What is the budget all about?
Response by the Communist Party of Ireland
to the anti-worker and anti-people budget
16 December 2009
Who said this in November 2007?
| “To further enhance equity we need to pursue a wide range of policy measures. These include:
• Maintenance of public expenditure on health and education;
• Address areas where existing systems have failed individuals or certain groups particularly in terms of access to services;
• On-going priority to tackling inequalities faced by citizens with disabilities or vulnerable groups;
• Keeping those on minimum wage from the tax net;
• Reform of the taxation system to remove inequalities;
• Mechanisms to support working families and individuals on low incomes.” |
None other than the then Tánaiste and Minister for Finance, Brian Cowen, in an address in 2007 about “equity” and the Government’s plan for developing it.
So what happened that caused us to get the most draconian budget in the history of the country?
The Government says it’s the worldwide recession, and the main opposition parties agree; not only that but they are all saying that public expenditure is too high.
As the full impact of the budget begins to hit, the Minister for Finance and other ministers are now saying what they really think. Before the budget the talk was all of the public sector and the costly and inefficient public-service workers; now they increasingly talk about “competitiveness,” bringing down wages, enticing transnationals, and the same old policies that have so dramatically failed.
In a nutshell
This budget is an outright attack on workers, those who produce the wealth of the country. It is clear to those who wish to see and who are not blinded by its deliberately created illusions that the European Union is driving Irish budgetary policy and priorities. Even trade union leaders now admit privately that the collapse of the talks and the Government’s rejection of the deal in relation to the reform of public services just before the budget was under instructions from the European Union. Brian Lenihan had agreed the deal, along with Cowen, then travelled to Brussels to run the budget proposals past the mandarins. They rejected the deal, demanding wage cuts, and forced the Irish Government’s representatives to go back to Ireland and turn down the deal they had already agreed.
There has never been such a vicious attack on working people; yet in public debate no-one has pointed out that it is workers who are creating the wealth of the country, not the small businesses or the transnationals. The trade union leadership really needs to address this failure when speaking to the media and the Government. In fact Irish productivity is high, and billions leave the country in profits every year.
This budget is an attack on the minimum wage and on workers’ rights and pensions. This is the real intention and is part of a worldwide attack on working people. It is a global policy implemented by governments on behalf of the owners of capital. The present Government is particularly well placed to implement such a policy because of our lack of a strong labour opposition and the nature of the economy.
This budget is a continuance of the policy of selling the country to transnational ccorporations. This is the policy that has us left with the most open economy in the world, with no control over our resources.
This budget is for a tax system that crucifies the lowest-paid in society and the unemployed and sick, while at the same time we are told that tax rates at the higher pay levels must not be touched, because that would discourage transnational managers.
This budget is an outrageous attack on social welfare recipients, treating them as fraudsters, while failing to provide decent jobs and letting speculators go scot-free. This programme is part of an EU policy drive to reduce social welfare, to create a pool of cheap labour. At the same time we have employers doing as the capitalist class always do, because it is the nature of the beast: taking full advantage of the situation and forcing people to work for wages that would not even allow for housing and food needs.
The mass media fulfil a central role in shaping the political and economic debate and the terms under which that debate takes place, at the behest of both the bosses and the Government. The media do the Government’s dirty work by producing programmes and articles that vilify trade unions, workers, and social-welfare recipients. They promote felon-setting business lobbyists and a Government that is accustomed to manipulating and bullying the media, which in any case belong to the same elite class. They produce false comparisons as well as outright lies, comparing the wages of public and private workers in other countries, without pointing out that housing, health, education and other services are much dearer in Ireland than elsewhere, and not even mentioning currency differences. RTE in particular, which uses its enormous influence in moulding public opinion, is nothing but a mouthpiece for the most right-wing policies in the country.
Economists defend the banks and speculators and support the Government and NAMA (there is no problem in funding this hole in public finances), and the Government rewards their criminal dealings with billions of euros.
Various reports, including reports by the Central Statistics Office and the Revenue Commissioners, show that tax breaks and allowances to higher earners and the wealthy owners of capital were deliberately ignored. Progressive economists have been pointing out that reducing or abolishing these tax breaks would yield more than cutting social welfare. One action alone—ending the tax allowances for income from rental property—would have produced as much revenue as these cuts. Yet these allowances to landlords continue while people with mortgage difficulties are harassed by the banks and mortgage lenders and even evicted. This is to ensure that cheap, badly designed houses in inaccessible places will be taken off the hands of the property developers.
Reports by CORI, Barnardo’s, the St Vincent de Paul Society, Threshold and the Simon Community were also ignored when they pointed out that the drop in the cost-of-living index does not benefit the very poor, as the index includes spending on goods and services that are never bought by poor people, such as mortgages, cars, holidays, and luxury goods.
There are a few honourable exceptions to the conventional right-wing bias, such as the analysis of Fintan O’Toole and Vincent Browne. The web site of Tasc (www.tascnet.ie), representing independent, progressive economists, presents a serious challenge to the figures reported and gives a full analysis of the budget cuts and alternatives.
This budget is for continuing the failed policy of subsidising transnational corporations and the claim that this policy made the country rich. Instead it has impoverished it, while making a minority grossly wealthy. It created a false short-term prosperity, the results of which we are reaping now.
This was in a period that saw the sale of public assets, giving a false picture of Government finances while enriching Government cronies. The privatisation of public services has never been assessed. It is claimed that Government spending shot up by 7 to 10 times in the last ten years (depending on who is saying it); but nowhere have figures been produced to show how much the privatisation of services has cost. This figure cannot be calculated, because the Government says the information is confidential to the companies concerned! All opponents of cuts in public services must demand that this figure be made known for each private company. The subsidies to transnational corporations and businesses with IDA and Forfás grants, the provision of land, research and development subsidies, university training, and tax breaks, is never pointed out as public spending.
Mary Harney is getting her way in dismantling the public health service. The combination of cutting hospital spending, privatising services and raising A&E and hospital stay charges and drug repayment limits is a political decision, not one based on cost. The most disgraceful indication of this intention is the introduction of the prescription charge for medical-card holders, which will be so costly to administer that it will bring in no money, but it starts the process of doing away with this service.
What are the possible answers?
The dismissal of opposition usually takes the form of claiming that it is “unrealistic” and does not deal with the “real world.”
Unless one is allowed to discuss the general political and economic state of the country, any solution will be limited. We should not be trying to fit in to their model of political economy.
There are alternatives, but these would involve a complete change of direction that would require vision and independence. It would involve a critical look at the direction of EU economic policy, and it would rethink how we use our natural resources. This would involve putting the people of the country before the European Union and the European Central Bank and their demand that public spending be kept down to 3 per cent of GDP. It would involve renegotiating Government contracts with the oil and gas companies and bringing them into line with the international practice of royalty payments, at least as a first step, as any international body would have to agree that the disgraceful give-away of more than €500 billion by Fianna Fáil was detrimental to the interests of the country.
We would also massively improve our national wealth by demanding that our fishing resources be returned to us and developed as a breeding ground for conservation while allowing our fishing fleet to sell at sustainable levels.
There is enormous potential in developing our hydro-energy industry by harnessing the seas around us and by developing solar energy. Scotland is already exploiting technologies being developed in the North of Ireland.
We have the level of education and expertise necessary to develop indigenous industry in the medical, educational and technological fields by trading fairly with developing countries.
Such a policy would need a state bank to support these developments, together with a national development plan. It would require public spending, but this should be clearly separated from public services, and any spending allocated to private business should be shown for what it is. This would ensure that our pension funds and the funds of credit unions, trade unions, county councils and other public bodies would be safe. It would mean lower interest rates on loans to county councils and to public enterprise. A state bank would be one in which people could invest safely, and would also be attractive to foreign public organisations as a place in which to invest.
We must look to more long-term, sustainable development that does not try to compete with the transnational corporations, as that is not possible except through the complete impoverishment of our people to the lowest world wage. That is what has got us where we are now.
Our agriculture can be developed with more intensive use of land, implementing drainage and development plans, such as the use of protective covering from the weather for suitable vegetables.
The housing stock of failed developers should be revalued and put to best use for all those people who need housing. The compensation should be the real value of the houses, and the banks should take the loss for the remainder. They are the ones who, when making excessive profits, claimed it was a compensation for risk. Jack O’Connor was criticised by establishment economists for making this proposal, on the grounds that it would cost the state too much and that he meant that the developers should get fully compensated for their speculation. It is interesting that the same economists back NAMA and all its costs.
Any economy that prostrates itself at the feet of bankers and transnationals will be an impoverished one, as a United Nations report in 2009 on sovereign wealth shows, with wealth increasingly in the hands of the richest 5 per cent of the wealthy owners of capital. And in order to service these there is an increasing gap between the higher wages of the managers and administrators of those companies and the rest of the workers, according to an ILO Global Wage Report for 2008. There is no doubt that if the world’s economies continue on their present course the lives of millions will be at further risk.
It is time to look to real alternatives and to break free of the stranglehold of the EU and American model. Trade unions need to assert a more positive view of the potential of the work force, instead of reacting to the bankrupt policies of IBEC and their Government.
We must shift the debate away from public spending while demanding that services be restored, to analysing where the wealth of the nation is really going and who is benefiting.
Most importantly, all workers must stand together in defending all their rights, because an attack on one group is a weakening of all. |