Delusional programme for government offers little hope that new incumbents can finally deliver a fair society, writes VINCENT BROWNE
THE ELECTION of another Fine Gael-Labour government is hardly welcome for anybody wanting to see the structure of society changed radically.
Inevitably, the legacy of this government, as of the last three Fine Gael-Labour coalition governments (not counting the brief one in 1981), will be of deeper inequality, more misery, coupled with that overweening arrogance that this combination is able to summon up almost instantly – it takes Fianna Fáil a little longer.
Inequality will be deeper this time than before because of the half acceptance of the Fianna Fáil four-year plan and the terms of the EU-IMF memorandum of understanding. The misery will be more, greater unemployment, more emigration. The arrogance certainly will be no less – they have been practising self-importance for two to three months now!
The prospect is awful. And yet, we hope the best for them because the prospect of this new government failing to get the banks off our backs is beyond daunting.
There is no point now railing about the bank guarantee of September 2008. Fianna Fáil and the Greens did it and we are stuck with it. No point railing about that memorandum of understanding, they did it and the Irish State is caught by it.
The consequences of a unilateral rejection are, at best, incalculable, at worst, all too calculable in terms of the collapse of our public finances, the banks, businesses and jobs.
You have to be apprehensive about their confidence that they can rescue us from the crushing inevitability of the bank rescue. There are several features in the programme for government to do with the bank crisis that are simply implausible.
They say they are deferring further recapitalisation of the banks “until the solvency stress tests are complete and known to the new government”, the clear inference being that if the stress tests show the banks require even more funds, they will not proceed with recapitalisation.
The problem is the memorandum of understanding makes it quite clear that this recapitalisation has to take place, irrespective of how bad the stress tests results are. It says in the section: “Actions for the First Review” (to be completed by the end of March 2011) on page 18: “The Irish authorities will ensure that AIB, BOI and EBS are initially recapitalised to a level of 12 per cent core tier I capital . . . and will fund early deleveraging by making available €10 billion in the system”.
The programme for government says: “We will end further asset transfers to Nama”. The memorandum of understanding says (again page 18): “Further deleveraging of the banks will be achieved by the extension of the Nama programme to including approximately €16 billion of land and development loans in AIB and Bank of Ireland, which have previously been excluded as they were below a value threshold of €20m”.
This stuff in the programme for government is delusional as is the general expectation that there will be a significant renegotiation of the scale of the debt.
At the very least the total debt will be about €300 billion (€150 billion arising from the fiscal deficit and a further €150 billion from the banks’ losses and the latter is a cautious estimate) within a few years.
The interest cost of this, at 5.8 per cent, will be €17.4 billion a year.
Even if we succeed in getting this halved, the cost will still be an enormous €8.77 billion, at a time when the total revenues to the State will be about €34 billion. More than likely the cost will be about €13 billion a year, close to the cost to the State of the entire health system.
To revert to the equality stuff in the introduction, there is the sentence: “We [Fine Gael and Labour] are both committed to forging a new Ireland that is built on fairness and equal citizenship”, and a few lines further down: “By the end of our term in government, Ireland will be recognised as a modern, fair, socially inclusive and equal society, supported by a productive and prosperous economy”.
But remember what this constellation of parties (now reduced to Fine Gael and Labour) did they last time they were in office.
The justice side of Cori (Congregation of Religion in Ireland), run by Father Seán Healy and Brigid Reynolds (now both directors of Social Justice Ireland), did a commentary on the last budget (1997) of that Rainbow government (Fine Gael, Labour and Democratic Left – ie, the same constellation as this new government).
The commentary found that in a year when the economy was booming, when there were lots of resources to redistribute to make this society more equal, in fact what they did was make this society more unequal: “The poverty gap between a couple who are long-term unemployed and a couple earning £40,000 a year [a huge salary then] has widened by more than £2,734 under the three years of this government”.
And they complain about what Fianna Fáil did on equality!