Saturday 10 December 2016

Outgoing union boss rows back on support for default

Published 06/07/2011 | 05:00

THE outgoing president of the Irish Congress of Trade Unions last night rowed back on an earlier suggestion that the congress "may well" support the call for a default on Ireland's debts.

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Jack O'Connor had said there was no possibility of 1.8 million workers repaying around €200bn in debts arising from the collapse of the banking system within any reasonable time frame.

And he warned delegates at the ICTU biennial conference in Killarney that there might come a time when ICTU would have to advocate default -- even though this would have devastating consequences for jobs and public services.

"We may well come to do so and we are conscious that resources are being run down as time passes," he said. "But we cannot anticipate the response of the European Central Bank, which could withdraw support from our covered banks."

However, speaking to the Irish Independent following his address, he stressed he was not advocating that Ireland should default on its debt.

"I'm not advocating default," Mr O'Connor told the Irish Independent. "What I am saying is that we shouldn't be adopting the position that we don't have options or alternatives other than simply defaulting.

"I'm arguing that there are things we can do which would entail addressing the savings ratio, which is bloated beyond all reason, and addressing the investment deficit.

"At the moment we don't have investment in the economy. We had gross fixed capital investment in 2007, admittedly in bubble times, of €46bn.

"We're down now to less than €19bn. We have to find ways of addressing that, because the private sector will not invest because the confidence isn't there.

"I highlighted the potential role of the residue of the pension reserve fund, and the possibility of leveraging €4bn to €5bn -- about 5pc of the assets of the National Pension Reserve Fund -- by encouraging them to invest in the domestic economy, on the basis of exemptions from the pension levy."

The proposal has received support from the Irish Association of Pension Funds, with director of policy Jerry Moriarty believing it was a viable alternative to the levy.

Levy

"It is something we had actually put forward ourselves in response to the proposal to impose the levy," he said.

"I think the idea of being able to swap the levy for an investment in infrastructure is quite attractive to funds, because it effectively gives you an immediate return on your investment."

In his earlier address to congress, Mr O'Connor said opinion was divided as to the potential consequences of threatening default, and the ICTU had so far not supported the call.

ICTU general secretary David Begg said the time may come when default would be "the lesser of two evils", when austerity was being heaped on austerity.

But he said this point had not yet arrived. "We don't know what the long-term effects would be on foreign direct investment, we don't know what the long-term effects would be on companies trading in this economy and we can reasonably anticipate that there would be huge consequences on the banking system."

Delegates at the conference also carried an emergency motion calling for the ICTU to resist the sale of state assets including the ESB, Bord Gais and the national airports.

Irish Independent

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