The Central Bank of Ireland says the Irish economy contracted by 3% last year and will contract by 7% this year and another 3% next year.
On 7 April the ruling Fianna Fail/Green Party coalition government in Ireland passed a brutal austerity emergency budget (the second in six months) in a blatant attempt to make the working and middle classes pay for the country’s economic crisis while continuing to bailout the banks.
The following articles (from The Socialist, the newspaper of the Socialist Party of Ireland) explain the scale of the attacks and what measures the organised working class should adopt to resist them.
THE GOVERNMENT says the budget has hit everyone equally, but this is a bare-faced lie. Whereas the billionaire and multimillionaire tax dodgers and those who benefit enormously from the so-called tax shelters have yet to be touched, the rest of us face our budget changes from 1 May.
Stephen Boyd
The two budgets we’ve had so far in 2009 have cost the ‘average family’ approximately €7,000 a year. Every section of the working class and middle class were hit by the budget.
The 1.3 million receiving social welfare, who are already struggling to survive, have had their income cut by 2% with the scrooge-like scrapping of the Christmas bonus. The unemployed were also hit by a reduction in rent allowance, with newly unemployed under 20s being told they must survive on €100 a week!
All workers from the working poor up to those on decent wages have been hit by a doubling of the income and health levies, some facing the extra burden of increased PRSI [social insurance] payments as well.
The limiting of mortgage interest relief (which will eventually be scrapped) will cost people with modest mortgages between €100-€200 a month. The halving and scrapping of the childcare supplement will hurt many low-income families who have come to depend on this money.
For public sector workers the budget was a double whammy piling more tax hikes on top of the recent pension levy/pay cut.
Yet the multinationals who exported nearly €60 billion in profits in 2007 were not asked for a single extra cent! Instead, the government has decided to give the banks and the super-rich speculators a potential bailout of up to €90 billion of our money!
Spending cuts
The budget also contained another €1.5 billion of public spending cuts. These cuts will once again hit vital public services such as health, education, housing and services to the old and disadvantaged – services that are already overstretched and trying to come to terms with the cutbacks of last November’s budget.
The emergency budget is just the first instalment of a four-year plan of tax increases, and public service cutbacks. That’s the future we have been promised – 500,000 unemployed with at least four more years of tax hikes and cutbacks!
Finance minister Brian Lenihan said that in the next two budgets they plan to introduce the taxation of child benefit, cuts in social welfare, a property tax and significantly higher tax increases for all workers.
The opposition Fine Gael protested that the government haven’t cut spending enough! Labour have criticised the budget but in reality are only squabbling over the scale of the cuts and the tax increases – they too argue that working class and middle class people must pay for the crisis.
The unions should walk away from ‘social partnership’ and harness the opposition and anger against the government into a major campaign of industrial action and protest to defeat this budget and stop the jobs slaughter and widespread pay cuts.
The crisis in Ireland is far deeper than in many other countries, reflecting the damage done to the economy by the craven greed of the property developers and speculators who were fully facilitated in their speculative debauchery by Fianna Fail and the banks.
But in Ireland, as in the rest of the world, this recession represents the failure of the market. Capitalism isn’t working. We must replace this failed system which puts the profits of the rich before everything, with a social system that puts the needs of people first.
Measures will cost jobs and fuel recession
AT THE start of his budget speech when Brian Lenihan talked about taking from each according to their means, it sounded as if he was just about to quote Karl Marx. Alas, very quickly it became clear that he was once again putting his hands deep into the pockets of the working class. His imposition of huge tax increases represents a savage cut in wages.
Kevin McLoughlin
At core, the economic crisis in Ireland and internationally is based on a lack of demand for commodities. The wage cuts in this budget, 7%-8% for many workers, will only serve to cut spending and consumption dramatically and make unemployment much worse.
Up to now the single biggest element of the Irish crisis has been the decline in housing construction. At its height housing construction accounted for 12.7% of the economy. Next year only 12,000 homes will be built. That equals just 3.7% of a smaller economy.
The wage cuts in the budget, as well as the cuts in public services, which are the start of a four-year austerity programme, are the opposite of what an economy in freefall needs.
The actions of the government are likely to turn the recession into a depression and an economic collapse of 20% in GDP could be on the cards.
As the international crisis worsens, Irish exports will shrink. The euro is relatively high and given that more than 60% of Irish exports go to non-eurozone countries, particularly the US and Britain, that sector will continue to haemorrhage jobs.
Being in the eurozone means the government can’t try currency devaluation in order to boost competitiveness and exports.
The government’s central policy to become more competitive is not based on investment in research and development but further draconian attacks on wage levels in the public and private sector. This is a deflationary strategy that will cost jobs and fuel economic decline.
It is vital for the future of the economy and workers’ living standards that these policies are fought. We are experiencing the failure of the capitalist market. The Socialist Party believes that the economy must be planned to provide for the needs of society and not the profits of the super-rich – that’s what caused this mess in the first place.
€90 billion bailout for the super rich
IN A graphic validation to the old adage “one law for the rich and one for the poor” the Fianna Fail/Green Party government will buy the bad debts from the Irish banks for up to €90 billion while making cuts to the poorest sections of society.
Michael Murphy
The billions in bad debts in the banks are owed by some of the wealthiest people in Ireland. Primary amongst them are the property developers and speculators who used their borrowings to massively inflate the property market which in turn saddled people with 40 year mortgages.
This is an attempt to take all the bad loans off the books of the major Irish banks and place them with a new agency called the National Asset Management Agency who will hold the debts for up to 15 years.
The government are buying the debts at a “discounted price” of anything up to €76.5 billion.
The government hopes that international banks and investors will then lend money to the Irish banks and in turn credit will be extended to consumers and businesses in Ireland to stimulate the economy.
Brian Lenihan claims this process will be ‘cost neutral’, in other words that the taxpayer will get their money back at some stage. However, the debts will add significantly to the national debt, the equivalent of €75,000 for every household in the country and is expected to cost 18 cents of every euro taken in taxes by 2013.
This is an astonishing bailout of those that caused the economic crisis and places the burden of cleaning up the speculators’ mess onto the shoulders of working class people.
The Socialist Party is in favour of nationalisation but not the form of capitalist nationalisation whereby we take on the debts of the rich and leave them with all of the profits.
The banks should be nationalised and the assets of the developers who owe billions should be seized and this money used to invest in a state development programme to build schools, hospitals and other projects that will benefit society and create jobs.
House repossessions could be stopped and mortgages adjusted to reflect real house values with affordable interest rate repayments.
Action not “social solidarity” will defeat budget attacks
COMMENTING ON the aftermath of the budget, Stephen Collins, Political Editor of The Irish Times said: “This year the silence has been eerie, mainly because the large body of PAYE [pay as you earn] workers who are being hammered by the budget have no one to directly represent their interests.”
Stephen Boyd
600,000 of those PAYE workers are members of trade unions and yes, they aren’t being represented by their ‘leaders’. Aside from a few comments bemoaning aspects of the budget there was an “eerie silence” from the so-called leaders of the trade union movement.
This is not surprising. The day before the budget, an agreed statement from the “social partners” – Discussion on a National Recovery Programme – was issued saying that talks would resume after the budget.
It said: “the best chance of laying the foundations for a sustainable economic recovery lies in an integrated response agreed through the social partnership process….”
The budget attacks on working class people will not derail these talks. The union leaders are committed to doing all that they can to help the government and big business ‘manage’ the recession even if that means 500,000 unemployed and major cuts in living standards.
The Irish Congress of Trade Unions (ICTU) leaders’ betrayal of working class people is being done in the name of “social solidarity”. The budget was “social solidarity” capitalist style – the working class taking all of the pain yet the multinationals and big business weren’t taxed by one extra cent!
The government and the employers are using the recession to implement major attacks on workers’ rights. The same is now in store for public sector workers. The ‘social partnership’ road will not save jobs or prevent the cutbacks and tax hikes. It hasn’t stopped the jobs slaughter at Dell, SR Technics, or Waterford Crystal.
ICTU’s call for a national strike on 30 March was a cynical ploy aimed at restarting the social partnership talks. Yet despite weeks of propaganda from all the main parties opposing the strike, including Labour, a majority of trade unionists voted to go on strike.
Undoubtedly workers throughout the private sector are fearful of losing their jobs and amongst a majority of people there is trepidation at what is in store for them and their families in the next few years.
But if a lead was given the majority of trade unionists would engage in industrial action and campaigns against the budget attacks and the jobs slaughter and the government and employers could be defeated.
