IN A third attempt within six months to save bankrupt Irish capitalism, Taoiseach Brian Cowen’s Fianna Fail government unveiled a draconian budget on Tuesday, raising taxes, imposing financial levies, cutting public works and services, and slashing welfare benefits.
This austerity budget is reminiscent of measures imposed in the Depression during the 1930s.
Attempting to justify the €3.3bn package of €1.8bn of added taxes and €1.5bn in cuts in public services and welfare, Finance Minister Brian Lenihan said: ‘The problem is our expenditure base is too high and our revenue base too low.’
Workers and middle class people earning €E15,000 to €75,000 will pay a two per cent income tax levy. Those earning over €75,000 will pay four per cent and those getting more than €175,000 six per cent. (£1=€1.1)
This falls heaviest on the low paid and is effectively a €7 a week pay-cut for those on the minimum wage. A family with a single wage-earner, getting €E40,000 a year, will be €9 worse off every week.
More workers will have to pay PRSI, like national insurance in Britain, as the income ceiling is raised from €52,000 to €72,000.
The €1.5bn in public spending cuts hits the poor hardest.
Jobless youth under 20 will see their unemployment benefit slashed in half from €204 to €E100 per week. The early childcare allowance will also be cut by half at the end of the year, hitting young families. The special Christmas payment to those on benefits will be axed.
Road and rail projects worth €3.7bn over the next two years are to be frozen.
Public sector workers are suffering a ‘double whammy’, with tax increases coming on top of the 10.5 per cent pensions levy on their salaries, imposed in February when the Dublin government slashed public spending by €1.8bn.
Cowen’s Fianna Fail government is taking billions out of the pockets of working-class and middle-class families and decimating public services, while handing billions over to the bankers and other capitalist parasites. Tuesday’s package earmarks €80-90bn to set up a government agency that will take ‘bad debts’ off the banks.
All of the measures of the Cowen government cannot disguise the catastrophe engulfing Irish capitalism, or solve its crisis. The economy is expected to contract by 7.7 per cent this year, the largest drop in western Europe.
Tax revenues have dropped from €47bn in 2007 to €E35bn this year and government borrowing is set to be 10.75 per cent of GDP. The national debt will rocket from 33 per cent of GDP in 2008 to 70 per cent by 2013.
Cowen, Lenihan and company can brazenly announce huge cuts in pay, welfare benefits and public services, because they have received encouragement from the leaders of the Irish Congress of Trades Unions (ICTU), who called off national strike action on March 30.
The ICTU leadership is collaborating with the government and employers through talk about the ‘Transitional Agreement’, which both the government and the bosses have binned.
It was clear from the response to the March 30 strike call, the 120,000-strong demonstration in Dublin on February 21, and occupations at Waterford Crystal and Visteon in Belfast, that the working class in Ireland is determined to fight to defend jobs, pay and welfare benefits.
Workers can see that they have to defeat the employers and the bankers’ governments of Cowen in Ireland, and Brown in Britain, if they are to prevent themselves being swamped by the catastrophe of the crisis of capitalism.
It is clear that workers in Ireland can only secure their future, and that of their families, through a general strike struggle to bring down the Cowen government and establish a workers’ and small farmers’ government, that will nationalise the banks and major industries, and establish a socialist planned economy.
Such a struggle requires the building of a revolutionary party in Ireland, a section of the International Committee of the Fourth International, in a struggle to remove and replace the corporatist leaders of the ICTU unions.
In this struggle, workers in Ireland have a strategic ally, the working class in Britain, which is locked in a fight to defeat Brown’s bankers’ government.
