It was the late John Kelly who famously said that Fine Gael couldn't pass by a sleeping dog without feeling the need to give it a kick. But it might be long past time to reappraise that assessment.

To be fair to Fine Gael, it hasn't been lacking in policy proposals to address the economic and fiscal crisis. But when push has come to shove – when the really controversial and unpopular measures have been announced – it has been very quick to put clear blue water between it and the government.

The party's stance on child benefit is just the latest example of that. When Enda Kenny got up in the Dáil last Wednesday to declare that "in so far as Fine Gael is concerned, it is possible to achieve the savings [in the social welfare budget] without having to resort to cutting child benefit", he was quite clearly and unashamedly reaching out to the 600,000 families who face having their monthly payment cut.

If the texts into talk radio shows are anything to go by, Kenny is pushing an already wide open door. Even people on large salaries of €100,000 were last week claiming that they couldn't manage if child benefit was cut. If that is the level of realism about the depth of the mess that the country is in and what is needed to rescue us from the economic abyss, then the government is truly caught between a huge rock and a very hard place.

Of course, the government's enormous difficulty is the opposition's opportunity. Politically, the logic of Fine Gael's stance is hard to argue with but economically, it is a lot more contentious.

The argument that, at a time when the state is borrowing €500m a week and when cutbacks of €4bn are being drawn up, the most wealthy in society should continue to receive the same rate of €166 per child per month as the very poorest is an almost impossible one to sustain.

But fairness is rarely a factor in political debate. That was obvious during the huge furore 13 months ago about ending the automatic medical card for relatively well-off pensioners. Emotion is what counts and, by drawing a line in the sand on child benefit, Fine Gael has almost certainly tapped into a huge well of emotion that is likely to explode on or after budget day.

Child benefit accounts for €2.5bn or almost 12% of the total social-welfare budget of €21bn-plus. Ruling out any reduction in that €2.5bn expenditure will make it much more difficult to deliver the required €1bn-plus in cutbacks in the remainder of the social-welfare budget. This is even more so the case when the €3.3bn spent on state pensions is widely regarded as a 'no-go area' (for political reasons) and when most other payments from the Department of Social and Family Affairs are geared towards the less well-off in society.

However, Fine Gael insists that there are alternatives to what the government is proposing. While the coalition is not for Turn(er)ing, the main opposition party says it does not buy into the 'Tina' – there is no alternative – approach. "We think there has been a fundamental disconnect between the approach of the last couple of budgets," a spokesman said, arguing that they were "anti-jobs and anti-enterprise".

Fine Gael, he says, "has a different approach" and will not get "drawn into the government's book-keeping exercise".

That said, he claims that its pre-budget submission of last April responsibly came up with even greater savings than the government delivered and considerably more than those presented by Labour.

Tax-cutting measures

Fine Gael argues that the best way to cut the social-welfare budget is to reduce the number of people who are unemployed and strongly pushes its €11.2bn 'NewERA' investment programme, which it says will create 25,000 jobs in year one and a further 75,000 jobs by 2013.

The party points out that the creation of 25,000 jobs would benefit the exchequer – in terms of saved welfare payments and increased tax revenue – to the tune of €500m. But some experts have questioned whether the investment programme is currently affordable and can deliver on its ambitious targets.

Although Fine Gael won't be publishing its pre-budget submission until closer to 9 December, it's possible to get a flavour of what it is likely to propose from the equivalent document it produced before last April. That submission prided itself on proposing alternatives to simply introducing cutbacks.

As well as the 'NewERA' idea, the party called for a cut in the lower rate of Vat from 13.5% to 10% and a cut in the standard 21.5% Vat rate. It also demanded the abolition of airport tax and increased PRSI relief for employers that expand jobs.

However, these tax-cutting measures, attractive as they undoubtedly are, would cost more than €640m a year, again raising question marks about affordability.

Unlike the Labour party, Fine Gael is not pushing the case for higher taxes, arguing "we can't tax our way back to recovery" and that the state needs to keep taxes off labour and enterprise. But it hasn't ruled out all forms of tax rises. Before April's mini-budget, it advocated the cutting of tax reliefs (although the recent Commission of Taxation report found that the scope for major gains was extremely limited), higher excise duties and more tax-enforcement initiatives.

It also argues that, on public-sector pay, it had proposed to freeze awards, bonuses and increments which would have produced savings of €250m a year. Fine Gael also advocated 15,000 public-sector redundancies in back-office staff, producing potential savings of €750m and a 5% pay cut for those earning over €100,000.

However, its argument that budgets are about choices, and that the government would have more scope for avoiding measures such as cutting child benefit if it had made different choices, is somewhat undermined by the fact that the party opposed the introduction of the pension levy, which brought savings of €1.1bn to the annual public-sector pay bill. Furthermore, other than through retirement – which the government would already have factored into its calculations – it is difficult to see how there can be any significant reduction in public-sector numbers without a generous voluntary redundancy package, something which is hardly tenable given a budget deficit of around €25bn.

In its April pre-budget submission, the party also estimated that it could get full-year savings in 2010 of a further €1bn from "smarter government". But some of the figures that make up that €1bn look decidedly ambitious, including €555m for 'other performance budgeting' and €50m from cutting government energy bills. The report of An Bord Snip Nua, while recommending a whole plethora of spending cuts across all government departments, did not uncover a lot of low-lying fruit that would could easily be plucked from the government tree.

The closer it comes to the budget, the closer Fine Gael's proposals to produce the magic €4bn will come under scrutiny. But, whatever gaps are there – and inevitably there will be gaps – they are unlikely to provide much cover for the government once the harsh budget measures are announced on 9 December.

LIKE Fine Gael, Labour has little time for 'Tina', far preferring, in the words of leader Eamon Gilmore, the appeal of 'Tara' – "There are real alternatives" as opposed to "there is no alternative".

Labour accepts the need for €4bn in savings to tackle the soaring budget deficit but it has firmly ruled out cuts in social-welfare rates and rejected an across-the-board reduction in public-sector pay.

As made clear by Eamon Gilmore last Wednesday in the Dáil, the party also wants the restoration of the Christmas bonus for welfare recipients, which means it effectively has to find savings of €4.2bn and not just €4bn.

In a speech to Labour's pre-budget forum in Dublin yesterday, Gilmore said that there had to be a more balanced policy mix, consisting of tax increases and cuts in current and capital spending to achieve the savings, rather than simply focusing on pay and spending cuts.

On public sector pay, Gilmore wants a "negotiated reduction" in the overall bill "knitted into an agenda of reform in the public service".

But while the Labour leader is right that across-the-board pay cuts will "not deliver the changes in working practices and organisation of the public service that we need", it is far from clear how €1.3bn in savings for 2010 can be achieved without such a pay cut.

The party has called for a salary cap of €200,000 on all public-sector employees which would save a not inconsiderable €100m a year but it's difficult to see how greater efficiencies, cuts in overtime and allowances, along with reduced public-sector numbers, would deliver the necessary savings for the next year, whatever about future years.

Labour accepts there will be a need for savings in the overall social welfare budget – which accounts for 34% of all current government spending. But by any standard, achieving the magic €4bn figure, without changing any rates, including child benefit, looks impossible.

Third rate of tax

This inevitably is where tax increases come in. The party has advocated a third rate of tax on single incomes over €100,000 but the take from that will be limited.

Speaking on Today FM's Last Word last week, respected Labour front bencher Roisin Shortall said that as much as €2bn could be garnered from the ending of tax reliefs.

However, the Commission of Taxation report makes it clear that there is no pot of gold from such reliefs. It examined 250 of the reliefs that are there and found that more than half were essential elements of the tax system. Of the remaining 106 reliefs, it recommended the abolition of just 24, which were costing €327m a year.

One of Labour's big targets in previous pre-budget submissions is the interest deduction allowable on rental property which costs €800m a year. Gilmore referred to this again in yesterday's speech. The government did move to reduce the amount that could be allowable in last April's budget from 100% to 75%. While there is scope to cut that further, the counter argument is that interest payments are a business cost and that suddenly deciding that legitimate business costs cannot be offset against taxes would raise seriously credibility and fairness issues about the Irish tax system.

Labour does support the government's endorsement of a carbon tax which would raise about €500m.

Final judgement needs to be reserved until the party publishes its pre-budget submission. But without cuts in any social-welfare rates, without an across-the-board cut in public-sector pay and even allowing for some scope for savings and efficiencies in the public sector, €1bn from carbon taxes and restrictions on relief, €100m from a public-sector pay cap, a further €400m at most from the introduction of a new top rate of tax and its proposed 17% cut in the capital budget, that still leaves a fair way to go to €4.2bn.