News Analysis

Friday 19 September 2014

In the blizzard of facts, a vision to reform Ireland just isn't there

Statement of Government Priorities that followed 
the reshuffle is general-
election lap-dancing.

Eddie Hobbs

Published 20/07/2014 | 00:00

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The new cabinet pictured at Áras an Uachtaráin.  Photo:  Gerry Mooney
The new cabinet pictured at Áras an Uachtaráin. Photo: Gerry Mooney

Five years in heaven or in hell? The taster tour of heaven was nice but slow-paced, serious, with lots of communal tasks to do but hell was really hopping; rock 'n' roll, booze, weed, and sex with whomever you fancied. The voter chose hell.

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Next day, he reached his destination. It was piping hot. "Hey", he roared, "where's the party, the music, all the cool people?" Forking him towards his chains, Lucifer explained: "Yesterday you were a voter - today, you're a taxpayer."

The Statement of Government Priorities that accompanied last week's reshuffle is pure general-election 
lap dancing; 4bn in finance from a reincarnation of ICC Bank, named the Strategic Banking Corporation of Ireland, and 6bn of our own money, previously held as the national pension fund, and now to be disbursed to infrastructure and businesses by ISIF, the Irish Strategic Investment Fund.

Together with a tailwind of economic expansion rising to 3pc by Christmas 2016 we can expect an extra 100,000 jobs to have been added since the trough in 2012, rising to full employment, back to where we started by the end of the decade, after 12 years wandering in the wilderness. But is that what we want - a return to the party days of the Noughties?

Don't look for a meaning in the new Government plan, there's no burning bush here, merely an economic destination. Implicitly admitting that the social-protection model acts as a work disincentive, the next budget is to contain measures that do not punish those who take up employment with losses in income supports, while water charges are to be subsidised by €100 through the household-benefits package. A universal pension savings scheme is to be introduced to address, among other things, the inequity between public and private retirement, and the planning system is to change to 'use it or lose it' permissions.

This is what we've come to expect - a management agenda of unrelated items devoid of a social vision, a parcelling exercise designed for broadest appeal, negotiated across the table by a self-preserving political class held, it seems, in very low regard.

Even in addressing the calamitous impact of top slicing earned income above the average wage at 52pc, the Government is deliberately opaque as to whether this will be undone by increasing tax credits, which is the fairest and most effective way, or by adding a third rate of tax at levels not seen since the hellish 1980s on earnings over three times the average wage;

"In Budget 2015, we will announce a tax reform plan to be delivered over a number of budgets to reduce the 52pc tax rate on low-to-middle income earners, in a manner that maintains the highly progressive nature of the Irish tax system."

There is management here, but there is no leadership. The Government treads the fault line between conventional socialist ideology that believes that confiscatory taxation is required to address perceived social imbalances and pro-capitalists who treat interest groups as customers and whose main objectives are measured in economic terms, hoping that the trickle down will sort out inequalities.

What's noticeable in the restricted ambition of the Coalition is what is absent - no suggestion that Ireland ought to arrive at a destination very different to the Noughties, such as moving towards a credible living wage, or how taxpayers can be persuaded to support better State services by administrating a brain, heart and lung transplant to public sector management so that those who staunchly resist paying more tax can be persuaded of the benefits of doing so, precisely because it does not line the fattened wallets of the middlemen, support workplaces where no one is accountable and feed a Masada for union godfathers.

TASC, the left-wing think tank chaired by former Workers' Party President Proinsias de Rossa, in defending the tax system, provides a depressing reminder why Ireland is divided into camps where the incumbents, the insiders, who afforded themselves the luxury of separation from the rest, through agreements that dominated much public debate over the crisis years, have fared best, exiting with pay and pensions remarkably elevated by EU standards.

In mapping out how tax relief for private health ought to be dismantled, how private pensions ought to be crushed by low-rate relief and how top slicing ought to move back to levels last seen when Ireland suffered from chronic economic mismanagement in the 80s, TASC has seen fit not to publish a single sentence in its lengthy defence of Irish taxation about chronic State mismanagement, inefficiency and feather-bedding, nor postulated on the consequences of herding everyone exclusively into the public health 
and old-age-pension corals.

Ireland, which suctions out nearly one-third of GDP in taxation, lies 10pc below the EU, but the EU is dominated by socialist models where the population, on average, is ten years older, leading to greater health and pension costs.

We are rarely reminded that for every working adult - that's about 1.9m, with mean pay of a little over €36,000 a year - there is another 1.8 million in education, or jobless, disabled or retired, of which one million are dependent on weekly social-protection payments, excluding child benefit. Eight out of ten of those over age 65, 417,000, are entirely dependent on the old-age pension - which sits well below the living-wage threshold of €23,000 a year.

With a dependency ratio of 2:1 between taxpayers and those most heavily dependent on social revenues, it is right to look for ways to compress the State intermediation costs, but, in the ugly maths of the crisis, it's share of national tax revenues, which collapsed from €47bn to €32bn, metastasised by agreement behind closed doors, an outcome unique in the history of modern national economic crisis management.

So don't look within the blizzard of facts for a vision to reform Ireland, because it simply isn't there. The Government, evidently, believes that, like with its lead agency, the HSE, the grip of the incumbents is simply too tight and too powerful to loosen sufficiently within its short life cycle to allow for a programme of social improvements that might garner sufficient popular support to close the divide between insiders, dependants and the private sector.

We await the day when a Taoiseach can look us in the eye from a TV studio and gives us a credible message that he, or she, knows that way, shows that way and intends going that way.

Sunday Independent

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