independent

Wednesday 16 April 2014

Carol Hunt: A growing wealth gap puts burden on the poor

The wealthy bore the brunt of the financial meltdown, but were largely able to take the hit, says Carol Hunt

HF Carol Hunt Charity S_15.jpg
HF Carol Hunt Charity S_15.jpg

DID you feel like throwing your slippers at the telly? I know I did, sitting there, watching that man from the European Commission with the unpronounceable name (Istvan Szekely) telling us that the wealthy had borne the brunt of the Troika-imposed austerity measures.

I wasn't feeling particularly wealthy I can tell you, watching the evening news with my son's woolly hat on my head and a thick blanket wrapped around me because we'd run out of coal and I was damned if I was turning the heat on yet.

Like most working families in similar situations, I felt as if we had borne the brunt of the financial meltdown of the last few years: a huge drop in income, increased taxes and charges, little or no discretionary spending and palpitations at the thought of upcoming Christmas expenses. And I know people – developers, builders, investors, those involved in construction – who have lost the shirts off their backs, some of whom are now solely dependent on charities like St Vincent de Paul for food and basics.

Meanwhile, Social Justice Ireland was not a bit happy at Mr Szekely's comments either, Fr Sean Healy noting, "When you take the whole story, poor-to middle-income Ireland has taken huge hits ... the better off had far more capacity to take the hits, and for the most part were able to take the hits that came their way and still not be seriously damaged."

And yet statistically Szekely is right. According to Department of Finance figures, the top 20 per cent of earners in this country pay 71 per cent of all PRSI, USC and Income Tax. When you do a crude number-crunch, the very well off have paid more during the last six years of recession than the squeezed middle or those on welfare payments.

But Fr Healy is also correct. Because when it comes to ability to pay or impact of loss, poor-to-middle-income Ireland has indeed suffered more than the wealthy. It's all relative, isn't it? Consequently the gap between rich and poor increased by 25 per cent in 2010, with the top 20 per cent earning 5.5 times the income of those on the lowest 20 per cent (figures from Equality Budgeting Ireland).

Interestingly, when Mr Szekely made his comment about the impact of the cuts being "progressive", he seemed to be talking about the early budgets of the crisis, rather than the most recent.

Now I don't pretend to be an expert in the dismal science, but the figures show that initially, while Fianna Fail was still in office, recession budgets were "progressive" as in they hit those who could most afford to pay. This is in contrast to the Fine Gael/Labour budgets which have been "regressive". Recent budgets have hit those with least ability to pay disproportionately: particularly lone parents, the low-paid, the disabled, the young unemployed and families with large mortgages.

I know – having a Labour party in government as opposed to the Soldiers of Destiny shouldn't exacerbate the inequality gap and hit the most vulnerable, should it? But amazingly it does. And in case you don't believe me I'm going to quote Vincent Browne – not known as a FF cheerleader – on this one.

Last December he wrote: "Following last year's budget, the first after Labour's most recent return to government ... the ESRI established that the 2012 budget's combination of indirect tax increases and welfare cuts imposed greater percentage losses on those with low incomes (reductions of between 2 to 2.5 per cent), as against losses of about 0.7 per cent for those on the highest incomes.

"That same ESRI study showed the previous Fianna Fail government was much more progressive, with the impact of the austerity regime being directed most on those with higher incomes."

And the FG/Labour trend of protecting the wealthy while getting those who have least to cough up pay more (relatively speaking) continues without interruption.

Last month independent TD Stephen Donnelly noted in amazement that the 2008, 2009 and 2010 budgets led by Fianna Fail were "perfectly progressive from a policy perspective" while in contrast the FG/Labour budgets were "perfectly regressive".

Now, perhaps Labour is correct when it implies that, if not for its stalwart defence of the most vulnerable, Fine Gael would have served up the poor and the unemployed in a nice, thick stew for their betters – but, one would have to ask, is this enough from a socialist party in government?

Labour tells us it is working hard to defend core payments for pensioners and the unemployed – and of course the benefits enjoyed by public sector workers – against the nasty capitalists in Fine Gael.

Presumably Labour is not happy with many of the concessions it has had to swallow – like cuts to child benefit, taxation of maternity benefit, increases in public transport costs, increases in university registration costs, property tax, etc – but you would be forgiven for concluding that staying in power is the ultimate aim of the current Labour leadership.

Because surely the core aim of socialist policy is to reduce, not increase, inequality in society?

Which begs the question: is Labour still a socialist party or has it turned into merely a liberal party, focusing solely on issues of social ethics like abortion and same-sex marriage?

Whichever is the case, the net effect is the same – the working poor, the so-called coping classes, seem to be completely unrepresented at government level. Those of us still lucky enough to have jobs, with young kids and massive mortgages, in negative equity, savings gone and no chance of a pension have absolutely no idea what political party best supports our modest, middling interests. All my life I have voted Labour and for the first time ever I am at a loss – like many others – as to who I can support. It's a bit of a head-wreck.

If ever there was a time for a new political party in Ireland, dedicated to closing the inequality gap, it seems to be now. Inequality is a political choice and a bad economic choice for society as a whole.

Economist and recent Nobel Prize winner Robert Shiller said last month: "The most important problem that we are facing today ... is rising inequality in the United States and elsewhere in the world."

Istvan Szekely may be right in saying that the wealthy have paid more during the past few years of our austerity crisis, but our widening inequality gap means the real burden has fallen on those least able to carry it.

Sunday Independent

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