Monday, August 1, 2011

The calm before the storm

The Dáil closed two weeks ago for its six week summer break. Fine Gael and Labour will be glad of the opportunity to catch their breath after weeks of intense grilling by opposition TDs over a wide range of government policies.

Fine Gael and Labour won power promising not to raise income tax or cut social welfare and to defend public services, including health.

Last December’s budget by the Fianna Fáil led government was supported by Fine Gael and facilitated by Labour. It proposed major cuts to public spending and services, and a four year austerity programme.

Among the measures introduced was the universal social charge. This is basically a flat tax which requires that everyone with an income above €16,000 pays it at the same rate of 7%. It also brings people who earn as little as €77 a week into the tax net.

It breaches the fundamental principal of progressive taxation – that those who have more, should pay more. In opposition Labour opposed it. One of its TD’s Róisín Shortall, who is now a Minister, even went so far to describe it last December as … “little more than a ‘Working-Poor Tax’… It is a blatant and unjustifiable attack on the poor.”

It is now government policy.

In opposition Fine Gael pledged that it would not commit ‘another cent’ to the banks. The current Transport Minister Leo Varadkar promised that any bank “coming to us looking for more money is going to have to show how they are going to impose losses on their junior, on their senior bondholders, and on other creditors before they come looking for us for any more money. Not another cent”.

Of course, that led to another significant u-turn and a commitment of an additional €24 billion to the banks. Worse still has been the continuous stream of money being paid by the government to unguaranteed senior bondholders in Anglo-Irish Bank and Irish Nationwide – two banks that are now defunct.

There is no legal obligation on the government to pay these people and yet, according to the weekend’s Sunday Business Post: ‘The state has paid out over €1 billion to unsecured bondholders in Anglo so far this year, and a further €1 billion falls due later this year, just weeks before the budget.’

Additional taxes, including water charges and a property tax are to be introduced. As a first step a few weeks ago the government announced the introduction of a household charge. This is an annual flat rate tariff of €100 on all households for a two year period, beginning next January.

This will be replaced by a full property tax in 2014. The Minister has already said that this levy may increase.

The claim by some that this amounts to ‘only’ €2 a home a week misses the point. This will be an additional bill on top of increased food costs; the universal social charge; water charges; a reduction in household benefits; and increased mortgage payments.

And the hurt for the growing numbers of unemployed and those on low and middle incomes doesn’t stop there. There are substantial additional costs on their way from gas and electricity suppliers.

So, claims by the government parties that they won’t hurt citizens by raising income tax or lower welfare benefits are a deception. In every other way imaginable they are impoverishing the less well off while protecting the wealthy.

But it is in the area of health that the crisis is most clearly visible and the dishonesty in Fine Gael and Labour party policy most clear.

When he took up office the Taoiseach told the Dáil that ‘the old ways of politics damaged us’ and he promised that his government would ‘tell the people the truth.’

The row over Roscommon hospital has brought all of this into sharp focus.

The government decided to close Roscommon’s A&E. The Taoiseach denied making any promises to keep it open. At least he did until the Sunday Business Post produced a tape recording of a speech Kenny gave in Roscommon during the election promising to keep services at Roscommon open.

One of the Fine Gael candidates Denis Naughten was even more explicit. He said: ‘This election is a referendum on the hospital. If people want the reconfiguration of services – which would lead to the downgrading of services – to continue they should vote Fianna Fail. If they want the exact opposite and to see services retained and enhanced then they need to vote for Fine Gael.’

Labour was no better. It was in the same mode. It wanted a seat in Roscommon and Labour leader Eamon Gilmore said: ‘The Labour Party policy will be to retain Roscommon Hospital and to retain all services.’

Only 4 months in office and the government parties have performed so many policy u-turns they must be dizzy – the public certainly is.

And in their handling of the Roscommon A&E issue they look and behave like Fianna Fáil. Cén difir?

When Fianna Fáil used the 2009 HQIA report to justify the withdrawal of emergency services from Ennis Hospital James Reilly rightly accused the government of starving smaller hospitals of resources to make them unsafe and of then producing reports to prove this and to justify their closure.

Precisely and exactly what Fine Gael and Labour are now doing. The way to deal with a hospital that is unsafe is to make it safe and to say that you have no other option demonstrates a lack of vision and imagination.

And this situation can only get worse. The government is committed to cutting another €4 billion from December’s budget. The new Dáil term which begins in September promises to be stormy.


Timothy Dougherty said...

Hello Gerry, alway good to read your insights. Lack of Vision and Imagination- this seem to say it all.
It seems like the capacity of the government to respond to the crisis. It seems like the Medieval doctors blood-letting,as knifes and sawsthat only makes one worse off for it. The Irish patients infected econmic body leaves it weaker and in an even worse state to fight the infection already at hand. The spending cuts in the next few years will slow the economy even further. The main obstacles to Irish prosperity,will be investment. Only more Lack of jobs and growth is in the national future, at this rate, of government policies.

stay well Gerry,

James and Linda said...

Sounds like the same budget fight we're having in the States. It's very depressing for those of us watching from the outside, and I can't imagine what it's like for progressives trying their best to stand up for the working poor (what a phrase that is-people who are working shouldn't be poor, they should be paid a living wage!)