Dire Ireland


Fine GaelIreland is drowning in debt. The election last week was all about that debt and how — or whether — to repay it. Current government expenditure is about 50 billion euro; the tax income is 31 billion euro.

The two main political parties, Fianna Fail and Fine Gael, are both conservative parties and both proposed broadly similar policies: bridging the gap between income and expenditure primarily through spending cuts rather than tax increases.

In the past three budgets, the gap has already been cut by 14.5 billion and a further 15 billion euro has to be found over the next four years.

Social welfare recipients have seen their payments reduced by almost 10 per cent, all public sector workers have seen their wages cut, the minimum wage has been reduced by 12 per cent and spending on public services has been cut, resulting in closure of services and longer waiting lists.

The low-paid have been brought into the tax net and unemployment has soared to 13.5 per cent, hitting young people particularly hard. Emigration has soared: 150 people, predominantly well-educated and skilled young people, are expected to emigrate each day over the next two years; not only because they have no jobs, but because they have no hope.

On top of that, there is bank debt. Ireland's banks borrowed heavily from other European banks to fuel the property boom on which our wealth was increasingly dependent. Now that the property market has collapsed, the European banks want their money back. Irish bank debt is estimated to be 60 billion euro, with some economists suggesting it will rise to 100 billion euro.

In September 2008, the government guaranteed to cover the banks' losses. The financial markets consider Ireland a basket case and refuse to lend except at unrealistically exorbitant interest rates. An EU/IMF bailout fund of 85 billion euro is all that stands between Ireland and ruin.

The bank guarantee is a huge bone of contention: many believe Irish taxpayers simply cannot afford it; others argue that taxpayers should not be asked to bail out private investors. What is certain is that future generations will still be paying back the money this generation now owes.

There are several unknowns ahead. One is the level of economic growth. Without significant economic growth in the next few years, our ability to meet our commitments is seriously in doubt, and even further savage cuts in essential services will be required.

Another unknown is the extent of mortgage default. An increasing number of home owners are in negative equity, have lost their employment and are incapable of repaying their mortgage. This will increase our bank debt even further.

And many small and medium sized businesses are in serious trouble, due to the inability or unwillingness of the banks to offer credit. They may not survive, leading to further unemployment and a further depression of the economy.

These unknowns may create a further 5 billion euro gap between income and expenditure.

This was the backdrop to the election. The poor, the sick and the vulnerable have borne most of the pain over the past two years and current policies will continue to inflict a lot more.

Drug and homeless services have been cut, while drug misuse and homelessness increases; family support services, respite services for people with mental or physical disabilities, special needs teachers in schools, support services for traveller children, and a range of other services for vulnerable and marginalised groups have been cut, even as poverty increases.

Many middle-class people who had good jobs, homes and an expectation that their children would find well-paid employment in Ireland, have seen their jobs disappear, their incomes reduced, and their mortgages increased. They fear losing everything, even their children to emigration.

There is huge anger at the dominant political party, Fianna Fail, which has been in power for all of the Celtic Tiger years and whose disastrous policies are responsible in large part for the mess we are in.

There is huge anger at the exorbitant salaries that Government ministers and senior civil servants enjoy (Ireland's Taoiseach gets paid more than President Obama!) and the sizeable retirement benefits to which they are entitled, even after bringing the country to ruin.

The election results show Fianna Fail's representation in parliament dropped from 78 to 20, its worst result ever. Many high-profile cabinet ministers lost their seats. The party now has only one seat in the whole of Dublin.

But Ireland continued to vote for conservative parties. Fine Gael has topped the poll with its best ever results, over 70 seats. It will seek to form a coalition with the centre-left Labour party, which is so slightly left that it will have no difficulty in agreeing a common policy with Fine Gael.

There is little support for left-wing parties or policies in Ireland. But they soaked up some of the protest vote and did better than in previous elections.

The big question now for the new government is: does it continue with a series of austerity budgets over the next few years which will decimate essential social, health, housing and education services, or will it reschedule Ireland's debt or even default.

In my opinion, Ireland's debt is so enormous that, without a radical change in EU policy, it will have to default — which may put the EU currency at risk of collapse.

 Peter McVerryFr Peter McVerry SJ has been working with Dublin's young homeless for more than 30 years. He is the author of The Meaning is in the Shadows and Jesus:Social Revolutionary?, both published by Veritas.

Topic tags: Peter McVerry, Ireland, Fianna Fail, Fine Gael, Celtic Tiger, Dublin, Taoiseach



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Existing comments

Ireland went further than most in adopting the world-wide fashion of over-reliance on the 'free market'- and the construction of thousands of unwanted houses. Widespread trouble and disruption of families has been the result.

The lesson to be learned by us all is the need for a reasonable degree of government regulation in the use of limited resources rather than over-dependance on the aim for quick profits.

To some extent, the same is happening in Australia with the construction of many over-sized houses intended for 'capital gains' profits - rather than the building of modest houses for the many families in need of a home.

Bob Corcoran | 01 March 2011

I thank Peter McVerry for his sobering article but I think he does a slight disservice to the efforts of Sinn Fein in the recent election. Despite only running 41 candidates in constituencies it picked up 13 seats and is now positioned as the genuine leftist party in the Irish political system.

With a likely coalition government between Fine Gael and the Labour Party and the political destruction of Fianna Fail in terms of both its seats and its legitimacy as a political movement, Sinn Fein is the main practical opposition party in the Dail. It is the party in the ascendency and the one to watch.
Tom Cranitch | 01 March 2011

Tom Cranitch, i agree with your sentiments and think the article in general fails to highlight that there is a growing support for the Left in Ireland. Not only did Sinn Fein do very well by tripling their representation in the Dail but also this election saw the entering of numerous left groups, most high profile being the Socialist Party and Joe Higgins. The United Left Alliance ran 20 candidates and had 5 of those candidates elected. This is not just a protest vote this is people voting for a far-left alliance which now has a very similar representation in Ireland in the Dail and Local Council as the Greens had. Not only that but the United Left Alliance were not even registered in time to appear with their name on the ballot. All in all i would think they got a very good result. it will be interesting to see the next election and how much the left vote will increase on the 2011 results with the 2 left parties acting as the main legitimate opposition.
Matthew Holloway | 01 March 2011

This sounds just like the United States' situation. The governor of Wisconsin wants to dismantle the Unions' bargaining rights, and working people are protesting to stop this from spreading to the other states. I try to recall the parable of the loaves and fishes, and that Jesus told the apostles to feed the people. We have a responsibility today to distribute resources in a just manner, with a preferential option for the poor. Jesus said so. Let's all do it. Amen.
Mercy Michalski | 01 March 2011

Peter. So where are the voices of the Church condemning these predators of the poor? Where are the voices of the Church about the need to reform the electoral system in Ireland? At present your voice seems to be the only voice saying something about the situation but it needs some voices at another level in the Church and perhaps there may be voices in the parliament and/or the media?
Laurie Sheehan | 03 March 2011

I would disagree with the comments of your columnist claiming that the Irish Labour Party is only slightly left wing in outlook.There is considerable support in the Labour Party for the legalization of abortion right up to full term for any reason whatsoever.
John Tobin | 04 March 2011

People cling to conservative governments when they are frightened. Conservatives represent a "don't rock the boat" attitude. Social justice, social democratic, left wing politics represents major change and rapid change. Frightened and threatened people are incapable of embracing that.
graham patison | 20 March 2011


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