Jack O’Connor, general president of SIPTU and President of the Irish Congress of Trade Unions (ICTU) warned yesterday that growth is the only means by which Ireland can avoid default in the current financial difficulties.
Many on the right wing of the political spectrum have been asserting that financial default is inevitable for this country. Even though the Troika agreement with the International Monetary Fund, European Central Bank and European Union is admittedly restrictive, Mr O’Connor insists that it is tactically and strategically wrong to suggest that we must inevitably default.
“We must articulate a better, fairer way,” he insists. Those on the left should seize the initiative and concentrate on growing the economy by providing more jobs.
Mr O’Connor suggests that the residue of €4 billion to €5bn in the Pension Reserve Fund should be used to establish a venture capital fund as part of the new strategic investment bank proposed in the current Programme for Government. A further €1bn could be raised with a “tiered levy” on all incomes of more than €100,000 per annum.
Before the last general election Fine Gael promised not to increase income tax, and the levy would likely be seen as a means of increasing tax by another name. The fear is that this would drive many wealthier people out of the country to live in lower tax jurisdictions, and this would then promote a vicious circle of austerity.
The risk of this happening could be “reduced” if those involved could be assured that the levy would only be implemented for a limited period and that those so levied would eventually get their money back. The fund would focus on investments to generate jobs.
If this proved successful, those levied would receive a dividend in return. But such a return could not be formally guaranteed, because it would add to the national debt. “If you manage a venture capital fund properly,” Mr O’Connor added, “it’s reasonable to assume that it would generate a return.”
Whatever the levy might cost those earning more than €100,000 a year, he argues that it would not be as costly as “a disorderly default”. The proposals are essentially an alternative to existing suggestions that some feel would virtually emasculate the public service. Levying extra tax on just the wealthy might be a popular means of addressing our problems, but it is not realistic, because there is no easy way. We need to recognise that society as a whole must make sacrifices.
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