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Cuts should not hurt the weakest

In this column from March 2009, Frank Connolly considers the limited public apetite for a program of austerity

The collapse of the pay talks between government, unions and employers has thrown the financial crisis facing the country into stark relief. It has also exposed the inherent weakness of the strategy deployed by Brian Cowen in recent months to counter the recession. The Taoiseach was perfectly justified in his effort to reach agreement with the “social partners’” to find a way out of the impasse and to meet the shortfall in government funding of between €15 and €20 billion over the next five years. What went wrong was that that the government and its officials, backed by IBEC, the employers’ group, appeared to think that the unions, and the public sector unions in particular, would agree to carry the burden of the pay and pension cuts.


Against the backdrop of bank guarantees recapitalisation and the nationalisation of Anglo-Irish Bank the very least that should have been offered to union leaders was an assurance that this enormous injection of tax payers’ money would be recouped from those largely responsible for the financial mess and from those who most gained during the good years. Or that there would be a significant reduction in, if not a return of, the excessive pay and bonuses the bank executives received while they were busy running down the entire banking system through reckless property lending. And that there would be full transparency in analysing the problems in Anglo and in pursuit of its former chairman Sean Fitz- Patrick through the courts over his undeclared millions in loans from the bank and other alleged conflicts of interest.


Cowen and Lenihan have made much of the global nature of the financial and banking crisis but have markedly failed to identify the local culprits, or banksters, responsible for the current state of affairs. It is not surprising that union members and workers in general suspect that the unhealthy relationship between Fianna Fáil and the property developers whose largesse to the party, and personally to at least some of its prominent members, deterred the government in recent years from reining in the excesses of the property loan market.


The Mahon tribunal over the years has exposed how certain individuals have become billionaires – and many others millionaires – due to the corruption of the planning system in Dublin by the likes of former FF press officer, and lobbyist, Frank Dunlop. By dispensing cash to politicians at the higher and lower and of the food chain Dunlop ensured that large tracts of land bought at agricultural prices were re-zoned for residential and commercial use. Many other strokes, including the apparently corrupt award of lucrative tax designations and the abuse of official party funds, were also identified during the ten-year hearings of the tribunal.


If even a portion of what was heard about corruption at Mahon is true, taken with the enormous sums at stake in the Moriarty tribunal in the upper yard of Dublin Castle and the previous exposures of the Ansbacher millionaires, it is no wonder that the bulk of ordinary tax payers look at the demand for them to tighten their belts with some cynicism. If the state showed some willingness to recoup some of the billions stolen in dodgy land deals and from those who benefited from this systemic corporate theft there might be a more generous dispensation on the part of others who did not so gain. Ireland is in a worse financial state than most European countries as a result of the recent economic downturn because there was less regulation, and more corruption and abuse of the law by the political and financial elite than was the case in other countries. That is why there is a reluctance to submit to the orchestrated clamour of the political and media establishment for the workers in the public sector to take most of the hit.


How can a tax on the pension of a public sector worker earning just €15,000 be justified when the government plans to inject €8 billion and perhaps as much as €15 billion into the major banks without any idea of the scale of their toxic debt from bad property loans? Of course there are over-paid public sector workers (bloated HSE executive salaries and €800,000 p.a for Pat Kenny for example!) but the scale of government cuts is neither fair nor equitable and is disproportionately aimed at the lower paid.


It is a simple question of fairness and equality and unless Cowen and his gang can get beyond the rhetoric and deal with the obvious source of our economic ills he will be left behind by the increasingly angry mob.


Across Europe there is evidence of social and political unrest as similar austerity programmes are foisted on the people. At times of profound shock and crises dramatic changes take place in society. Ireland will be no exception and unless the political system can incorporate the needs and desires of the majority of people, and more importantly protect their fundamental social and financial interests, the solution will be sought by other means. Clearly Fine Gael would have offered no real alternative to the policies pursued in recent months and years by Fianna Fáil and the PDs and more recently their allies in the Green Party. The question is whether any other alternative political arrangement can generate the radical and realistic way out of this crisis which threatens to turn the country into the economic and political basket case of Europe .