PACUB received a response from Green TD, Paul Gogarty, this morning after founder Treasa Dovander wrote to him about our opposition to proposed cuts in child benefit. Depressingly he closely followed the Fianna Fail mantra: Unfortunately we need to reduce the €22 billion we borrow every year to keep things going and this requires some tough but necessary decisions.
I do believe he is correct when he says that the deficit needs to be reduced as I don't know enough about international finance to tell what would happen if Ireland just carried on gaily with the current regime.
And economics is such an inexact science! Very hard to predict what will happen, because there is always the chance of a shock - such as the collapse of Lehman Brothers.
But, cutting spending is not the same as reducing the deficit. It depends on the type of spending. Currently the Government seems to be looking at putting the bulk of their planned cuts in the easiest places, where they can just cut with the stroke of a pen - and they are cutting the incomes of the 'spending' classes, thus just taking money straight out of the economy, With knock on effects on expenditure, VAT receipts, jobs, income tax receipts, social welfare claims etc.
Ideally the problems with the tax base (ie dependence on stamp duty, capital gains tax etc) should have been tackled in the good times. At the very least, more should have been done in the April budget.
Some people are saying that the rich need to pay more tax. But I'm not sure that increasing income taxes on high earners is the way forward - experience appears to show that increasing income taxes can reduce the tax take and vice versa. But as has said before, there are plenty of other ways to tax the rich and reduce the number of tax shelters available to them.
Even though so much time has passed it doesn't look like the Government has come up with any creative solutions that would help preserve jobs and incomes and also close the deficit. They have an army of people in the civil service - many very intelligent people who care about the future of this country - who should have been encouraged to work on solutions. Earlier this year websites were set up to allow the public to contribute ideas of how to save money and reduce waste, and radio stations did similar. There has been no response from the Government as to whether they took on board any of these ideas.
We know that there is money pouring into NAMA, into the National Pension Reserve Fund, into administration in the HSE, all the levels of local Government, Quangos and many Government Departments - why is there a huge Department of Health as well as the HSE? Why are more prisons being built? That has to be the most costly way to punish someone for not paying their TV licence...why can't they do community service instead. Or make it fit the crime. They could mow the grass on the Donnybrook campus!
There is about €87 billion in savings. There has to be a way of tapping into that. Can DIRT be increased with an exemption for non-tax payers and pensioners? To fit in to the green agenda, put more financial inducements in place - perhaps tax relief - to put in solar panels etc, though you would need a regulator to avoid builders simply putting their prices up.
Then there is a need to reduce costs in the economy, such as the utilities, and professional services. If these are cheaper, it will encourage investment.
Reduce bureacracy and help small businesses - where has the talk gone of a Government Bank to help small businesses with loans? What about the proposal to provide some funding to help people to stay in genuine jobs?
I think that imaginative expenditure cutting, genuine reform and intelligent stimulus would be far more effective and would provide what Ireland really needs right now: a Happy Christmas and a hopeful New Year!
