Heads they win, tails we lose… Budget or not guess who is looking after their class interest…

This being Budget day let’s start the day by looking not so much at that event/catastrophe though an open thread will be here soon, although note in passing the following from Stephen Collins this morning: The impact of the budget will be felt most keenly by taxpayers on low incomes who will be brought into the budget for the first time and by people dependent on social welfare.

But let’s first consider what the outline, at least in part, of the next four years are likely to be, Budget or no. What sort of society, in other words, will be we be living in?

The Fine Gael plans, as outlined on Saturday in the Irish Times, certainly provide food for thought. Consider what they represent.

The party puts the emphasis on cuts rather than taxes: a three-to-one ratio in 2011; and a two-to-one ratio between 2012 and 2014. It is against any increases in income tax. However, an increase in Dirt tax from 25 per cent to 30 per cent – to encourage consumption – will yield €125 million next year. The party says the four-year plan’s doubling of carbon tax is too punitive, arguing for an eventual increase to €25 per tonne.

This site has already referenced many times the IMF research which demonstrates that the effectiveness of cuts over tax increases are so marginal as to make little effective difference. As leftists with a strong belief in the maintenance and extension of public provision the idea that – even if one accepted the orthodoxy – one would reify the latter over the former given that information is anathema to our analysis. It hardly needs to be spelt out in any great detail again the pernicious effects of further whittling away social and public provision after a succession of harsh budgets over the past two and a half years.

And this demonstrates more clearly than one might expect precisely what class interest Fine Gael is aligning with. It certainly isn’t with those who are to use that enormously irritating and condescending phrase ‘most vulnerable’.

Consider the following:

The party says a €6 weekly cut in social welfare should be imposed next year, rising to €18 by 2014. The welfare cuts would yield €216 million next year and some €650 million by 2014. Pensioners, the blind, the disabled and carers would be excluded from cuts.

At a time when the numbers in unemployment are now so great to impose further distress upon them is almost incredible. This is followed by the bizarre approach of the following:

One of the more ambitious elements of the plan is the proposal to save €1 billion per year by an “all-out war” on social welfare fraud.

What’s clear is how levels of social welfare fraud are – generally speaking – relatively low. And Fine Gael know that. Know that how? Because they sit on the joint committees quoted above (in this instance Olwyn Enright and Seymour Crawford), they know the facts, they know how overstated the issue is. And yet despite that we hear such empty rhetoric as a ‘war’ on social welfare fraud. Whatever else about this state social welfare fraud is not one of our greater and more pressing problems. The unbelievable lack of energy, or martial endeavor, turned towards white collar crime is a further exemplary demonstration of priorities that target those on less and deflect attention from those with more.

Consulting the Autumn 2010 edition of LookLeft magazine from the Workers’ Party I read in an article by Justin O’Hagan that:

In 2002 the Revenue Commissioners had eight full time officers backed by a support staff of 22 working on Ansbacher and related investigations while the office of corporate enforcement had a staff of 38. During the same period a staff of more than 600 at the Department of Social and Family and Affairs was dedicated to investigating and preventing social welfare fraud.

O’Hagan continues:

One might expect from this that welfare investigation brings a greater return to government coffers, but if recent evidence from the UK National Fraud Authority is anything to go by, tax evasion by the rich is 15 times greater in extent than welfare fraud by the poor and desperate.

Perhaps O’Hagan overstates the case, perhaps there have been rapid improvements in the last three years. And then one reads that:

In the recent 10 year period the Republic has seen 3,183 prosecutions for welfare fraud worth €43 million, leading to 48 million jauled for 12 years in total. In the same period there were only 39 prosecutions for tax evasion worth €2.25 billion [a related issue is white collar crime more broadly. Some might be surprised how many get away with such crimes because companies are unwilling to prosecute due to the impact on their image of internal fraud. I’ve directly seen cases of that myself in the private sector – wbs].

But it is also strikingly at odds with the research in the area. This isn’t just a matter of weighing up different approaches, but of taking a profoundly ideological approach, one which from the start believes that, for example, the public sector is over-staffed, and so on. Is the Irish public sector overstaffed? Given the figures available it would seem not to be in EU and broader international terms. The effects of such cuts on service provision appear near incalculable. Beyond that whether in the context of a fierce recession/depression it makes sense to make more unemployed is open to question.

Certainly in the absence of a private sector that can absorb even the job losses currently incurred the idea that yet more workers will be put out of work is lamentable, and entirely counterproductive.

Among the other measures is a temporary cap, until 2014, of €200,000 on all public sector salaries. This would include politicians, consultants and chief executives of semi-States upon renewal of contracts. The party said it would ensure judges took pay cuts.

To be honest €200,000 seems remarkably and overly generous, and yet, in the private sector the heads of large scale organisations often earn multiples of that. Which raises a neat little paradox, given that the public sector is told to be more like the private sector it seems curious to try to impose limits like that. Or is it that the public sector really isn’t like the private sector – something argued here before, in which case the delineation of what is appropriate must take a different course.

Most concerning is the reality that short of some catastrophic political rupture the inevitability of Fine Gael in government after the next election is now so great as to be undeniable.

And here’s a thought. A lot of fire is being, rightly, brought to bear on Fianna Fáíl. This is as it should be, particularly in advance of the election. But the proposals from Fine Gael are hardly any less reactionary than those currently implemented by FF/GP and in some specific instances as seen above arguably more so.

There is a pressing need to show just how reactionary they are, particularly as the Labour Party, sotto voce, cosies up for a five year term with them.

How that particular marriage will function will be educative, not least in terms of how many of the proposals emanating from FG are softened even slightly, though surely none have any illusions as to the Labour Party’s radicalism. But given that the LP positions are far from maximalist… very far indeed… whatever joint platform is unlikely to be regarded positively by many of us on the left.

But these policies put forward by Fine Gael are, as much as the bank guarantee was by for Fianna Fáil, akin to a document of surrender to commercial interests and point to yet further commercialisation of this society and the hollowing out of the very concept of public provision.

And it’s difficult to read through these policies without profound concern for the future.