Mick Wallace (Wexford, Independent) | Oireachtas source

Whenever a budget appears a critical question must be asked. Does the budget seriously address the massive levels of inequality in our society? Does it make a genuine effort to close the gap between the top 10% and the bottom 10%? Sadly, the answer today, as with previous austerity budgets, is "No".

A few days ago, I found a page from The Guardian which I had kept from 8 December 2010, the day after the last budget of the Fianna Fail-Green Party Government. The headline was, "Poor Pay Price of Saving Ireland's Economy". The article went on to say:

During the budget debate in the Dáil, Fine Gael spokesman on Finance, Michael Noonan, accused the Fianna Fáil-Green Party Government of being socially blind and said the budget was soft on the rich and hard on the poor. Michael Noonan added, "This is the budget of a puppet government doing what it is told by the IMF, the EU and the ECB".

He was right.

Irish Labour Finance spokeswoman, Joan Burton, said the winners in the budget were the bankers, both foreign and Irish, who were hoovering our money. She said responsibility was not being borne by reckless lenders or those who lent to them. She said the budget would leave Irish society more divided than ever.

She was right.

That same month, as they prepared for an election, Fine Gael said a recurring residential property tax on people's homes would be unfair for a number of reasons.

The party said it would be difficult for asset rich but income poor households to pay, particularly the elderly and the unemployed, and that it would be deeply unfair for a young generation who paid exorbitant amounts of stamp duty and VAT on the purchases of over-valued houses, many of whom are now in negative equity. Once again, Fine Gael was right. Within three months, Fine Gael and the Labour Party were in power and how power changed everything. The people of Ireland voted for change, but they did not get it. They got lots more of the same. The gap between what politicians say they will do and what they do in reality has been well exposed.

The injustice of how the pain has been shared is breathtaking. The Government's decision to allow a neoliberal philosophy from Europe to shape policy has seen the most vulnerable suffer most. We are also witnessing the development of a new poor from the ranks of the middle class. We have reached a stage in Ireland where the majority of people are struggling to pay their household bills - over 50%. Only the best off have been spared. Offering support for families that need it should be seen as a function of society and of Government. For too long politics has capitulated to the idea of evaluating outcomes when often the parts that work cannot be counted and the parts that can be counted do not work.

Today, unemployment haunts Ireland as massive emigration helps to keep the figure below the 500,000 mark. The people of Ireland care more about the jobs deficit than about the budget deficit. Austerity has failed and fiscal consolidation has failed to spur growth or tackle unemployment. Growth requires financial investment, investment that does not suit the political thinking of our masters in Europe or our own Fine Gael-Labour Party Government at home. Basic economics teaches us the best way to cut borrowing levels in the long term is to get people back to work. As John Maynard Keynes put it, look after unemployment and the budget will look after itself. Europe's crisis, however, is not just about economics. Unlike GDP or inflation, unemployment is the only major economic indicator that measures real human beings. Unemployment is not a price worth paying. Sadly, at the moment Europe has a different idea, and Ireland has a different idea.

What has been happening in the past few years is nothing short of a complete rewriting of the social contracts that have existed since the Second World War. In these contracts, renewed legitimacy was restored in the capitalist system after it had been discredited by the Great Depression. In return, they provided a welfare state that guaranteed minimum provisions for all those burdens most citizens must contend with throughout their lives, such as child care, education, health, unemployment, disability or old age. The path we are now taking does not put the interests of people first. We are looking at a system with deep structural inequalities and a rigid adherence to a failed economic ideology that protects neither democracy or human rights.

Our domestic economy is struggling to breathe and the Government says there is only one way to deal with it, but there is always an alternative. Another world is possible. Cutting the deficit is vital but it must be done at the right time and in the right way or it will make things worse. Austerity is squeezing the life from the economy at the very time it needs more oxygen. It is squeezing the life out of the people. There is nothing inevitable about high and growing inequality. Different paths chosen by others bear this out. Nations can choose to be high tax with good social services, like the Nordic countries, or follow the American model of the survival of the fittest. Austerity economics pretends there is no alternative.

A recent OECD report, Divided We Stand, noted that in the western world, the gap between the incomes of the top 10% and the bottom 10% has multiplied by a factor of 14 in the past 25 years. The experience in the West has shown that social mobility happens least where incomes are most unequal. When the fate of young people is fixed by their parents' fortunes, it reinforces the vicious cycle of poverty. The widening wages gap, and the emergence of a winner takes all culture, has been worsened by cuts to benefits as low incomes fail to keep pace with the rise in earnings. Former US Treasury Secretary Lawrence Summers, hardly a left wing thinker, recently said that the principal problem facing the developed world is the strong shift in the market reward for a small minority of citizens relative to the rewards available for most other citizens. In Ireland, much progress was made on taking children out of poverty but the austerity budgets of the past few years are undermining that progress. They are forcing children back into poverty. It is not possible to reduce child poverty at the same time as cutting child benefit. How do we measure the savings against the long-term costs? What is the cost of child poverty? This is false economics. It fails the economy, it fails society and it fails the people.

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