We Ain’t Seen Nothin’ Yet!

The Citizen: Issue 4
September 2011

Author: Joan Collins

We may think things are bad now, but we haven’t seen the half of it. Three years of austerity have destroyed 25 per cent of domestic demand, with a huge effect on businesses and jobs. Real hardship is being experienced by, for example, parents with children who have special needs, families struggling to keep their homes, and those who use our public health services, where cuts are hitting front line services.

Three more years of this austerity will be absolutely devastating, and that is the best case scenario under this government. A huge crisis is unfolding in the European Union. Greece is close to a default on state debt, regardless of the views of the European Central Bank. Whether Germany gets its way and the Greek debt is ‘restructured’ with either the voluntary or forced participation of bondholders, the financial markets are already indicating they will regard it as a ‘credit event’ – in other words, a default. A default by the Greek state will mean that its bonds will not be accepted by the ECB as collateral for loans to Greek banks, which depend on ECB funds to stay open.

This will have big implications for countries such as Ireland and Portugal, which could be caught up in the ‘contagion’: an increase in defaults by Greek and other banks to the already bankrupt banks that have lent to them will increase the debts of the states that support them. That is why the ECB, supported by France (French banks are the biggest holders of Greek debt), are opposed to any such deal. But if Greece doesn’t get some type of debt reduction or extension, it will default in a much more dramatic fashion.1

Michael Noonan, however, is trying to ride two horses: supporting the ECB-French position, while simultaneously pushing write-downs of ‘junior’ debt. Allied Irish Bank and Bank of Ireland, under instruction from the government, are forcing big devaluations on junior bonds (regarded as a default by the financial speculators’ watchdog Standard & Poors), and Noonan is proposing to try it with unsecured Anglo Irish Bank bonds in November against the will of the ECB. This is high risk stuff. But it makes Noonan look like he is doing something, while actually doing nothing to reduce the much bigger ‘senior’ debts of AIB and BoI that the government has saddled on the people of Ireland.

In my opinion, the government should be working with Greece and Portugal to demand a new deal from the EU and ECB: they should seek to burn bondholders, cancel the unpayable state debts, and demand that the ECB provide long-term finance at cheap rates to fund government investments for reflation of their economies as a way out of the crisis.

Meanwhile, the first one hundred days of the new Dáil have just passed. These were one hundred days in which Enda Kenny promised the new government was going to make a radical difference, delivering on all the urgent issues of the programme for government. I am glad I am not holding my breath. In fact, if you close your eyes and just listen to what they are saying, you would swear the old lot were still in power. Kenny and Gilmore spouted that there would be no more money wasted on the black hole of our toxic banks, that the bondholders would get a haircut, and that the EU-International Monetary Fund deal would be re-negotiated. But, then, the people who really make the financial decisions for our leaders (the ECB, the IMF, and the governments of Germany and France) said no. Enda and his government very meekly complied.2

But when it comes to putting the boot into ordinary working people, there is nothing meek about this government. This week in the Dáil they are putting through a bill to amend social welfare and pensions. This bill will raise the age at which people can claim the state old age pension from sixty-five to sixty-eight years. It will cut from eighteen to fourteen years the age for a child still attending school for which a single parent can claim support.

It introduces a form of workfare through what they call internship. This could displace real jobs by replacing them with people on work schemes. I think it is disgraceful that a Labour minister, Joan Burton, is covering up for the lack of any real action to tackle the jobs crisis by making the issue of welfare fraud a major feature of her department.

Recently, the United Left Alliance group of TDs, of which I am a member, tabled a motion opposing the cuts which the government wanted in relation to pay, overtime, and Sunday rates for the 260,000 low-paid workers who are covered by joint labour committee (JLC) regulations.

These regulations were brought in decades ago because the workers covered by them were recognised as being amongst the lowest paid, most exploited, and least able to stand up for their rights. Even the arch-reactionary Winston Churchill recognised this when he established the Trades Boards in 1909, from which the JLCs evolved. As I expected, our motion was voted down by the obedient ranks of Fine Gael and Labour backbenchers.

The approach of the United Left Alliance to the crisis is informed by a number of key principles. First, tax the rich. Broadening the tax base means going after those who have the wealth and those who earn most. There should be no tax increases for low and middle income earners. There are a number of areas where billions can be raised: a 5 per cent wealth tax would bring in €5 billion; another €11 billion could be raised by ending tax breaks for high earners; and limited increases in corporate taxes on company profits and capital gains tax could bring in €3 billion. The Universal Social Charge should be abolished.

Second, NO cuts. The attacks on the incomes of workers, the unemployed, and welfare recipients must end. These cuts are deflationary and hurt the most vulnerable most. We oppose cuts to the minimum wage and changes to registered employment agreements.

Third, we cannot be slaves to bondholders, speculators, or the IMF. The ordinary PAYE tax payer cannot be held responsible for the debts of speculators. We call for an end to bank bailouts – the Irish people are not responsible for bank debts and are under no obligation to sign up to the EU-IMF deal, which is designed to ensure that German, British, and French banks are paid. We should repudiate the EU-IMF deal and insist that the money from the National Pension Reserve Fund be returned to the Irish state.

Fourth, we need a publicly owned banking system under democratic control. The deposits, workforce, branch offices, and infrastructure of the banks should be transferred to a new state banking system. Publicly owned banks could concentrate on investment to create sustainable jobs; affordable mortgages; and reasonable lending to small businesses and individuals. The reckless greed that caused the crisis should never be repeated.

Fifth, investment in jobs is an absolute priority. The collapse of investment must be reversed. We are calling for the nationalisation of our natural resources and a state-led programme of investment to create real jobs.

Sixth, investment in education should be increased to facilitate all those who want to return to education. A national programme for sustainable economic development and useful public works could develop new green energy projects and industry; make all public buildings and homes energy efficient; and build the schools, créches, hospitals, local health centres, and community facilities that would transform our society and slash dole queues.

The establishment of the United Left Alliance is a great step forward for both the Left and the working people of Ireland, and it is being consolidated as I write. Nineteen candidates stood in the last election. By the end of the summer, we will have organised over forty meetings around the country, and more groups are seeking to join the Alliance. This will give us a base in all of the cities and big towns in Ireland. We held a one-day forum on 25 June 2011 in Liberty Hall, which was attended by four hundred people and debated policies on a range of issues. We are currently helping to organise resistance to repossessions and evictions due to mortgage arrears – we hosted a meeting open to all at the Red Cow Hotel on 3 July 2011 to begin a campaign against evictions.

While remaining an alliance of groups and individuals, we intend to transform the United Left Alliance into a new workers’ party – a party that will consistently defend the interests of working people, the poor, and all oppressed groups. Our non-negotiable starting point is rejection of coalition with the parties of the right, Fianna Fáil and Fine Gael. Labour claims to represent ordinary people, but their willingness to go into coalition with Fine Gael and drive through Blueshirt policies means they are part of the problem and not of the solution. Likewise, Sinn Féin, while they are sharply and accurately critical of the government, would be willing to go into coalition with the Right if the numbers added up, as they have done in the North.

While we are talking about the North, the election results for People Before Profit candidates in Derry and West Belfast in the Assembly elections and more recently in the West Belfast by-election for Westminster indicate a real potential for the like the United Left Alliance in the Six Counties.

At present, resistance to the onslaught of Fine Gael and Labour is muted: there is a residual hope that they might do something different to Fianna Fáil, and the official leadership of the workers’ movement (the Irish Congress of Trade Unions) is desperately trying to stitch up deals it can sell to the trade union membership rather than leading opposition. Safe in the knowledge that David Begg will undermine any fightback, Labour minister Brendan Howlin has made it clear that the cuts from the Croke Park deal will not be enough: he will be coming back for more in the autumn. And Joan Burton will be back with cuts in welfare payments – she as much as said so in the debate on the welfare and pensions bill.

I hope that the United Left Alliance will be able to be a tribune for the resistance that will emerge against these attempts to impoverish us; and that we will be able to help in the organisation of active opposing to them. The recent election was our breakthrough, but the next one will tell if we have made ourselves part of the future for ordinary people in Ireland – a future where people are put before profit.

Joan Collins is TD for Dublin South Central; People Before Profit Alliance and United Left Alliance.


1 Editor’s note: Since this article was written, Greece has been the subject of a second EU ‘rescue’ package, which involves more loans (i.e. increased debt) and more austerity measures. While the details are still vague, an element of voluntary contribution by the private lenders is involved, and the ECB and the ratings agencies are pretending this is not a default. This has failed to stop pressure increasing on Italy and Spain, which has resulted in the ECB buying Italian and Spanish bonds in an effort to prop them up. While the outcome is not yet certain, these efforts seem likely to fail. This sequence of events supports the views expressed in this article.

2 Editor’s note: As part of the second Greek deal, Ireland has received a reduction in the interest rate on the EU-ECB part of its loan package. Despite its insistence to the contrary, this was neither achieved by government negotiation nor a great triumph.

Copyright © The Citizen and the contributors, 2011