensions account for over €20 billion of our expenditure. We have stabilised the numbers this year by stopping growth in the public service coffers. Also, in our budget there are two things going to happen in 2009 – one, we have a pay pause until October next, which is an 11-month pay pause. Secondly – we have a commitment in our budget to cut public service payroll costs by 4% next year alone. That’s a challenging target but we have to do it. The third arm of that, then, is a detailed programme of public service reform in terms of how we deliver public service and how we get people to work across agencies and get more flexibility and better output for the resources we’re putting in. We will be publishing that detailed programme in the weeks ahead after the government has considered a memo from myself and the Minister for Finance. So, we will address that issue.
Why did you choose to bail out the banks? Surely they were the architects of their own misfortune?
It’s not because we’re trying to protect or develop the banking system as if it were separate from the real economy. It’s because it’s so fundamentally important for an effective, functioning enterprise economy that we’ve had to take some of these extraordinary steps in what are extraordinary times. This financial crisis is of a kind that hasn’t been seen since the 1920s. The meltdown in Wall Street is clear for all to see. The impact it’s having on the world economy is also clear for people to see. We were facing a situation where the stability on our financial and banking systems were being threatened because of the fact that interbank markets weren’t lending money to each other and were running out of cash, which meant no money was available for them to conduct their business in a normal way. We had to step in – not because we’re beholden to the bankers, that’s not the issue. The issue is that a functioning banking system is fundamental to a modern, enterprise economy. There are thousands of companies that depend on the banks for a line of credit being extended to conduct their business. There are hundreds of thousands of small depositors who have deposits in our institutions and we had to make sure that the public confidence was retained in our banking system – not only domestically but abroad because it was clear we were coming under a lot of pressure in getting access to funds which are critical for banks being able to do their business.
Is the government preparing to undertake any other measures?
What other measures we’ll have to take in the future depends on the circumstances and developments, but certainly there is a huge change taking place in international banking. My concern as Taoiseach – and the government’s concern – is not just that the banks get back to a normal course as quickly as possible in the interest of people being able to conduct their business, and businesses being able to plan for investments again in the future, but also the impact it is having on the real economy is potentially very damaging and therefore we have to monitor and work closely with the banking systems to make sure that it is available to do business and Irish corporations and Irish companies are helped. We don’t want to see a total credit squeeze which would squeeze the life out of some of these companies and therefore put more jobs at risk. So, it’s a real challenge. People often think that when you make some big decision, ‘Well, that’s the end of that problem and you move on to the next problem.’ Many countries are finding it very hard to grapple with the challenge that it presents. We have bought some time and space by the decisions that we’ve made, which were welcomed, I think, by almost everybody.
A lot of people are wondering – how did the banks get away with fooling the government and fooling the regulator so completely?
The banks aren’t getting away with fooling anybody. The fact is, in international banking for many years we’ve had the provision of credit, which had enabled an awful lot of businesses in Ireland to thrive and enabled an awful lot of people in the housing market etcetera, etcetera. The present situation did not arise in Ireland in its initial phase – it arose from the crisis of confidence in international banking as a result of Lehman Brothers going to the wall. The impact that had on banks all over the world has seen many of these banks – established names – no longer in business or taken over. Everyone now has to adapt their business to the new realities and that includes banking. We have to ensure when the banks get their acts together that they do so in a way which does not cut off lines of credit to Irish business unduly. In other words, while they have to have more prudent lending policies in the future, because of the new system that’s going to be in place, that mustn’t translate into good job opportunities and good investment opportunities by Irish businesses being denied business because of it. We can’t have banks swinging on a pendulum and becoming overly conservative.
Why should ordinary citizens be at risk of having to pay for this when they’re already contributing heavily to the banks’ profits?
The whole purpose of what we’ve been trying to achieve is to minimize the exposure of Irish taxpayers, and the risk of banking failures. The point is this – if we had sat back and allowed a situation to happen where the financial stability of our banking system was seriously undermined, then the exposure of the taxpayer would be far greater than the exposure at the moment. We have a bank guarantee system put in place and this means banks will have to pay for the benefit of obtaining a State guarantee. In others words, the banks can use the reputation of Ireland as a means of getting access to funds on the international markets so as to keep business going here in Ireland. The Minister for Finance and the government have structured a fee system for the guarantee which we believe – if money isn’t called upon for that guarantee in the next two years – it could see the Irish taxpayers making a gain from this, rather than having a cost to us. There are other countries in the process of recapitalizing banks by putting money directly into them. That’s not the process we’ve adopted. We haven’t regarded it as appropriate up till now. At the end of the day, any such investments would be on the basis of the hope that the Irish taxpayers would make money from such investments because you’d hope in the future that those banks would regain their value in equity markets and in terms of their share prices, to reflect the asset value that is in those banks.
There is speculation that Third Level fees will be reintroduced. Where do you stand on this issue?
What we are doing in this budget is increasing the registration fee from €900 to €1,500 and that’s to provide for a viable, financial model to fund third level education. We stand over the decision to increase the registration fee which, again, wouldn’t be popular with students or parents, but one that’s unavoidable in the context of the budget realities that we’re confronting. The Minister (for Education) is also taking a wider review regarding the financing of the third level sector of education, generally. The work from that will be instructive of where we go from here.
What do you say to the argument that free third level education has encouraged far higher participation from the less well off in education and shouldn’t be tampered with?
The point is this: providing free education irrespective of means by definition militates against those who have less income compared to those who have more income. We want to see more people partaking in higher level education, so that’s a funding issue. We want to see more people from lower socioeconomic groups being able to get access to education. And we have been doing that successfully. But there’s a need to look at the whole thing now. We’ve increased the registration fee as an immediate measure. Which still leaves the question: what do you do when you’ve less resources? Do you target them towards people who need them most or do you assume that everyone needs them equally? If there are people on high incomes who can make a contribution then we should facilitate that, in the interest of equity to those who can’t, who might as a result be deprived of getting into third level because we can’t provide sufficient places because we’re already subsidising places for those who could afford to make a bigger contribution. That’s a big equity question. I believe that what has to come out of this debate is trying to improve equality of opportunity for everybody.
What’s the bottom line? Do you see fees being introduced?
Until those options are on the table and properly studied and properly considered it would be very foolish of the government to indicate what way it’s going to go. The government has instigated a review. The purpose of what we’re at here is to make sure that the very greatest number of our kids coming out of school go onto further, higher education. So, that involves expanding numbers. We will continue to regard education as a priority. We have to find a means of funding this in a sustainable and affordable way. Up to now we’ve had, if you like, free fees – people just paying registration fees. There’s going to be a significant increase in that next year. There are also maintenance grants – and quite rightly so – given out to people with no incomes. People are being helped all the time. That’s what we are trying to achieve and the outcome of that will become more clear in the months and years ahead.
It’s been speculated that, if fees are reintroduced, the government would favour the idea of loans for students. In effect students would be saddled with a debt at the start of their working lives.
People have spoken about loan schemes and what’s happening in the likes of Australia and Sweden. What we are simply doing here is saying, ‘Let’s have a study of all the options. Let’s see to what extent would that fit in Ireland?’ The whole purpose of it is not that we are trying to deny people education but that we find a sustainable funding mechanism that makes that opportunity available to a greater number. We have to make sure that we find a funding mechanism that’s fair, that equitable, that takes into account who can pay and who can’t pay – but not to snatch at this and come up with some quick solution.
The American elections are taking place before Hot Press hits the streets. Would either candidate’s ascent make a difference to the global crisis?
Obviously, we’ll work with whoever is the victor. We don’t get involved in internal party politics of the United States. I think it would be wrong of me to suggest, at this stage, one or the other is a preference for us. Both of them have addressed the issues that the Irish community has raised with them. I think whichever of them wins we can be confident of having a good relationship with them and we can continue to see US foreign direct investment as an important component of our investment strategy for creating jobs.
Do you know either candidate?
I’ve met Senator McCain when I was Minister for Foreign Affairs. He was very good on the Irish immigration question – he worked with Senator Kennedy on the Kennedy-McCain Amendment Bill which, unfortunately, didn’t win sufficient support, but we were very grateful for his efforts on our behalf at that time. So, he’s proven himself to be a great friend of Ireland. Senator Obama comes from Illinois and I know Mayor Richard Daley very well. He’s been very closely associated with Senator Obama in this campaign. They’ve run a tremendous campaign. I’d be confident that we could have a very good relationship with Senator Obama should he become president.
Unfortunately for you, the economic bubble burst just as you took up office.
My reaction is this. Firstly – we have to manage the process of adjustment which has to take place in terms of what levels of public services can we afford. The second challenge is to develop – as we are in the process of doing – a credible economic recovery strategy. In other words, bringing order to public finances and identifying – even in these difficult circumstances – areas where we might be able to provide some more investment and some more jobs. The third strategic challenge is public service modernisation and reform – in line with social partnership commitments. The final challenge we have is the banking and financial crisis. We’ve just been discussing a few moments ago the controversy around the issue of medical cards. Less than a month ago, I sat in this office having to make a very big decision about how we would bring stability to our whole financial system in Ireland. If we didn’t make that decision it could’ve had the effect of knocking off 25% of GDP in a pretty short time. And the discussion we are having here would be academic because of the difficulties that would arise from that!
Political pundits are predicting Fianna Fail will perform badly in next year’s local elections. Are you concerned?
They said we’d take a hammering in the General Election, and we didn't. The bottom line is: We intend fighting the election with good candidates – people who are prominent and active in their community who’ll make good local public representatives and have the interest of the community at heart. We’ll contest that election with confidence on the basis of our record. I’d also make the point that there are many local authorities – the vast majority – we don’t have majorities on. We think higher levels of Fianna Fail representation would enable people to be provided with better services. We’ll contest the election on a positive platform rather than the negative approach that the Opposition seem to be committed to.
There were great celebrations when you were elected as Fianna Fail party leader, and therefore as Taoiseach. But there’s no disputing that your six months in office have been very traumatic.
You play the ball as it presents itself, as they say. There’s a new ballgame in town and that is based on the fact that there’s been the biggest crisis in financial markets in over 80 years. There’s a recession in the world economy that’s been the biggest we’ve seen in 25 years. We don’t know how deep it’s going to go or for how long it’s going to last. There’s a lot of uncertainty out there. Obviously, the rejection of the Lisbon Treaty was a setback for the government. And obviously the budgetary controversy. We just have to deal with these issues and continue to put our message out to the people about what the government is trying to achieve.
Has the job been more difficult than you’d envisaged?
No. It’s as difficult as I thought it would be. Life throws its challenges at you – and certainly we are facing challenging times. My colleagues and I are committed to trying to get this right as quickly as possible, to do this as competently and honestly and conscientiously as we can. It’s not how many times you are down, it’s how quickly you get up in life that defines a person.
Do you think you became Taoiseach at the wrong time?
No. You become Taoiseach on the basis of other events. There’s never a wrong time to be Taoiseach. It’s a great privilege to be Taoiseach – for however long. You don’t pick your time to be Taoiseach.

NEXT ISSUE: The Lisbon Treaty; Enda Kenny; the crisis in the health system; political heroes; the so called ‘Dail Bar Lobby’ – and young people and alcohol…