BUDGET CAN'T BE ALL TAKE AND NO GIVE

1 December 2011 No Comments by The Northern Standard

The statement by the Economic and Social Research Institute downgrading Ireland’s 2012 economic growth forecast from 2.3% to 0.9% puts a context on next week’s Budget that the Government will hardly welcome.
The ESRI are strongly of the view that the depth of the crisis afflicting the eurozone is such that it will seriously undermine the efforts of individual economies within that zone to achieve the ambitions for fiscal recovery they are setting themselves.
The message seems to be that no matter what the Government decide to do come Budget day, forces beyond their power to influence will keep us under the thumb for the foreseeable future.
One possible effect of this declaration could be to undermine the increasingly shaky but still evident willingness by the Irish people to swallow the bitter medicine of austerity that recent Budgets have fed them.
If we no lose faith in the unpalatable Government line that there is a cure at the end of all the bleeding that will eventually see the economy stand on its own two feet again with some semblance of vitality, we might well choose to spit the medicine back into the faces of its purveyors.
We should, however, treat the ESRI statement with a degree of caution.
It seems plain enough to even those with only a pass-your-hand understanding of economics that austerity and growth are uneasy bedfellows – despite our continued export success it is difficult to see how improvement much beyond the revised ESRI prediction could take place when the Government are cutting capital investment programmes and reducing disposable incomes.
However, reference by the ESRI to the need for “decisive action at political level ” within the eurozone, “to end the crisis and boost growth”, seems to bring their declaration out of the neutral environment of economic analysis and into the more subjective and ideologically nuanced realm of politics itself.
Is this not an implicit heightening of the pressure being exerted on German Chancellor Angela Merkel to soften her opposition to a lender of last resort role for the European Central Bank in order to stave off the further disintegration of the financial markets and domino-effect recession among the euro nations?
The German leader might well be misguided in the stance she has adopted, but one suspects it will take more than impeded growth in the Irish economy to persuade her differently – even if she has been depicted in some quarters as commanding more influence over the fiscal future of Ireland and other chronically indebted eurozone countries that their titular political leaders.
Although it is now customary to bemoan our compromised sovereignty, we are sure that considerations of wider European economics, as pertinent as they might be to our situation, will not weigh heavily on the minds of many of our readers this week.
They will be looking ahead with understandable trepidation to the details of the national Budget to be announced at the start of next week.
Leaks, some orchestrated and some inadvertent, have already given us a sort of scrambled jigsaw picture of what we can expect.
The pieces do not present a comforting picture however you make them fit.
Most of us will be poorer as a result – not due to income tax increases, which we are promised are not on the agenda, but as a consequence of the 2% VAT hike, the imposition of household charges and the likelihood that savings will be hit by a raising of the rate of deposition interest retention or DIRT tax.
Those already at the poorer end of the income scale will undoubtedly come under even more severe pressure as it is unlikely that – despite the intense efforts of lobby groups and the considerations of social justice – the Government will stay its hand totally from benefit curbs and removal of entitlements from the unemployed, medical card holders and other vulnerable sectors of society.
The cumulative effect of the Budget will be that life in Ireland will become a great deal more difficult in 2012 – and for the country to buy into such a bleak prospect it is essential that the Ministers for Finance and Public Expenditure hold out some hope for the creation of genuine employment opportunities.
The word ‘genuine’ is very important in this context.
In difficult economic times it is often the case that the ‘jobs’ governments boast of creating are not jobs at all in the sense that those who hold a dignified idea of the word’s meaning can relate to.
Employment opportunities that occupy a half-way house between the dole queue and the world of work, that are meagrely remunerated, of uncertain longevity and hold no real prospect of career advancement or equity of status are not jobs at all – and too often are the playground for unscrupulous employers who use them as a means of cheap labour lent dubious respectability by being tied into a State-instituted, and often State-sponsored, scheme.
The ground in this country at present is fertile for such exploitation – and the Government should be careful not to cultivate it by concocting initiatives that make for a good press release but deliver little to satisfy the aspirations of the unemployed – and possibly compromise their rights.
The oft-made argument that such work is “better than being on the dole” is deeply insulting to those people who have experienced loss of employment as a result of the scandalous economic mistakes perpetrated in this country over recent years.
If the Government cannot create genuine jobs, it would be much better diverting the expenditure it might be tempted to make on the sham ones into supporting retraining and further education opportunities for the unemployed, allowing them to enjoy the challenges, dignity and fulfilment of the learning environment while equipping themselves with the skills that hold out some hope of well-paid and stimulating work in the future.
Next week’s Budget can be none other than a tough one – but it must also be a fair one if the people are to rest easy with it.
Ministers Howlin and Noonan could incite a period of conspicuous social unrest if they unveil a package of measures that are all take and no give.

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