Rising expectations - Too early for any tax and pay bonanza

THREE developments yesterday suggested that we should be very cautious about allowing expectations around the idea of significant pay increases gather a momentum that cannot be satisfied. 

The imperative behind this position is social rather than a business-orintated argument to keep pay rates down.

Growth predictions and tax returns are improving but those rising tides ebb and flow against something verging on daily crisis in far too many public services.

We have a lot of ground to make up in service provision — health, education, justice, housing, and social supports — before we can, with a clear conscience, justify cutting taxes or increasing wages significantly. As Mary Chapin Carpenter put it: “The stars might lie but the numbers never do.”

One development — the European Commission’s spring statement — argued that even modest pay increases, if not linked to increased productivity, would be counterproductive and would have the potential undermine recovery.

We would essentially be shooting ourselves in the foot if we imagine that we are in a position to try to return to pre-crash pay levels, even in the medium term.

That may have been the economic argument but homelessness campaigner Fr Peter McVerry also made a compelling moral one. His analysis put calls for pay rises or tax cuts in a pretty shabby, challenging, dog-eat-dog perspective. He described Environment Minister Alan Kelly’s funding announcement to help local authorities build social housing as “insignificant”.

The authorities are to get €312m to fund 100 projects and have been set a target of building 1,700 homes by 2017. Recognising the scale of the housing crisis faced by the Government, Fr McVerry pointed out that the funding will create around 600 units a year but there are something like 100,000 households waiting for a home.

Fr McVerry suggested that, even when those homes are completed in two years, the waiting list will be longer.

Last November, Mr Kelly detailed a €3.8bn, six-year strategy to deliver 35,000 social housing units.

That such an investment might prove inadequate shows the depth of the problem created when a government decided that the free market would look after the country’s social housing needs.

The third leg of yesterday’s stool was the fact that Greek bond yields rose on reports that the IMF may cut a funding lifeline to Greece unless its European partners accept more debt writedowns.

This crisis deepens and shows what can happen when governments refuse to rein in the fantasies of an electorate that refuses to pay taxes, work until a reasonable age, or refuse to accept that their jobs are redundant constructs that can no longer be sustained.

It would be wonderful if it could be jam for everyone but there are far too many people for broad-sweep pay rises and tax cuts.

If the idea of society is to have any real meaning, then those in the most vulnerable positions, and the public services we all depend on, must be the focus of any newfound spending capacity.

Anything else would be a return to the self-centred policies of greed and neglect that got us into this mess in the first place.


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