Paul Murphy (Dublin South West, Socialist Party) | Oireachtas source

The rationale for the Irish Fiscal Advisory Council's call for yet more austerity is given away in one of the first few key messages where it states, "Maintaining the fiscal discipline required to achieve large primary budget surpluses will become politically harder following a long period of fiscal consolidation and as crisis memories fade". What we have there is an open, honest admission of what has been the strategy of the troika, of the previous Government and of this Government. It is to use so-called "crisis memories" to restructure the economy further along neoliberal Thatcherite lines, which was already the plan of these right-wing economists and the Government to start with. It is an classic example of what Naomi Klein called the shock doctrine, that one uses the shock of a capitalist crisis caused by neoliberalism to further embed that system in Ireland and right across Europe. It is what has been happening economically where economies have been restructured further along neoliberal lines. In this country, there have been €30 billion worth of extra cuts and taxes. There has been a driving down, or at least a repression, of labour costs right across Europe and a driving of privatisation. That is on an economic plane. The shock doctrine also takes place on a political plane with a conscious attempt to undermine the democratic rights of people, including the democratic rights of Government to determine economic policies. That is why in the course of the crisis there has been economic decision-making power shifting, from elected Governments with all their faults to unelected bodies, such as the European Commission and the European Central Bank. It is why there has been austerity written into law and, in some cases, into constitutions in terms of the fiscal treaty, the six-pack and the two-pack. It is why the Commission has been given the right to fine member states that do not implement enough austerity. It is why there has been the removal of elected governments in Greece and Italy and their replacement openly by governments for bankers by bankers. The is what is happening.

A key part of that is the establishment of so-called "independent" bodies. The establishment of independent central banks predates this economic crisis, but it is a central tenet of neoliberalism. It is the idea. The reality is that they are independent of any democratic check and any accountability to ordinary people, but dependent on the same right-wing economic ideas that serve the interest of the 1% at the expense of the 99%. The likes of the Fiscal Advisory Council play exactly the same role. Their job is to play a role in what is the technocratisation. It is to say that economic policy is no longer a matter of debate, between right and left, about acting in the interests of working class people versus acting in the interests of big business - one can make an argument about trickle down, etc. It is to say that there is no longer a debate between all the neoliberals, with Fine Gael, with Fianna Fáil, with Labour, with the Keynesians in Sinn Féin and with socialists such as some of us in the Technical Group and in the Anti-Austerity Alliance, and instead it is a choice between right and wrong, between responsible and irresponsible. That is given clearly in the first sentence in the introduction of the Irish Fiscal Advisory Council's statement on the budget, which states, "In recent years successive governments had little choice but to implement an enormous programme of fiscal retrenchment against a backdrop of an already weak economy and labour market". According to the council, there were no choices and the Government made the only choice it could make, which was to impose austerity. That is the job of the council. It is to remove political debate about economic policy and to say the only course is even more austerity than the Government wanted to implement this time around.

When there is a genuine left Government, the Irish Fiscal Advisory Council, if there still is one, will say that the Government cannot repudiate the debt, that is, the banking debt, and that to do so would be entirely irresponsible and would spook the financial markets. They will say the Government cannot invest significantly to build houses because that would distort the property market and one could not distort the property market. They will say the Government cannot provide invest public investment to create jobs to go some way towards solving the unemployment crisis because that would displace private investment because, whether they do so consciously or unconsciously, the fact that they are completely tied to right-wing neoliberal economic ideas means they service the interests of the 1% at the expense of the rest of us.

To look concretely at the advice of the advisory council this time round, the main advice was to go for a full €2 billion in austerity. It was to hit it hard, first, because Irish people are so stunned that they can still take it - that is basically there in the document.

The second reason was to send a strong signal to the financial markets. Of course neo-liberals always like to think about the financial markets and what signal we send to them. The third reason was because of the debt, which it hints is barely sustainable. The third point is the only one on which I am in agreement with the Irish Fiscal Advisory Council because it is a decision of the Government for political reasons to overstate the sustainability of the debt and how quickly it will reduce. The Government’s projections will be proven false by events. The only response of IFAC to that is austerity because it completely rules out any notion that one could repudiate the debt.

One could ask where IFAC thinks the debt came from. The second sentence refers to the huge increase in the Government deficit, mounting bank losses partly funded by Government expenditure and the State’s eventual loss of market creditworthiness which necessitated the introduction of tough measures to repair the public finances. The first responsibility is placed on a huge increase in the Government deficit, but that is part of the lie that is put by the Government, the troika, the Commission and right-wing governments throughout Europe to rewrite the history of the economic crisis which started with the bailout of the banks. Ireland had a debt-to-GDP ratio of 25%. Portugal and Spain all had low debt-to-GDP ratios. Ours was lower than the ratio in Germany. The only reason it ballooned was due to the massive bank bailout, the collapse of an unsustainable system built on the interests of developers and bankers and the fact we decided to bail them out. That is where the debt and the crisis come from rather than it being due to the lie that is continually peddled that we were spending too much on public services.

The IFAC gave me a laugh in stating that the coming years would demonstrate whether Ireland has learned from past mistakes and if it will take the actions necessary to break the historic cycle of boom and bust. Does it not remind one of the hubris before the current economic crisis that right-wing economists think there is a way to avoid the cycle of boom and bust? The system of the Government and IFAC is one of boom and bust. If we want a break from boom and bust, the only way to do so is to break from the domination of the 1%, for public ownership of the financial institutions, which should be run as public utilities in the interests of ordinary people, and democratic planning to have sustainable, economic and environmental redevelopment.

See this speech in context