Is austerity working? NO

THE austerity policies first inflicted by Fianna Fáil, and now continued by Fine Gael, Labour, and the EU-IMF troika, have been a disaster for ordinary citizens and the economy.

At 13.7%, unemployment remains at crisis levels, with 426,000 people on the live register. This figure would be far worse except that 200,000, mostly young and educated people, have fled the country since 2008 — a tragic return to dark decades of the past.

Poverty is also at crisis levels with 900,000 people living in poverty, including 200,000 children. Many more are hovering just above the poverty line, with 33% of the population unable to pay all their bills at the end of the month.

The mortgage arrears crisis is a ticking social and economic time bomb with around 185,000 households in mortgage difficulty — either in arrears or in some sort of mortgage re-structuring arrangement.

Under pressure from the troika, the Government has disgracefully just passed legislation which will make it easier for the banks to repossess homes.

Through austerity taxes, job losses, pay cuts, and social welfare cuts, the incomes of low and middle-income households have been slashed by 15-20% with a devastating impact on small and medium enterprise and the domestic economy — a classic downward spiral.

Claims this pain would eventually produce a return to economic growth were exposed when recent figures showed Ireland tipping officially back into recession at the beginning of this year.

Health, education, social welfare, and local authorities have seen their budgets slashed, year on year, inflicting unforgivable hardship on the disabled, children with special needs, carers, disadvantaged and rural communities, students, and pensioners.

All this to shore up banks and protect bondholders whose greed caused the economic crisis in the first place.

We then discover from the “Anglo tapes” that those same people were laughing about it as they pushed us over the cliff.

Even the former EU-IMF mission chief to Ireland, Prof Ashoka Mody, recently admitted that austerity is damaging our economy and should be abandoned.

Interestingly, Prof Mody also stated that even if Ireland was not in a troika programme, the Government would pursue the same failed policy of austerity. In other words, the Government is using the troika as cover to impose policies they support anyway.

If you think about this it is obvious. Fine Gael and Labour claim they must introduce water charges because of troika commitments. In reality, Fine Gael and Labour coalition governments attempted to impose water charges twice before — in the 1980s and again in the 1990s.

Fine Gael have always supported privatisation and cutting spending and public sector pay, and they have always been associated with large corporate interests seeking to benefit from privatisation. The Denis O’Brien-Michael Lowry Esat mobile phone licence affair is only the most obvious example.

Interestingly, Mr O’Brien now owns a company, Siteserv, a subsidiary of which, Sierra, is a major contractor for Bord Gáis — soon to be privatised. As part of the deal where Mr O’Brien took over Sitserv, the company saw €110m of its debts written off by Anglo-Irish Bank.

Mr O’Brien is now chasing the contract to install water meters which will be given out by the new State water company — a part of Bord Gáis.

So, not everybody is losing under austerity. Corporate profits have increased over recent years as has the wealth of the very wealthiest in our society. Not only does the Government refuse to increase taxes on these sectors, they refuse even to enforce the incredibly low €12.5% tax rate on the enormous profits of multinationals and big corporations.

Figures, I revealed earlier this year showed corporations, mostly the very big ones, making €70bn in annual pre-tax profits but only paying €4bn in tax — an effective rate of just over 6%. In the last budget, the Government also passed a measure that executives in these companies will now get tax breaks to send their kids to fee-paying private schools.

And let’s not forget the cost of servicing our ballooning debt — a debt incurred to protect banks and bondholders. This year, we will pay-out €8bn (almost the equivalent of our entire education budget) in interest to — you guessed it — bankers and bondholders. Honestly, the Sopranos haven’t got a patch on this lot.

Of course, as an alternative, we could: a) not pay off the gambling debts of banks and bondholders b) make big corporations and the super-wealthy pay their taxes c) force the banks we bailed out to write down the debts of distressed homeowners d) stop giving away our natural resources and State assets and invest in them to generate employment and real economic wealth e) lift some of the tax and levy burden from low and middle income families to boost the domestic economy f) protect the vulnerable.

Oh I forgot, that’s “cloud cuckoo-land” economics. Better, we just slash another €2 or €3bn out of an economy on its knees and keep paying off the bankers debts. Sure, it’s working so well.