Social Justice Ireland meets with Oireachtas Committee on Finance

Social Justice Ireland believes a fairer future is possible and deliverable. It is crucial however that Government’s decisions and the terms of the bailout agreement with the IMF/ECB/EC should be focused on delivering such an outcome. These were key fundamentals for Budget 2012 presented to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform by Social Justice Ireland on November 2, 2011.

The Social Justice Ireland delegation went on to make the following points in the course of a wide-ranging presentation and discussion.

The adjustments required and the decisions taken should all be in the context of reaching a future that is fair, just and sustainable. As well as this it is essential that the pathway towards such a future must itself be just and fair.  It is essential therefore that the decisions taken in the context of Budget 2012 take some key steps towards such a future and do so in a fair and just manner.

The present approach is not working

Budget 2012 is being framed in the context of a severe recession from which Ireland is slowly emerging. The IMF/ECB/EC Bailout agreement and conditions are being honoured and met by Ireland but the promised outcomes are not materialising:

• Economic growth is not reaching the forecast targets.
• Jobs are not being created on the scale required.
• Unemployment is not falling at the rate envisaged.
• Finance is not available on the scale required for small and medium enterprises.
• Essential services are being reduced to such an extent that the health and well-being of citizens is being put at risk.
• Those who are poor and/or vulnerable are bearing an inordinate share of the pain of the adjustment process.
• The Community and Voluntary sector, often the place of last resort for many vulnerable people has seen a huge demand for its services. At the same time its funding has been reduced dramatically.
• The essential infrastructure that supports the delivery of public services is being eroded with very serious long-term implications.

Social Justice Ireland highlighted three key problems in the current situation:

• Growth won’t reach the level projected for 2012 which underpins the calculations in the Bailout Agreement.
• Domestic demand continues to fall.
• The infrastructure that supports the delivery of public services is being eroded.

Social Justice Ireland  believes the Bailout agreement requires too big a set of changes to be produced at too fast a pace with harsh consequences.

These factors are combining to undermine economic growth and, in turn, undermine any potential for recovery.  In essence, the adjustments being imposed would require the economy to reach Celtic Tiger growth rates to have any prospect of recovery, or to achieve the job creation and other targets contained in the timeframes proposed. This is not a credible option given where Ireland and the EU/World Economy is currently and is likely to be in the years immediately ahead.

Elements of a solution

Later in their presentation Social Justice Ireland outlined a range of concrete proposals on both income and expenditure. However, they first drew attention to a number of initiatives at the macro level that Ireland should take:

• Some of the debt should be written down.
• Unsecured bond-holders should not be paid
• A new state-backed bank should be established to provide finance to SMEs

Budget 2012 and beyond

In a 20-page Policy Briefing on ‘Budget Choices’ Social Justice Ireland outlined a detailed set of costed proposals within the overall parameters Government and the ‘troika’ have set for Budget 2012. While these reach the same bottom line in terms of reducing borrowing in 2012, the choices on how to reach the target that Social Justice Ireland outlinee were different to those set out in the Bailout Memorandum of Understanding Ireland has with the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC).

Social Justice Ireland takes a different approach because, in addition to the problems already identified, the measures contained in the Memorandum:

• fail to protect poor or vulnerable people;
• continue the process of dispossessing poor people so that bankers and bond holders may be repaid in full, a process we consider to be profoundly immoral and unjust;
• provide no investment to help generate economic recovery.

There are serious doubts concerning whether or not the future set out in the Memorandum’s targets and outcomes can in fact be achieved in the changed national and international circumstances. Likewise there are doubts that the pathway set out in the Memorandum is either fair or just.

When meeting the troika in July and again in October of 2011, Social Justice Ireland was assured that different pathways were acceptable as long as they reached the required borrowing reduction.

The major differences between Social Justice Ireland's proposals and the Government/troika’s are:

• The borrowing reduction target is achieved by tax increases and expenditure reductions on a ratio of 2:1 the opposite to the Memorandum’s approach.
• There are no reductions in welfare rates and we leave Child Benefit unchanged.
• The situation of the working poor is improved by making tax credits refundable.
• A new initiative of scale would see up to 100,000 long-term unemployed people take up real part-time jobs.
• The support infrastructure for social services would be protected.

Social Justice Ireland also make costed proposals to protect vulnerable people in areas such as healthcare, education, social housing, rural transport and Third World Aid and proposed a new capital investment programme.

Budget Choices document can be downloaded here