Socialist View (Spring 2003)

Cut Backs and Privatisation: The Irish Government's New Offensive

by Kevin McLoughlin

As the Irish economy continues to decline and heads into recession, the Fianna Fáil and PD government have launched their new neo-liberal offensive.
"The share of capital relative to the share of labour has risen. The division of social wealth between capital and labour has become still more unequal.... The material position of the worker has improved, but at a cost of his social position. The social gulf that divides him from the capitalist has widened." Karl Marx
This quote from Marx is a good summation of the economic boom in the South and what it meant for working class people. Not only is Marx long gone, so to now is the "Celtic Tiger". In 2000, Gross National Product grew by 8.7%, the estimate for 2002 is just 1.2%!

Such a dramatic downturn in the economy is bound to have a profound effect on all aspects of Irish society. Working class people are concerned about the economy and what changes are on the horizon.

The sharpest expression of these changes has been seen already in the steep decline in the government's finances. As a result of this decline, Fianna Fáil and the PDs have launched into a series of attacks on the working class through cutbacks and their proposals for widespread privatisation in the public sector. The government have embarked on a generalised, neo-liberal offensive, and the tempo for the implementation of these changes has sped up since the budget.

Ahern and his government exude an air of confidence. They are taking comfort from the fact that the official opposition are ineffectual and in a shambles. The government also believes that they have the measure of other opposition forces, i.e. the trade unions, who despite the government's neo-liberal offensive are signing up to a new social partnership agreement. The government are moving swiftly to implement these attacks in order to take advantage of the weak opposition and they hope that they can recover from any political fall out in time to fight the next election with the backdrop of a recovering economy. However, Bertie Ahern and Mary Harney have no real understanding of the depth of the anger and disgust that is bubbling under the surface of Irish society.

Neo-liberal agenda

The government is scrabbling to make cuts and implement privatisation and wage restraint in an attempt to seriously curtail public expenditure. The list of proposed cuts, price hikes and new charges seems endless. However their offensive is not only on the economic front, they are also moving to restrict democratic and political rights in a number of very important areas and enhance the autocratic powers of the state.

Harney has proposed new restrictions on immigration. Her claim that restricting work permits will defend Irish jobs is laughable. The ruling from the Supreme Court denying immigrant or refugee families who have an Irish born child the automatic right of residency, is a significant weapon that the establishment will use in the future. In the context of an economic crisis, the establishment parties will use a divide and rule tactic to scapegoat immigrants for rising unemployment and public spending cutbacks.

Within months, new draconian legislation for local authorities and service charges will be enacted. This legislation allows for councils to refuse to collect the bins of people who don't pay the bin tax. This is a very serious attack on the anti-service charges campaigns and must be met with a concerted campaign of opposition. This legislation will also take the power to decide local charges (taxes) and local authorities' waste management strategy out of the hands of the elected councillors. From now on, bin tax charges will be set by unelected local authority managers. They will also have the right to decide to build waste incinerators, and the location of dumps without consulting the councils. Many establishment politicians will cry foul over these changes, but privately they will be delighted, hoping that they will no longer be blamed for the rising cost of these local charges.

In February, the Garda Special Forces were deployed on the streets of Limerick and the army was sent into Shannon Airport. These two events have occurred without any serious opposition or much discussion about the implications of such actions. The feud between rival gangs in Limerick and the so-called "dangers" posed by the incidents at Shannon Airport were blown out of proportion by the media and the government and facilitated these unprecedented measures. The Irish Army is now in effect protecting the transfer of US troops to the Gulf for the war against Iraq! While it is very unlikely that the state will try to repress the anti war movement at this stage, these developments are part of a trend by the state over the last couple of years to take a more repressive approach to workers and political activists. A potentially dangerous precedent has been established. They have been able to put armed Gardai on to the streets of Limerick even though there was considerable controversy about the killing of John Carthy by these same special forces at Abbeylara. They are also moving to impose new restrictions on the Freedom of Information Act.

These neo-liberal attacks, the weakening of democracy at local authority level, and the use of the armed forces of the state are not in fact indications that this is a strong government confidently moving forward. The reality is the opposite. This government has less actual support and authority in society than any previous government in the history of the Irish state. At this stage, they are able to get away with these measures and legal changes because of the generally low levels of political activism and struggle and the lack of a strong political alternative which represents working class people. However, the change in the economic situation and in a more immediate sense the war on Iraq, will create the conditions in which there will be an increase in struggle which will be a real challenge to the Irish capitalist establishment.

Economic crisis

The Irish economy is in a very weak position. Gross Domestic Product, the value of all goods and services produced in Ireland grew by 5% - 6% in 2002. However, the Gross National Product (GNP) figure of1.2% growth is more accurate because it takes into account money transferred into and out of the country. Given that the multinational corporations repatriate a huge amount of profits, this is a truer picture of the wealth in the country. The latest figures from the Central Statistics Office show that GNP for the third quarter of last year actually declined compared to the same quarter in 2001. If that trend continues it would mean that the domestically owned economy had slipped into recession, which would be a dramatic change after years of substantial growth. At this stage this would mainly indicate the decline in the key markets to which Irish companies export. It would also reflect the increasing cost of Irish exports due to the increase in the value of the euro.

More so than before, consumer spending and the continuing growth in credit for mortgages, are playing an important role in the economy. However, both of these would be cut across quickly if there was a sustained loss in jobs. The number of job losses has grown in the last year. If the economy remained sluggish this year and certainly if the domestic economy went into recession, job losses would be likely to increase rapidly and would further increase the economy's problems.

The perspectives for a new social partnership deal must be set against this background. Even if a new deal were agreed, a deterioration in the economy would put it under considerable pressure. A 7% pay rise over 18 months in the private sector is below inflation and will only be accepted by the majority of workers reluctantly. It is now likely that many employers will cite inability to pay because of the changes in the economy. In addition, the deal contains binding arbitration in order to attempt to curtail the ability of workers to force employers to pay up.

The state may find it harder to renege on its 7% pay award and the benchmarking awards. Still, with a recession on the offing, government finances will be hit hard. Major new changes are proposed in the public sector and the government will use them to cut public sector expenditure at every turn. In the new economic situation, social partnership will not be able to stop industrial struggles occurring in the defence of jobs, wages and working conditions.

Vacuum on the left

Political parties are now focused on the local elections due in the summer of 2004. Most of them are assuming that there will not be a general election before then. However, there are many banana skins that this government can slip on. In particular, given the anger that has built up over the years during the "Celtic Tiger", a series of struggles by workers could fundamentally undermine this government, who have a weak base of support and an early election could be forced upon them.

Sinn Féin, the Greens and now Labour under the leadership of Pat Rabbitte are trying to position themselves to make gains in the local elections. Although they will increase their number of councillors, there is an ever growing vacuum in which genuine left forces can develop, in particular the Socialist Party.

It will be a feature of the new political and economic situation that Sinn Fein, the Greens and Labour will actually find it increasingly difficult to respond to and reflect the demands of the class struggle as its tempo increases. These parties are fundamentally rooted to the idea of the capitalist market and they lust for power. Coalition and ministerial jobs will influence their political direction far more than the needs of the working class.

While it is not yet a generalised mood in society, it is instructive that many activists involved in the anti-bin charges campaign are quite disgusted with Sinn Féin. These activists clearly see that Sinn Féin talks about radical opposition to the bin tax, but that on the ground they haven't been prepared to build the anti bin tax campaign. Sinn Féin have an important base in some working class areas but they will be incapable of leading the new struggles of the working class when they arise in the coming period.

The decline in the conditions for the economy will result in the creation of the political and social conditions within which the idea of building a new mass party to represent working class people will mature. That will represent a very important development in the workers' movement and the Socialist Party will be a key player in the processes leading to the development of this party. In the weeks and months ahead there will be big opportunities to build the genuine forces of socialism in the South of Ireland.

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