Tuesday, 8 October 2019
Financial Resolutions - Budget Statement 2020
We had a tale of two budgets presented by the Minister for Finance. It is the worst of times for working-class people: with eco-austerity in the form of a regressive carbon tax, no increase in social welfare rates, no increase in pensions, what looks like a postponement of a rise in a completely inadequate minimum wage, almost nothing in terms of real investment in public housing and literally nothing for renters. It is the best of times for the developers and the rich: with a budget marked by giveaways and tax breaks; the continuation of the help-to-buy scheme, better known as the help-to-profit scheme, for developers; the extension of the special assignee relief programme, SARP, and the foreign earnings deduction, FED, benefiting only the very top tier of income earners; and a preparation for a lot more tax and other giveaways to big business in the coming months. Whether under the guise of an economic crisis, an environmental catastrophe or the threats posed by a hard Brexit, the centre of policy remains fundamentally the same. The Government continues to act, in the memorable words of James Connolly, as a committee "of the rich to manage the affairs of the capitalist class". This means that it is always ordinary working-class people who pay the price for whatever crisis looms, while big business, the bankers, the developers and the rich are always protected or, if they cannot be, bailed out by working-class people.
Let us take the case of Diana, a young mother on the minimum wage who rents a flat with an oil heating system. She will receive no increase in her income. Instead, she will be hit by the carbon tax. She cannot qualify for retrofitting because she rents. In fact, if her landlord retrofits her flat, he may then try to renovict her. She will be hit by the nitrogen oxide tax when she buys a cheap old car, the only type she can afford. When her rent goes up, she will receive no assistance to deal with it because in the entire budget the Government allocated €2 million for renters in the form of funding for the RTB which is completely incapable of managing and policing the completely inadequate rent pressure zones. Given the reality of the housing market, if Diana's landlord tries to increase her rent by over 4%, she may feel she will have no choice but to accept the increase because of the reality of the shortage of available and affordable housing, given the crisis in the housing market, which will be deepened by the budget. She will still have a struggle in getting her child with special needs the education he needs. She struggles with mental health problems, faces massive waiting lists because the Government continues to under-invest in and to refuse to build the national health service that is necessary. It is the worst of times for Diana with this budget.
Let us compare Diana's case with the case of Dave the developer and landlord. The continuation of the help-to-buy scheme means that house prices will remain high and that he will continue to maximise his profits. The giveaway of yet more money through the HAP scheme and the RAS means that, as a landlord, he will receive another transfer, another chunk of wealth, from the public pocket. He can afford to buy an electric car and, therefore, avoid the nitrogen oxide tax and lower his carbon tax bill. He can also avail of the grant to retrofit his house. It is the best of times for him.
It is a joke that the Government tries to pretend that it is a champion of action on climate change. Enterprise and agriculture together are responsible for almost 50% of carbon emissions. These emissions have increased by almost 40% since 2011 and the targets for reductions in the climate action plan are extremely modest. Just last week, under pressure from protestors outside these Houses and Deputy Bríd Smith's Bill, the Taoiseach announced that he would stop future oil exploration. None of us was fooled, however, because it was clear that the Government would go ahead with gas exploration, even though study after study shows that gas is not a bridge fuel and should not be invested in as an alternative to oil and coal. The Government which now states climate action is at the centre of its budget wants to invest in one of the biggest liquefied natural gas, LNG, terminals in Europe in Shannon. It is investing in fossil fuel infrastructure that will be with us for decades and not just any fossil fuel but one of the dirtiest in the form of fracked gas. It is so dirty it is banned here, but the Government is happy for us to import it from the United States. It has no credibility on the issue of climate change, but it is pretending to be doing something by introducing a carbon tax which everybody accepts will be a regressive tax that will hit working-class people and those on lower and middle incomes much harder than the wealthy. In particular, it will hit the 28% of households who experience energy poverty and make precious little difference to carbon emissions. Carbon taxes simply do not work because people do not have choices. If people who live on the outskirts of Dublin are not provided with an alternative to driving into Dublin city each day, there is nothing else they can do. One can increase the cost of driving from County Meath to Dublin each day, but unless a viable public transport alternative is provided, they have no choice but to continue to travel by car. One study of 19 jurisdictions with carbon taxes found that it would take 110 years to reach an 80% emissions reduction target on the basis of a carbon tax. However, we do not have 110 years; we have about ten to turn things around radically. Instead, the carbon tax will be an excuse not to take the action that matters. It is no surprise that fossil fuel companies have increasingly become promoters of and lobbyists for carbon taxes because they pass on the cost to working-class people and mean that they can try to continue to avoid taking the action that is necessary, which is their being put out of business by deciding to leave fossil fuels in the ground.
This regressive carbon tax sits side by side with tax measures which have been explicitly designed only for the rich. Let us take the example of SARP. It is a tax relief from which one can only benefit if one is on a minimum basic income of at least €75,000 per year and assigned from abroad to work in Ireland. In other words, it is for highly paid executives brought into Ireland. Those who qualify for it can benefit from tax relief equivalent to 30% of their gross income.
That is a huge relief for the very highest paid people in society. Someone on €1 million per year would be getting a tax break of over €100,000. Not only that, these people get tax-free travel and tax-free education expenses for their children. The cost of this was almost €20 million in 2016. There are no more recent figures but it is likely that has increased significantly since then and will be higher again next year. That money does not come from nowhere. It is paid for by working-class people who are struggling to get by and the Government has decided to extend it, as it has done with FED.
As for housing, one would not know from the Minister's speech that we continue in an unprecedented and deep housing crisis. As Deputy Barry pointed out, more than 10,000 people have been officially homeless, and many more than that have been unofficially homeless, for more than seven months. Included in that figure are almost 4,000 children, who are growing up with the insecurity, disruption and fear of that situation and all of the impacts on their mental and physical health and development. The Government maintains it is purely pragmatic when it comes to housing and that it just wants to resolve the crisis whatever way it can. That is simply not true. The evidence of that is in this budget again. The Government's policy is deeply ideological. It is a neoliberal ideology that serves the interests of the developers and landlords it represents. Nowhere is that more obvious than in the fact that it is literally the developers who are writing the Government's housing policy. Just a couple of weeks ago, it emerged that the developers had written the strategic housing development laws. According to The Sunday Business Post,industry representatives said that the then Minister for Housing, Planning, Community and Local Government, Deputy Coveney, took their recommendations "lock, stock and barrel and stuck it into the new housing bill". In recent days, the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, wrote threateningly to Dublin City Council councillors to demand they vote for the privatisation of public land at O'Devaney Gardens instead of using it for public housing. Now the Construction Industry Federation, CIF, has written the budget on the extension of the help to buy scheme. This scheme was originally introduced at the request of the CIF back in budget 2017. Now it is extended, again at its request. The CIF is not concerned about first-time buyers getting access to homes. It is concerned about those it represents, namely, the construction industry and it is concerned about the maximisation of profits for it. This is a help to profit scheme to artificially prop up property prices, which takes €100 million per year, passes it through the hands of first-time buyers and then puts it into the pockets of developers, instead of using that money to build 500 public homes as part of an extensive public housing programme to build 100,000 public and genuinely affordable homes.
That would be a real action to help renters, as would the banning of evictions and the introduction of proper rent controls, backdated to 2011, so people can afford to rent. Instead, this budget provides only €60 million extra to build public homes, while more than €100 million is again transferred to landlords in the form of HAP and RAS payments. That is another transfer into the hands of private landlords from the public purse, which allows the Government to pretend to be tackling the housing crisis. As I mentioned, renters are facing some of the hardest conditions and in the entire budget, some €2 million has been allocated to them by way of the Residential Tenancies Board, RTB. There is practically nothing for them in this budget. They are being consigned to their fate within the market, which does not function for them.
What is the alternative? There was and is an alternative to all of the policies presented today by the Government, which Fianna Fáil says it has no alternative but to accept. It is not an alternative that was ever going to be taken by a right-wing Government and the developers', landlords' and big-business Government we have before us. It is an alternative a left-wing Government and a workers' Government would take. That alternative is to accept there are many crises facing the economy and society, from impending climate catastrophe and the impact of a no-deal Brexit to a coming new, global, capitalist economic crisis. Preparing for those crises and avoiding them means it cannot be big-business as usual, which we have here. Preparing properly means a radical break with the economically unsustainable model of Ireland as a tax haven for big corporations and breaking with the ecologically unsustainable model of agriculture that we have at present. Preparing for Brexit means a radical transformation from the current approach, yet the Government continues with big-business policies as usual. It means now is the time for a radical socialist transformation of our society.
To start with, a green new deal with socialist policies addressing environmental and social injustice by taking on the power of the fossil fuel industry and agribusiness is needed. A ten-year mobilisation of public investment to completely transform the nature of our economy, to ensure we are completely renewable-based in our energy use by 2030 is needed and we need to have a net zero-carbon economy by 2030. We must introduce free, green and frequent public transport, which would have a real impact on carbon emissions and would transform people's lives by offering them for the first time access to transport as a right, regardless of whether they live in a city or in a rural area. This would reverse the process of privatisation of transport and would ensure decent wages and conditions for all workers in the sector. This could be delivered at a cost of about €1.5 billion annually. We must introduce a green jobs programme with massive investment in renewable energy, providing jobs and retraining if necessary for those workers currently in Bord na Móna, and other workers whose jobs will be impacted by transitioning away from fossil fuels, to ensure no worker loses out in terms of jobs or income as a result of these policies. We must invest in a retrofitting programme for every single home in this State, and in a massive expansion of care jobs. We must make proper investment in our health service and build a national health service. We must begin a low-carbon public home building programme to resolve the housing crisis through the building of 100,000 homes in a three-year period. We need investment in education to resolve the crises that face people, particularly for children with special needs, and through the development of a national childcare service, free at the point of use. The cost on an annual basis of starting such a transformative programme would be €7 billion per year. We must shift to a sustainable model of agriculture. That means breaking and ending the control of big agribusiness and taking it into democratic public ownership, while ensuring no loss of income for small farmers by changing the nature of the grant system that has operated until now. It means a rapid transition from beef and dairy farming to sustainable agriculture, including a massive expansion of forestry and full support for small and medium farmers. The annual cost of this would be €1 billion. We must transition to a four-day week without loss of pay for workers. This would reduce carbon emissions by up to 16%, as well as transforming the quality of people's lives, as they would have a three-day weekend. This would have a cost of about €4 billion to the public sector.
The total cost of this, on an annual basis, would be €13.5 billion. That can be raised. The money is there and the resources exist within our society. It can be done by taking on the big polluters, instead of working-class people. It can be done by taking on the 100 corporations that are responsible for 71% of the carbon emissions on a global basis. Doubling corporation tax for big companies from 12.5% to 25% would raise €8 billion. Introducing a millionaires' tax of 2% on net wealth exceeding €1 million would raise €3.5 billion. Increasing employers' PRSI would raise €2 billion and increasing income tax for those earning over €100,000 per year would raise €2 million. The resources are there to transform our economy and to transform people's lives.
A green new deal and a rapid and just transition mean more than just a programme of eco-stimulus or eco-investment instead of eco-austerity. It means ending the private ownership of the key sections of the economy and bringing them into democratic public ownership in order that the economy can be planned for sustainable improvements in people's lives and for transition to a zero-carbon economy. For such a programme, we need a left-wing Government serving the interests of working-class people, renters, unemployed people and pensioners etc., rather than serving the interests of developers, landlords and big business. We need a Government that is willing to stand up to the capitalist big-business interests that block the change we need on every single front.
Faced with a right-wing Government, and a right-wing supposed Opposition party in the form of Fianna Fáil, which agrees with the direction of this budget and allows this budget to pass, that can understandably seem like a distant prospect to people. However, we should all remember this remains a weak Government. It is a Government which has been repeatedly forced to do things it did not want to do because of movements outside of this Dáil, from the scrapping of the water charges to the repeal of the eighth amendment.
Such a movement is developing again right now. Extinction Rebellion protestors are blocking the gates of Leinster House and there is an Extinction Rebellion camp with significant numbers of people in it in Merrion Square at this very moment. There will be protest actions throughout this week at which people will demand that the Government tells the truth, takes the necessary action and implements a just transition. If people continue to mobilise, and particularly if the power of the working class is brought into play by building towards a day of global climate strikes, such a movement can do more than win concessions. It also demonstrates the power of people and allows us to envision how society could be very fundamentally changed.
The Minister for Finance repeated the words he has uttered on numerous occasions about the centre of Irish politics holding. In reality, the centre that the Minister and the establishment correspond to is a very extreme neoliberal centre. What kind of centre stands over a budget that hands so much money over to landlords and developers and does nothing for renters? It is an extremely neoliberal and economically right-wing centre. The repetition of the idea of the centre holding is the Government whistling to comfort itself when it sees all of these crises facing its system in the period ahead. It is an attempt to kick the can down the road. The capitalist road only goes so far. It very clearly ends in a cliff of misery and climate chaos. People will ultimately refuse to go down that road with the Government and they will not allow it to drag society down with it.
Capitalism in Europe and in Ireland has not overcome the contradictions that exploded in the crisis of 2007 and 2008. Those crises will re-emerge with dramatic vengeance in the coming months or years. The capitalist system is identified more and more by millions of protesters worldwide as the cause of the climate catastrophe. That will be combined with a new economic crisis. It is very clear that the only answer offered by all the parties who stand for the rule of profit will be for working class people to pay again. It will be another round of austerity. However, this will come at a time the economic and political reserves of capitalism have been exhausted. They have been expended on dealing with the previous crisis and have not been replenished, as indicated by the relative decline of establishment parties across the world. This will create new waves of struggle, new radicalisation and new possibilities of building a mass left-wing party in this country, one that can put a truly left-wing Government with socialist policies, a Government serving the interests of the majority instead of the tiny rich majority, on the agenda.