Manage Ireland’s National Finances Responsibly


Ireland is still firmly locked into a repeated sequence of pre-election budget giveaways and promises that erode the tax base and set the country up for a fall. The worst example of this was Fianna Fáil during the bubble, leading to economic instability, recession and high levels of public debt. This allegation of irresponsible fiscal policy by FG/Labour is now being reported on by the EU.

Fine Gael / Labour are now repeating exactly what Fianna Fáil did – they’re using one-off revenues, largely from unexpected corporation tax returns, to fund large scale tax cuts. The results can already be seen in things like increased child poverty and people on trolleys in A&E Departments.

The size of the crash could be bigger under Fine Gael / Labour, as the various safety mechanisms that kicked in at the time of the last recession are gone. Public debt is too high for any serious future borrowing, households have nothing left to give, businesses have nothing left to give, public services are already severely cut-back.

The Social Democrats propose an end to this boom-and-bust cycle, through responsible fiscal management. To this end, there are many policies the Social Democrats would prioritise, including:

  • Maintaining the tax base at its current level;
  • Running a structurally balanced budget;
  • Increasing investment in social and productive infrastructure (e.g., schools, broadband, transport, flood defences, primary care centres, community centres);
  • Putting money back into people’s pockets by reducing the cost of living (see that topic separately);
  • Refuting validity of outstanding Anglo / INBS promissory note debt of €25 billion and seek multilateral agreement on burden sharing at earliest opportunity;
  • Beginning the fiscal planning necessary for the long-term provision of services, including pensions and healthcare.

CALL FOR A EUROZONE DEBT CONFERENCE:

Our National Debt has increased from €93 billion to €183 billion during the lifetime of the current Government. This has caused and will continue to cause deep hardship for our citizens. A significant portion of this extra debt arose from the banking collapse and the decisions of this and the previous government to bail-out the banks using our money and that of future generations. There remains a deep sense of injustice that these banking debts were foisted on the Irish people due to a combination of weak and incompetent Irish politicians and bullying from European Institutions.

Other countries in the Eurozone are also suffering severe hardship arising from debt problems. We strongly believe a Euro zone debt conference should be convened to address this issue in a collegiate and rational manner. This would help reinvigorate the solidarity among nations that should be at the core of the European project.

At a minimum the €25bn Anglo/INBS debt should be classified by the Irish State as odious debt, and full write-off should be pursued vigorously by the new Government.

A European debt conference was held in London in 1952 to restructure Germany’s debts, including the writing off of significant amount. This restructuring was one of the drivers of Germany’s subsequent economic growth.

 

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