Austerity: ask not what Ireland can do for you, ask what it will do to you

With public spending ‘out of control’ the government wants to avoid being seen as ’the next Greece’ by imposing round after round of tax hikes, public sector pay restraint and swingeing cuts to public service provision—but has it worked, asks JASON WALSH

IT’S IRELAND in 2010: Austerity—the favourite political programme of guilt-ridden Irish liberals during the boom years—has transformed into actual policy and, as anyone who thought about it for even a second would have realised, the worst off are getting clobbered while the rich are being merely inconvenienced.

The austerity plan is simple. Here’s a recap: slash spending, increase tax revenue and bail-out banks in order to prove the county is a ‘good financial citizen’. A controversial ‘bad bank’ scheme, the National Asset Management Agency (Nama), was created to buy delinquent property debts from the country’s financial institutions.

Paycuts for police, nurses and teachers and a hiring freeze in the civil service coupled with tax hikes and cuts to social welfare benefits were never going to be popular in any European country but Ireland’s response has been unique in eurozone: public anger and resignation in equal measure.

Coming after previous bailouts and with the general government deficit running at 14.3 per cent of gross domestic product (GDP) the prospect of further payments to banks have proved especially unpopular, though. Ireland’s two major banks, Bank of Ireland and Allied Irish Banks (AIB), have already swallowed €7bn between them and are expected to receive billions more.

Since the crisis erupted, the Irish government has taken stakes of sixteen per cent in Bank of Ireland and 25 per cent of AIB.

Driving public anger, a number of smaller banks, including the discredited Anglo-Irish Bank, have also been gobbling tax revenue. Anglo-Irish was nationalised in 2008 and will soon have received €22bn in aid.

Dr Stephen Kinsella, economist at the University of Limerick, says no-one is saying there should be no cuts but the government is interested only in the financial markets.

“Some kind of austerity package was inevitable,” he says. “The problem is there is no coherent employment policy – [cuts] kept the bond market happy but that’s all.”

The public response has been mixed, to say the least.

There is some sign of resistance—but only as set-piece confrontations. Almost a thousand protesters took to the streets of Dublin, six of whom attempted to attack the Dáil. It’s not rebellion of Greek proportions but there is resentment in the air. 2009 saw massive protests with tens of thousands on the streets of the capital on two separate occasions but the crowds dissipated when the government refused to back down on its austerity plan.

The government’s mantra of ’share the pain’ has been repeated endlessly since the end of the boom but many people are asking why they have to shoulder so much of the burden.

Kinsella says the protests unwittingly reveal sharp class divisions in Ireland: “The policy is ‘upper-middle class people first’ and those people’s reactions are heeded by the government.”

According to Kinsella protests by low and middle earners are ignored but complaints from the leafy suburbs result in adjustments to policy: “When you see little old ladies and relatively well-off students on the street then people take notice,” he says.

Áine Gannon, a public employee in the town of Kilkenny says that people on low to middle incomes are being hurt disproportionately by the way the cuts are being distributed: “I agree that it is necessary,” she says, “however, I don’t think that the cutbacks are fair. They are not hitting people equally.”

“No one should be exempt,” she says.

Despite this sentiment, the land of green is not turning red, Greek-style, nor has the unpopularity of the Fianna Fáil-Green party coalition government has not seen a corresponding rise in popularity for the opposition. Labour leader Eamon Gilmore is personally popular but there is still no sign of a Labour-led government ever coming to pass. Fine Gael’s Enda Kenny is no more popular than ever, which is to say: not at all.

Irish politics has never fitted into neat ideological terms: the two dominant parties, Fianna Fáil and Fine Gael both grew out of the IRA but rather than representing left and right they are complex coalitions and both tend to the conservative. Additionally, both parties have in the past governed in coalition with the centre-left Labour party while other left and liberal groups have occasionally had a hand in propping-up governments.

Small leftist groups are gaining some support. Richard Boyd Barrett, a councilor in the Dublin seaside suburb of Dún Laoghaire, narrowly missed election to parliament in 2007, campaigning on a platform that married traditional socialist demands with local conservationism that appeals to the district’s wealthier residents.

Boyd Barrett acknowledges that certain protests have a greater effect than others: “There is certainly a willingness [on the part of the government] to concede to the demands of the wealthy,” he says.

So, it the plan working? Yes. Assuming you agree with the government’s logic and don’t give a hoot about the public. Today the Central Statistics Office (CSO) announced that the ‘live register’ of unemployment rose by 6,000 in May bringing the jobless total to 439,100—13.7 per cent of the workforce.

The rise in unemployment is not an unfortunate side-effect of government policy, it is an intentional consequence of a policy designed to restructure the economy. Job well done, eh?

---

JASON WALSH is the editor of forth