Keynesian fantasies are no substitute

The Fine Gael/Labour coalition has unveiled the country's fifth austerity budget. Despite that the leading factions of the ULA continue to dither, writes Anne Mc Shane

The United Left Alliance could make a hugely positive impact in Ireland, but only if its leadership had the courage and the political conviction to take the necessary steps. A conference should be called for January to bring together the left and working class throughout Ireland to discuss and build around a strategic programme to organise the working class into the ruling class and replace bankrupt capitalism with a socialist society. If the Socialist Workers Party and Socialist Party cannot rise to the task in such unprecedented times then there is little hope for them ever being able to do so in the future.

The economic crisis continues to cause deep social dislocation. The working class is desperate for leadership it can trust. The Fine Gael/Labour coalition made a lot of promises in order to get elected in February. Labour in particular pledged above all else to stand up for the poor and vulnerable. It was, of course, a sham. The two parties knew full well that in order to pay the bondholders and keep Irish capitalism afloat they would be required to attack the living standards of the working class. Now, after nine months in office, they are really putting the boot in with a budget that is, even by recent standards, extraordinarily vicious. When asked about the turn-around in his position on the Frontline current affairs programme on December 5, Labour Party leader Eamon Gilmore just shrugged and said: “Someone’s got to take the pain.”

But there are cracks showing in the Labour camp. A number of backbench TDs freely express their unhappiness at the budget. The newly elected member for Dublin West, Patrick Nulty, walked off the government benches on December 6 in disgust. He followed another Labour TD, Tommy Broughan, who resigned last week over the renewal of the bank guarantee scheme. Although this will not cause any immediate problems for the coalition with its overwhelming majority, it will certainly have an impact on the Labour Party grassroots. Nulty openly calls himself a socialist and the ULA should be looking to engage with such people in order to break their supporters from Labourism.

The government is well aware that there is deep anger at the attacks. Taoiseach Enda Kenny went on national television on December 4 in an attempt to persuade people that there was no alternative to further cutbacks. But his gloomy ‘state of the nation’ speech had the opposite effect. He hypocritically called for workers to tighten their belts, take the pain and some time - maybe by 2016 - things will get better. Stressing his faith in the courage and patriotism of the Irish people, he appealed for unity in facing the challenge of austerity. We were reminded of Ireland’s many successes and now we are “fighting for our survival as an independent small nation”. It sounded like we were going to war … all Irish people proudly marching forward together. An attempt to stoke up national loyalty to cover for yet another brutal offensive against the working class.

The budget

The fifth austerity budget Ireland has seen aims to claw nearly €4 billion back out of the public sector to satisfy the strict requirements of the European Union bailout package.

In some parts it is deliberately vague and it has been hard to work out where exactly the axe will fall in the health service and other vital facilities. This has already caused alarm among both staff and users. But there is no doubt that it will be slash and burn. Single-parent allowance is to be abolished for children aged seven and over and there are more cuts in child benefit - this time targeting families of more than two children. Working class women are to have their benefits removed at a time when it is virtually impossible for many to get a job. Redundancy rebate to employers has been cut from 60% to 15%, meaning many more sacked workers will not receive minimum redundancy payments. And one of the more sickening measures has been a six-week cut in the cold weather fuel allowance. If this winter is anything like last year, it will mean a very serious situation for the elderly and physically vulnerable.

Disability benefits for 18-24-year-olds will be halved. State benefits for those on partial lay-off are also to be slashed, along with training programmes and funding for many advice and support services. The most vulnerable have been targeted. The section of the working class which is the most in need, which is even now forced to ask for help from charities, will be attacked once again. Tuesday’s announcement of a further rise in VAT of 2%, taking the rate up to 23%, will make it even more difficult to afford food, electricity, gas, etc. The government is also introducing an annual household tax, to begin at €100 per home, but with the likelihood that it will be raised to as high as €1,000 after a couple of years. In a country where over 80% own their own homes, this flat tax will apply to all households, irrespective of income or wealth.

Keen to show that austerity is already bringing rewards, the media have portrayed Ireland as about to turn the corner, with growth in the region of 0.4% and a healthier economy forecast for 2012. But new figures have exposed this as self-serving drivel. The latest report from the Economic and Social Research Institute predicts that the Irish economy will grow by 0.9% next year, instead of its previously projected 2.3%.[1] Profits made this year have resulted from an intensification of exploitation, as agency workers replace permanent staff, wages are cut and hours are increased.

At the moment the working class is pessimistic and demoralised. In 2009 and 2010 there were mass demonstrations of over 100,000. There were 4,000 at most at last week’s national anti-budget protest. There are anti-austerity groups in most towns and cities, but for the most part they remain isolated and politically directionless. The struggle to make ends meet has taken over people’s lives. While officially there are half a million unemployed, the true number is more like one million (almost a quarter of the population) - for example, self-employed construction workers in the collapsed building industry are not entitled to benefits and therefore do not register in the government statistics. An emphasis on ‘entrepreneurship’ in the days of the ‘Celtic tiger’ has now resulted in thousands of small businesses going into liquidation. This section, like the young, unemployed ‘building contractors’, now has nothing and is entitled to nothing. The surge in emigration and the high number of students - due to the lack of jobs - also disguises the true state of affairs. For the rest, cuts in wages and price hikes, along with the constant fear of job loss, makes for a grim reality.

Social partnership

Ireland has been through an economic rollercoaster over the last 20 years. The current level of poverty has followed more than a decade of credit-fired boom. The level of spending in those years was something very new.

Southern Ireland had been a traditional rural economy up to the 1970s. It has never had a solid indigenous industrial or commercial sector and there has been a huge dependence on the transnationals, with successive governments bending over backwards to make sure that the country is an attractive destination for these corporations. In particular there was the lure of very low corporation tax, jealously protected by all governments. It is an unquestioned norm of Irish capitalism that, while the working class is forced to absorb continual tax rises, company profits are off limits. Corporation tax is only 12.5%, compared to 33.33% in France, 30% in Spain and 21%-28% in Britain. It is the biggest sticking point in Europe, with Sarkozy and Merkel furious that Ireland is still refusing to budge. There are constant rows reported, but government ministers refuse to give an inch.[2]

The other attraction for transnationals has been the existence of the so-called ‘social partnership’. This was created in 1987 and brought employers, unions and the government together in a tripartite pact. The first three-year agreement was the ‘Programme for National Recovery’, followed by others which also aimed at prosperity, competitiveness, etc. As the economic bubble grew, ‘social partnership’ was feted as the keystone of Irish success. The working class would benefit from the trickle-down effect, if it worked alongside the bourgeoisie in the ‘national interest’. Trade union membership plummeted from 62% of the workforce to 31% in 2009.[3]

Trade union bureaucrats have very clear vested interests and themselves hold positions within state and semi-state bodies. David Begg, general secretary of the Irish Congress of Trade Unions, actually has a number of directorships, including a position on the board of the Central Bank and a non-executive position in Aer Lingus, the national airline. In addition to the income he receives from these, he is paid around €140,000 by the ICTU.[4] It is no wonder he is always so keen to promote social peace.

There are plenty others like him. Jack O’Connor, outgoing president of the Services, Industrial, Professional and Technical Union, the country’s largest, was awarded ‘business person of the month’ in December 2010 for his role in recommending that his members vote for the Croke Park agreement, which imposed cutbacks and pay freezes in the public sector.[5] ‘Social partnership’ breeds corruption, with jobs for the boys and perks for families and friends. One particularly notorious scandal was that surrounding the government training agency, Fas, revealed in 2008 to be a luxury gravy-train. EU grants and taxpayers’ money were spent on first-class flights, luxury hotels and shopping sprees. High-ranking employees, government ministers and trade union leaders took off on junkets together to the USA, Australia and a range of attractive destinations.[6] Peter McLoone, leader of Impact trade union, was forced to retire as chairperson of Fas and take early retirement from his union position.[7] He had been enjoying a salary of €155,000, along with €25,000 from Fas, as well as many other freebies and bonuses.

New poor

Such lifestyles have only ever been the preserve of the inner circle. For the working class, especially the young, the only option has often been to emigrate. In the 1980s thousands went to Britain, Australia and the US, as so many generations had before.

But then something new happened - for the first time in the mid-1990s people began to return home. They joined those already settling into a comfortable life. As house prices soared, credit was no object. Even people receiving social welfare were given mortgages. The better-off bought second and third homes, and holiday villas in Turkey and Bulgaria. Shopping became the new religion, as malls sprung up all over the country. It seemed that the money would never run out. When it did in 2008, it had dreadful consequences for the majority of those caught up in it. The same banks which had been such enthusiastic and generous lenders turned nasty.

Up to recently many families had two earners, with a joint income of €1,000 a week or more. Job losses mean that many of these same families are now trying to survive on €300 a week. The high court in Dublin orders repossessions on a weekly basis. The applications are often brought by maverick subprime lenders - previously the most eager to lend at huge interest rates. Mortgage debt will become a major problem in 2012, as moratoriums and payment freezes run out. Most debt is related to property bought between 2006 and 2008, at the height of the boom. These homes are now worth less than a third of their purchase price. Those who got caught up in the credit boom now cannot cope with mortgage payments, loans and credit cards. Ireland has a new poor - those who in the years of the ‘Celtic tiger’ would have seen themselves as a middle class.

The crisis began in 2008 when banking insolvency became an overnight phenomenon. The first and most controversial bailout was for Anglo-Irish Bank, an elite institution concerned with commerce, property and wealth management. It was the main bank involved in funding the construction industry. It first received €1.5 billion, then €4 billion, then €8.3 billion and finally €12.7 billion. A ‘golden circle’ of banking executives were exposed as recipients of enormous secret loans. Chairman Sean Fitzpatrick suddenly and conveniently took early retirement - owing €155 million, which he has never repaid. He filed for bankruptcy in 2010, declaring he only had €188 a month to live on. He neglected to mention that he had conveniently transferred many assets to family members and ring-fenced others. There is an ongoing criminal investigation into his financial dealings and those of his cronies, Willie McAteer and David Drumm, both high-ranking executives in Anglo-Irish. Drumm took off suddenly to the US to avoid arrest and is now refusing to return.

The banking bailouts are deeply unpopular, particularly as there is no mercy shown to ordinary borrowers by these same banks. There is no debt forgiveness for a working class person in trouble with mortgage and credit card payments. Also, as in the UK, banking executives have brazenly continued to award themselves huge bonuses.

Protests against cutbacks began in late 2008, when pensioners took to the streets to defend their right to free medical treatment - and won. Another demonstration of 120,000 filled Dublin’s streets on February 22 of that year, including among its numbers for the first time a contingent of 2,000 Gardaí. Then in November, after a lot of prevaricating by union leaders, a one-day strike of 300,000 government workers was called. This very solid action unnerved the government and there was talk in the media of the spectre of working class resistance. Luckily for the Fianna Fáil/Green coalition the union leaders were only too anxious to return to talks. They had been unhappy when the government had walked out of social partnership earlier in March. The militancy of their members was cynically used to get a foot in the door and a subsequent strike due for December 3 was called off at the last minute.

The result of these negotiations was the Croke Park agreement of March 2010, ratified by the unions in subsequent months. They accepted major ‘reforms’ to the public sector in return for a promise of no further wage cuts for government employees. It seems there will be no further strikes - or demonstrations - while the deal remains in place. The union bureaucrats promised the government and employers that they were men of their word. But reforms, of course, meant cuts resulting in huge job losses in health and education. There is no replacement of permanent staff who leave and conditions in some hospitals are dangerous due to shortages of beds and nurses. There is worry about what will happen next year when there will be a mass exodus of civil servants taking early retirement - the last opportunity to do so on a full pension.

ULA response

The ULA has issued a document entitled ‘Austerity is not working: tax the rich, invest in jobs’.[8] It contains a number of proposals for a scheme of public works and job creation. It also calls for a reversal of all cuts and a demand to ‘burn the bondholders’. All good stuff as far as it goes. The main problem with the submission is what it does not say. There is no mention of the working class at all and certainly none of socialism or revolutionary change. Instead we are told that the “only way out of the current crisis is to generate real economic activity and create jobs”. This will be done through an assets tax and increased income tax on the wealthy - calculated to raise €15 billion per annum. Tax exiles will also be targeted.

Curiously there is no mention of corporation tax. There have been discussions at ULA meetings where some individual members expressed concern that the transnationals would leave if corporation tax was raised. Could it be that the ULA is also worried about losing support on this issue and has backed off? The document is essentially about solving the economic problems within Ireland. Europe is addressed by calling for “a Europe-wide alternative, including a state-led programme of socially useful investment to halt the slide into depression”. In other words, cooperation between bourgeois states rather than the building of an all-Europe working class movement aiming for a European workers’ state.

Although the submission calls for people before profit, its appeal is to the “Irish people” rather than the working class. It is a Keynesian fantasy to suggest that government funding from wealth tax will put things right. It is a national solution to what is an international class problem - dangerous and worrying.

Church crisis

As well as the economic crisis, there are other major changes in Irish society. The Catholic church, which has been so dominant in Irish society since the formation of the Free State in 1921, is seriously disgraced.

The 1999 documentary States of fear revealed for the first time the level of abuse within institutions run by the church. The response was one of deep shock. The institution that was meant to protect children was systematically abusing them. The worst were the industrial schools, where children of the poor were sent to carry out slave labour and be ‘reformed’. Not only were they deprived of a family life and kept in terrible conditions, but they were physically, psychologically and sexually abused. The church had - and continues to have - a systematic loathing of the working class.

The Fianna Fáil government at the time moved to limit the damage to the church by setting up the Residential Redress Board in 2002. The state would indemnify the church and compensation would be made to victims of clerical abuse who could prove their case. The stipulation was, of course, that the hearings take place behind closed doors and there could be no criminal prosecutions of clergy.

A commission of inquiry was set up which reported in 2009. The Ryan report confirmed the scale of the abuse as endemic and it was described as “Ireland’s holocaust”. Again the government had made sure that there would be no criminal prosecutions of clergy as a result of any revelations. This inquiry was followed by the Murphy report into abuse within the Dublin diocese and the Cloyne report into occurrences in East Cork. All showed huge levels of ill-treatment and physical and sexual abuse. And recent church-sponsored audits of parishes have shown the problem has by no means gone away. Abuse is still going on and the church is still doing its best to cover up.

The obvious answer is a secular state. The complete separation of the church and state is the only possible way to deal with the power and influence of the church. Its massive assets should be seized and put to common use. There should be no more religious indoctrination of children in schools. Religion ought to be a private matter and the church removed from a position of power within the state. It remains in a predominant role - the fact that the ‘life of the unborn’ is protected in the constitution says it all. Women are prevented from seeking an abortion in Ireland because of a religiously-inspired law. They have to travel to Britain or Europe to do that - a costly process especially now.

The European Court of Human Rights rapped the Irish state over the knuckles last year and demanded that the right to an abortion - albeit in very limited circumstances - be put in place. But the government does not even want to debate the question and has shunted it off to be examined by some specially formed commission. But abortion rights, still a very controversial issue in Irish society, must be tackled head-on. The ULA is far too cautious - it does not want to lose votes or potential support from those who oppose abortion. The demand for a woman’s right to choose has never been included in election literature and the leadership has refused to adopt any position on the question. The five ULA TDs must take this up in the Dáil as a matter of urgency.

This coming February sees the 20th anniversary of the ‘X case’. This involved a 14-year-old girl who had been raped by a neighbour and became pregnant, yet was denied a termination. The supreme court subsequently decided that abortion should be allowed where a woman’s life was at risk, including by suicide. A referendum three years later supported that decision, but it has never been legislated for. The ULA should come out for abortion as a right in all circumstances and the anniversary of the X case provides us with an opportunity to launch a campaign for abortion rights, including in the Dáil.

Irish society has become more secular in many respects and even many religious people no longer look to the church for advice on personal and ‘moral’ decisions - and little wonder. The role of the family has changed. Many couples now decide not to get married and being a single parent is not at all the scandal it was 20 years ago. Forty percent of all marriages in Dublin now take place in a registry office and many people no longer get their children christened. Attendances at mass have plummeted. But the church remains very much in control of education and continues to push for influence in all spheres.

We need to campaign now for the separation of the church and state. But this should be part of a broader campaign for a new, democratic and secular constitution.

National question

There has been a limited debate within the ULA on the north-south divide, but it seems to have generated a lot more heat than clarity. The SWP is in favour of an all-Ireland ULA, but the Socialist Party is completely against - the SP dismisses the entire republican movement as an enemy of the working class. It wants trade union and community unity in the north and glaringly ignores the question of national rights.

But it is essential that we put forward a democratic solution - for a united, federal Ireland with the right of secession for some territory where the Northern Ireland protestants form a clear historically established majority. I believe that the details should be determined by an all-Ireland assembly. However, the most important question is that socialists in Ireland oppose all kinds of nationalism and champion consistent internationalism. The unity of Ireland must be a voluntary unity.

To summarise, we need a working class party with a revolutionary programme. That programme must address the specific questions in Ireland in respect of how we are ruled. This means dealing with the Catholic state, the national question and women’s rights. There are many other questions that also need to be considered, including ethnic minorities and Irish travellers. The economic issues are part of a programme, not its entirety. And the essential point is that the programme must be based on what the working class needs to advance its interests, to build itself into a ruling class. Politics comes first.



1. www.rte.ie/news/2011/1130/esri.html.

2. www.irishtimes.com/newspaper/world/2011/1203/1224308524982.html.

3. http://en.wikipedia.org/wiki/Social_Partnership.

4. www.ictu.ie/about/staff.html.

5. www.businessandfinance.ie/index.jsp?p=793&n=708.

6. www.herald.ie/news/taxman-probes-fass-luxury-junkets-1647044.html.

7. www.swp.ie/industry/peter-mcloone-quits/2250.

8. www.peoplebeforeprofit.ie/node/731#attachments.