Economic Shock Therapy - Irish Style (Continued)

This is the second part of a review of the recent report of An Bord Snip Nua and reviews the detail of the proposed cuts across the government.

Selling-Off the Family Silver

The report targets the property portfolios of the various Departments and recommends the imposition of requirements on them to have a property management strategy and to "detail and justify their current property holdings before further sanction to spend capital is granted". Such requirements are clearly the precursors to a large-scale sell off of assets by departments a fact underlined by the proposal to "remove any veto Departments may feel they have over property proposals relating to them made by the Office of Public Works".

It should be noticed that there is no consideration in the report of the implications of such a sell-off for the public purse at a time when property prices are at historic lows.

The report's authors consider the failure to better prioritise public resources as "symptomatic of a public service culture" that is insufficiently focused on the allocation, efficiency and outputs which is "in marked contrast to the private sector, where high costs and ineffective management have very direct consequences in terms of business closures and job losses". The authors must be entirely blind to the bailout that has been extended to the biggest bankers and the richest people in our society! There were limited 'direct consequences' in their cases.

Cuts on Social Welfare

Overall cuts identified for the Department of Social and Family Affairs amount to €1.8 billion or 8.7% of its budget. This is largely achieved by an across-the-board reduction of 5% on all social welfare payments (generating €850 million in savings).

This social welfare cut headlined media coverage. The same media have traditionally caricatured those living on benefits as parasites living at taxpayer expense. It is notable that they have not presented the same reality when it come to the massive bailout for the bankers and their ultra-rich clients. Yet even for our right-wing media, it is increasingly difficult to present those without work as voluntarily unemployed in accordance with the 'theories' of neo-classical economics. The media are, therefore, running the line that these cuts are 'harsh but necessary' in the context of a wider meltdown.

The report presents the cuts in social welfare supports - which let us remember are directed at those who, by definition, are excluded from the labour market and at risk of social exclusion - as being necessary to maintain "incentives in the labour market" in the context of wage cuts across the working class.

It is apparently beyond the authors of this report that most of those afflicted by unemployment do not want to be unemployed and that there is no inducement to eke out a living on social welfare payments already barely sufficient to maintain a basic standard of living. The neo-classical economic theory that underpins this conviction that social protections generate unemployment is exposed for the lie it is at precisely this point in a recession. Unemployment is structural to capitalism as was even recognised by JM Keynes. In fact it is an essential element in a successful capitalist economy as it lowers the negotiating power of workers through the maintenance of a reserve army of labour thereby keeping down wages and maintaining the level of profits.

On similar ideological grounds, the payment of additional allowances and training bonuses to some participants (notably the long-term unemployed) on training schemes are also identified for cutbacks as they "can act as a disincentive to re-entry into the workforce". If this is the case today, then it was the case a week ago - why then were they provided and justified on precisely those grounds previously.

The report identifies further 'savings' of €513 million through a 20% reduction targeted on Child Benefit payments. It notes with anticipation moves towards the taxation and means-testing of this benefit and, like Scrooge, advises "against reintroducing the Christmas bonus payment" ever again.

Not missing an opportunity, the group proposes the elimination of "second welfare payments". The logic of this is that if you are eligible for more than one benefit you can't get any extra despite your acknowledged higher needs. Benefits are to be made taxable and the report specifies the Widows'/Widowers' pension for particular attention by the Department.

Farmers in the Sights

Ireland's struggling farmers do not escape the cuts. The report identifies savings by ending the Suckler Cow Scheme (€44 million), disease levies and restricting TB eradication compensation to 75% of the market value (€9 million). And in a move that might undermine recent gains to the rural environment, it also recommends the restriction of farmers rolling-over from one Rural Environment Protection Scheme to the next (saving €80 million). It might be asked whether such a temporary approach to improving the biodiversity of rural farmland will accomplish anything.

In a further targeting of the few grants oriented towards the most deprived rural areas and smaller farmers, a further €66 million is to be cut by a 30% reduction in the Disadvantaged Area Compensatory Allowance Scheme.

Finally, the Department of Agriculture is to “dispose of non-essential land/property holdings owned by the State Agencies”, “surplus Teagasc assets” and “review the operations of Coillte with a view to realising optimal return through rationalisation, asset disposal and, possibly, privatisation”. It is notable that this public sector yet profitable agency responsible for the harvesting, maintenance and sale of Ireland’s forestry is identified for potential privatisation. Another exemplary case of privatising the assets and socialising the liabilities!

Energy Efficiency – the Market Knows Best

Not content with undermining the gains made by the minimalist rural environmental protections recently adopted by government, the report recommends a further assault on moves to reduce energy consumption. “Energy efficiency schemes should only be funded in the future if the cost of achieving the reduction in carbon output secured by them is equal to or less than the market price for carbon credits”. The implication being that resources are to be taken away from improving insulation in Ireland’s houses and traffic and instead focussed on improving energy supply to the big polluters.

It will be interesting to see how the Green Party who are happily progressing their agenda within the coalition will deal with this anti-environmental proposal.

Attacks on Education

The number of teachers is to be reduced by increasing the staffing schedule (the number of extra pupils required to qualify for an additional teacher). In a shameful recommendation and without any justification, the report also identifies scope to “reduce the number of Special Needs Assistants by up to 2,000” the report considers that this reduction would leave “about 8,500 in the system” which they consider to be adequate to provide "support for students with special needs”

The attacks on education do not stop there. The report identifies a one-third reduction (€100 million) in the cost of substitution arrangements for teachers absent on sick leave or approved absences. The group blames “a set of restrictive working terms, conditions and practices for teachers” for the overall costs encountered and thereby clearly demarcates a future struggle with the teachers' unions. Further savings of €50m in management allowances are also indicated but not identified.

Irish schools remain in a chronic state of disrepair despite the Celtic Tiger prosperity primarily as a result of totally inadequate capitation grants provided for their overhead costs. It is the norm for parents to have to engage in massive fund-raising to pay for basic essentials within schools. Yet, the report sees fit to impose a €25 million cut in primary grants and a 10% cut in those for post-primary education. Closure of rural schools will bring a further estimated €25 million in savings which would imply a massive number of closures of rural schools. The "mainstreaming of traveller education” - travellers are always a soft target – will yield a further €25 million in savings. Such a figure might suggest to the careful reader a little more than simply efficiency gains from what might be expected as ‘mainstreaming’.

Irish language schools suffer the loss of their strategic development body with little benefit to the public purse and unspecified cuts to school transport of €25 million are identified. This will have a dramatic impact on rural education, safety levels and quality of life for parents.

Third Level education is also targeted with the National University of Ireland being discontinued and the group noted "there is significant scope to reduce the number of third level institutions" pencilling in a €9.2 million saving under that heading. Increased productivity and a reduction of 2,000 staff (10%) within the tertiary level teaching sector “over the medium term” will result in a further €140 million savings.

Students attending universities benefited from the scrapping of fees but the group calls for them to be reintroduced (although didn’t include it in their budget) but did recommend “targeting of grant supports for students attending third-level institutions, including through the inclusion of an asset test for means-testing purposes” which will lead to €70 million in savings.

Health Cutbacks

The health sector has already been subjected to cuts identified by the Employment Control Framework which identifies 6,000 staff reductions in the sector (at a rate of 10% a year for the next three years). These are assumed by the report which goes further. Again, the report portends conflict with unions as it recommends that “staff flexibility and redeployment, on a compulsory basis if necessary, be introduced in the best interest of patients”.

The approach of the right-wing authors to “restrictive agreements and work practices” provides them with the basis to identify trade unions as being a “major inhibitor to staffing and pay efficiencies” in the Health sector. Without any hint of irony, it also highlights this as being “a block to good quality patient-focused care”. Socialism or Barbarism considers that cutbacks in front-line staffing is of far greater consequence in undermining standards of care for patients than trade unions standing up for basic working conditions.

The group also recommends restrictions on eligibility criteria for the Medical Card and the introduction of payments for the supply of medicines. In particular, it recommends that those in receipt of Jobseeker’s Allowance be placed above the income-threshold for free medical care, that “the monthly threshold for the Drugs Payment Scheme is increased to €125 and that a co-payment of €5 is introduced for each prescription under the Medical Card and Long-Term Illness Scheme”. These are measures which are disarmingly innocuous but which will have a hugely distressing impact on the basic quality of life for those sick and living on basic social welfare support.

Social Housing – No Need!

The failure of the Irish property boom to address the structural deficit of housing stock for young people reflected the priorities of the Celtic Tiger era. Profits rather than human needs directed investment. Yet the report considers that the problem of “oversupply…in the housing market” means that the focus of social housing “should shift more towards leasing and rental of housing units”. No doubt this offers the precarious situation of Ireland’s remaining property developers some hope for the future but it is far from clear that the houses that have been built are going to be appropriate for those who need them.

The significant and positive role played by non-profit distributing voluntary housing associations who deal with the realities of market failure in the housing sector will be undermined by the suggestion that they “should use their current housing portfolios to raise necessary funding” instead of relying on governmental loans. The group cite the growing cost of public borrowing but it remains considerably lower than that available from banks to institutions. It also proposes the scrapping of the Home Choice Loan Scheme and the Affordable Housing Programme as they are unnecessary from the perspective of the group.

Cuts to Local Authorities and Other Agencies

The group recommended a general cut of €100 million (2%) across the budgets of Local Authorities but provided no estimate of the impact of this on employment.

The group were however sympathetic in their recommendation that commercial rates be frozen to “alleviate pressure on business”. But there was no similar concern for the pressure on working families as it recommended that local authorities move to being ‘self-financing in the longer-term’ and suggested the imposition of “increased cost recovery levels for appropriate services”. It also recommended “charging for domestic water services” as being consistent with this approach.

The County and City Enterprise Boards, Business Innovation Centres, Western Development Commission and enterprise functions of Údarás na Gaeltachta, Shannon Development, Bord Iascaigh Mhara, LEADER and Teagasc and the Irish Film Board are to be merged within Enterprise Ireland. This will greatly centralise economic development across the island but will clearly reduce the influence of regions who have suffered underdevelopment and peripherality to the growth of the last decade.

It cited unacceptable costs of €350 million towards supporting 870 Community Development Projects, Family Resource Centres, Citizen Information Centres, Money Advice & Budgeting Service (MABS), Partnerships & LEADER Companies, Community Training Centres, Community Service Projects, Volunteer Centres and County Childcare Committees and concluded that they needed to be ‘rationalised’. Of particular note was the passing remark that “not all organisations that are currently funded will be guaranteed support”. So more cuts for the community services and development sector are planned (above and beyond the €100 million cut on Community Employment schemes ‘double payments’).

One half of all Garda stations in the state are to be closed and there is to be a reduction in Garda pay and allowances of €50 million. Forget swine flu we look forward to the return of Blue Flu!

Overseas aid did not get missed and Ireland’s contribution is to be reduced from 0.48% to 0.39% of GNP with the timeframe for reaching the UN target of 0.7% GNP contribution put off until 2015. In an even greater affront to Ireland's commitment to global equality, the report recommended that “the totality of Ireland’s humanitarian expenditure (including our traditional commitment to international peace-keeping) be made explicit in accounting for our overall commitment to the international community”. In other words, our involvement in international peacekeeping operations usually in the interests of global imperialism is now to be counted as ‘overseas aid’! Strangely, cuts to the defence budget were below 5% of the total and, indeed, army pensions are set to increase by 2.6%. Is this to guarantee the loyalty of the troops for future instability?

Finally, the allocation for the Support for Irish Emigrant Services programme is to be reduced by €1 million. No doubt this will be of comfort to our next generation of expatriates who will receive even less support by the state when they emigrate.

A Sharing of Pain and an Appropriate Response

Of course, the pain could not be exclusively focussed on working families, those at risk of social exclusion and dependent on social welfare – there were some reductions for the perks enjoyed by the upper tiers of Irish society. In particular, the princely sum of €1.5 million will be deducted from politician’s allowances and benefits!!

This document represents a major instalment in the agenda of the current government to significantly lower living standards and social provisions for the working class. We who did not benefit from the Celtic Tiger will bear the brunt of its collapse. While they achieve reductions of tens of millions by slashing social services and front-line provision, the Government is committed to cover tens of billions of debt simply to ensure that the richest people in our country are not burnt when the deck of cards came down.

The only appropriate response to this document is for those committed to revolution to come together to build a mass opposition to its proposals. The people must demand and fight to ensure that this or any other government will not implement this report or the other proposals which will follow it.

Socialism or Barbarism believes the time for those committed to revolutionary change to come together and build a mass opposition to neo-liberalist cuts.