Press Release - Scandalous Budget an Affront to Working People – Looney

Dermot Looney, a Labour Party candidate in the Tallaght Central ward in June’s local elections, has slammed April’s ‘emergency budget,’ saying that it targeted PAYE workers and those on welfare instead of hitting the rich. Looney, 26, said that the budget featured, at its heart, a callous and right-wing political imperative which underlined the failed politics of the Fianna Fáil government.

“I have been talking to hundreds of local people since last Tuesday who are fiercely angry about the tack taken by Minister Lenihan,” said Looney. “Instead of hitting tax reliefs for their developer pals and millionaire tax fugitives, 81% of the €1.8 billion in tax increases is to come from the PAYE sector in an affront to working people.”

“A single worker on €40,000 - just over the average industrial wage - will lose €1,200 or €23 a week through the new levies, after already losing €400 last October. If they have the misfortune to be a teacher, a nurse or any other worker in the public sector, they were also hit from March by an additional pension levy of €2,103, or €40 a week. Yet despite these shocking, anti-progressive levies, there was no levy on wealth or unproductive assets which could have yielded hundreds of millions.”

“Let’s take another example – a married couple on €45,000 each, with 2 kids and a standard €250,000 mortgage. They will pay an extra €900 per year on the income levy – on top of the €900 they began to pay in January – and €1,800 on the health levy. They will lose €1000 in the early childhood payment for their two kids, and €900 on the abolition of mortgage interest relief – on top of the €300 they lost in January.”

“In total, after April’s budget, this couple are down almost €6000 a year. If either works in the public sector there’s an extra €1600 – or, if both are public servants, that’s almost €10,000 wiped off their annual income since January.”

“The abolition of mortgage interest relief will also hit working families hard, particularly those who were forced to pay through the roof during the Fianna Fáil-backed boom. At the same time, a landlord with a portfolio of properties can still claim tax relief of 75% against interest repayments.”

“Rent Supplement changes leave tenants at the mercy of landlords. Existing tenants will be hit with an 8% cut, meaning that all 80,000 current rent supplement tenants are going to have to ask their landlord for an immediate rent reduction or make up the difference themselves. Although some rental prices have been falling, this measure was crude and does not take into account the individual circumstances of tenants.”

“Attacks on welfare are the lowest of the low, and the abolition of the Christmas welfare bonus, and the halving of dole for those under 20 – with no requisite employment or educational supports – are particularly heartless.”

“Even where the Government looked to make the correct decision, it botched it. After years of following the US-style privatisation of hospital land for Harney’s crazed co-location policy – including at Tallaght Hospital – they have rolled back. But there is no word on how the 1,000 hospital beds promised under the scheme will now be provided. Labour first proposed the abolition of the early childcare supplement, but only when the details had been ironed out on a national pre-school scheme – something the Government have yet to do.”

“Perhaps most scandalous of all was what the Government refused to include in the budget. There are no cutbacks on special tax breaks for the pensions of company directors. There is no change in the status of tax exiles who, despite their claims to ‘patriotism’, claim to reside outside Ireland for part of the year to avoid paying taxes here. The 440 ‘high worth’ tax fugitives, who are worth an estimated €30 million each, will not contribute a penny more under this rich-man’s budget.”

5 Ways to Save

From a press release by Róisín Shortall, 5 proposals by the Labour Party to save the State money. Before we hit the most vulnerable again, let's hit those who benefit most the hardest.

1. Director Pensions:
Director's pension schemes are still a major loophole. A director can build up a fund of up to €5.4 million and take 25% of it in a tax-free lump sum. (Again, the Government has been unable to provide information on the amount that would be saved).

2. Landlords:
Interest relief on rental properties is costing €800m and should be cut.

3. Tax exiles:
An Irish passport should mean something. If you want to be part of Irish society and benefit from it you should pay like anyone else (The Government has been unable to provide information on the amount that would be saved, but we estimate the figure to be at least €175m)

4. Cap pension relief at €100,000:
Tax relief on pension contributions is capped at €150,000. Lowering this cap to €100,000 would yield €186 million

5. "Co-location":
Abandon the super-private clinics and save €1 billion over seven years, or €140m per year.

Towards a New Economic Narrative - Debating the Way Forward

Irish Left Review is a superb site for all kinds of left wing discussion on issues such as crime and justice, education, health and media, amongst a vast array of other issues. But where it shines best is in the area of promoting and provoking left wing economic debate.

Michael Taft, who baulks at being called an economist but is certainly one of the foremost left wing Irish bloggers, includes the always-readable and eternally-useful "Recession Diaries" on both his own blog - Notes on the Front - and ILR. His most significant intervention into the debate on the current series of economic and fiscal crises came with a 10-point plan entitled 'Towards a New Economic Narrative.' It is, for me, the first significant attempt to provide not just a left critique of the last few months, but to provoke debate on a new way forward for left economics arising out of it.

You don't need to be an economist to read it. It's accessible, easy-to-read and digestable. Micahel summarises it as follows;

So there you have it:

• Overcoming the fiscal trap by borrowing, taxing capital assets and opening up the Pension Reserve Fund to infrastructural and enterprise investment

• Increasing demand and consumption through a new pay deal, extension of welfare benefits, anti-inflation measures

• Putting our enterprise base on a new footing through a new Green deal, opening up new investment streams, an Enterprise Guarantee and new models of public economic activity.

Do with these proposals what you will. Improve on them. Come up with better ones. Add and subtract.

But it's worth reading in its entirety for anyone even mildly interested in how to get out of this mess - and let's face it, that's all of us.

It's worh noting that this is not a fait accompli. Michael podcasts on it here to explain that this needs to be the start of the debate, not the end. And the first major response is similarly significant. Terrence McDonough, of the NUIG Economics Department, responds here to note that "[o]nly socialism will get us off this long run roller coaster." Even Dan Boyle of the Greens has made a response, putting great faith in the ongoing Commission on Taxation to resolve the outstanding inequities in the taxation regime.

The most important thing for us all, though, is not merely to read the opening volleys of the debate, but to put our own views forward. The trained economists, the stockbrokers, hedge fund managers, professors and department heads got us into this with little warning - so it's clear that academic or other expertise is not required to take part in this broad debate. What is needed, right now, is a new commitment to an economics of equality that leaves neoliberalism confined to the history books. How we achieve that is a question for us all.

Labour Correct to Oppose Bank Bailout

2008 was almost the Year of the Digout. Now, it seems, for us and our friends in the United States of Freedom, it's going to be the Year of the Bailout.

Never forget what has happened the past few days. The Irish political establishment, carrying the Greens and Sinn Féin in tow, voted en bloc to provide the biggest welfare cheque in Irish history to some of the wealthiest companies and individuals in the country.

As a Labour Party member, voter and candidate, I am proud of the stance our party took inside and outside parliament on this bill.

I would encourage blog readers to take 5 mins to read what you won't have heard in the mainstream media.

Firstly, take a look at Michael D Higgins' concise, accurate and crushing analysis. He notes that

the Minister for Finance is describing the external conditions, such as what he calls "the credit crunch" as a kind of international flu. I wish to state immediately that those who want to look at the different models of international finance must conclude that a debate is taking place at present in Washington about how one should respond to the failure and collapse of the neoliberal model of non-regulation.

Higgins also states;

There are matters for which the Government has explicit responsibility. One cannot blame the relationship between the Fianna Fáil-led Government and the speculative component of the building industry on the Washington consensus.

My colleague Michael Taft, who regularly posts on Irish Left Review as well as his own Notes On the Front, has a series of insightful articles on the shambolic economics of the past weeks on his blog, chief amongst them September 30th's entry in the Recession Diaries.

He notes, starkly;

Let’s be clear: these are institutions who have in the past engaged in widescale tax evasion, pursued investment policies that starved our economy and recently have been full and gleeful participants in the lunatic preoccupation of property speculation. And the Government has not just guaranteed deposits but liabilities as well – to the tune of between €400 billion and €500, or up to nearly three times the size of the entire economy.

There are issues of democracy at the heart of the debate too;

This is about maintaining a system whereby the ‘commercial’ (and I use quotation marks deliberately) decisions of a handful of people determine the economic health, welfare and future of everyone in the land. And now these ‘commercial’ decisions are no longer subject to the ‘discipline of the market’ (whatever the hell that might mean anymore), but rather to the largesse of a desperate and pliant Government. No accountability, no oversight, no new disciplines: in my book, if someone guarantees the consequences of my actions, then I can have no complaint when that someone rightfully demands accountability over my actions; and extracts a fair price. But not here, not in Fianna Fail-land.

Michael's conclusion, which I quote below at length, shows just how far things have got;

No one questions the need to keep banks afloat. To say that markets need capital is an insulting tautology. The issue here is on whose terms – the bankers or people, business, the economy. That George Lee, not known for spouting demands for the nationalising the commanding heights of the economy, pointed out that the Government could have bought half the four major banks for a cool €5 billion, suggests that taking the route that US and European authorities have taken is not so far-fetched. That capital injection would have provided much-needed liquidity and would have given the taxpayers a real stake in these institutions. This, then, could have been followed up with not only guarantees but an intervention in the investment practices themselves, specifically a redirection of 1% to 2% of banks lending portfolio into Enterprise Development Funds which would finance our indigenous base (this would have won support from huge sections of the business community).

Something like this would have been a rational approach. But it would have involved a socialisation strategy that is anathema to the Right. So what we get instead is capitalists without the capitalism, capitalists with a big fat welfare cheque, capitalists who are not allowed to fail no matter how unworthy their efforts. This is the system we are paying to save.

Extraordinary. And don't forget who is giving the bailout to their banking buddies, who is responsible for an inflated economy, whose connections to builders and speculators are now causing pain to hundreds of thousands of working people, and whose economic system has been proven for the house of cards it truly is.

There is an alternative, and it isn't to be found in Tweedledee to Tweedledum, or Podge to Rodge. Labour's plan for the economy is here.