Whither Bertie Ahern's economic legacy after Tuesday's budget?

It's not nice to have to ask the question about a retired taoiseach, someone who has done the state more than a little service – most particularly on the peace process. But in the wake of the collapse in the public finances, the question is unavoidable.

Until recently, Ahern has basked in the reflected glory of the Celtic Tiger. On his watch, employment, immigration, tax revenues, income levels and economic growth all surged. The country was utterly transformed.

Any criticism of his record – and there was always some – was restricted to questioning what level of influence he had on the boom. His proponents – pointing, in particular, to radical tax changes by the government – argued that he was central to it. His critics claimed that his role was minimal and that the Celtic Tiger was conceived before Ahern took office.

But potential criticism of Ahern now goes well beyond that point of debate.

The central question now is whether he and, more particularly, his style of government, was a major factor in the position the country now finds itself.

It's important not to scapegoat Ahern for all Ireland's woes. Regardless of what decisions were made, the country would still be facing huge challenges. The depth of the global economic downturn and the international banking crisis mean that a small open economy like Ireland's was always going to be dramatically affected for the worse.

But equally, it is beyond dispute that domestic factors are also at play. We are, as a country, now paying the price for the profligacy of the last decade and a chronic overdependence on the property boom, partly fuelled by the unwise decision to maintain property tax incentives long after the market has started to heat up.

In the period Bertie Ahern was taoiseach, spending grew by double figure percentages every year – a level that was entirely unsustainable. Some of this spending was about "catch-up" and justified (extra teachers, nurses etc); much of it was utterly profligate. How, for example, did the annual budget of Fás soar to €1bn at a time of virtual full employment?

The growth in public-sector employees in that time was staggering, leaving the government with a pay and pensions bill that it now can't afford and which will have to be addressed with a massively expensive redundancy programme.

But it wasn't just the growth in public sector numbers. The public sector unions were given an absolute veto over reform by Ahern. After 11 years of talking about it, there is still no movement on reforming the 1932 (yes, you read that correctly – 1932) Transport Act. Why? Because the public sector unions didn't want it.

Nor did Ahern forgive those who annoyed the same unions. The late Séamus Brennan was shafted as transport minister because he dared promise to deregulate the Dublin transport market.

Willie Walsh, arguably the most successful chief executive Aer Lingus has ever had, was excoriated by Ahern in the Dáil because he took a position (that the airline could not survive as a state-owned entity) that did not please the unions.

The huge influence of the unions ensured that when the health boards were rightly scrapped, there were no redundancies, leaving the new HSE chronically overstaffed at mid-management level.

It was this utter inflexibility in the public service that directly resulted in the costly explosion in the number of state quangos, whose boards, incidentally, are dominated by social partners.

The absolute subjugation at the feet of the public sector unions also brought the country benchmarking – a blatantly biased, insider, sweetheart deal. Public sector workers were given a €1bn pay hike in return for absolutely nothing. Not only were no reforms sought in return for this largesse, but no explanations were given by the benchmarking body for the various pay awards granted.

The current political mess the government finds itself in over the abolition of free medical cards for the over-70s can also be directly traced back to Ahern. The decision in 2001 was a political stunt, lacking any social justification whatsoever. It wasn't costed and the last-minute nature of the announcement left the government wide open to being screwed to the wall by the GP body, the Irish Medical Organisation, which is what happened.

It later emerged in internal Department of Finance documents that the move "had been strongly recommended" to Charlie McCreevy by Ahern. The
current government is now reaping the whirlwind of that decision.

Amazing as the Celtic Tiger years were, there is now a frustrating feeling that they represent an opportunity lost.

It was inevitable that with the state so flush with money that mistakes would be made. And Ahern's three governments have many fine achievements – particularly the 1997-2002 coalition. But the flaw with Ahern's tenure was the wider philosophy at the heart of his governments. Tough decisions were shirked. Money was thrown at every problem to make it go away. Nothing happened without the social partners' say-so.

It was brilliantly effective politics. But good economic management, it most certainly was not.

scoleman@tribune.ie