Fianna Fail, EU and IMF protect the most vulnerable
The government recently published a draft memorandum that will give legal effect to the negotiations between the EU/IMF and Ireland. Essentially the draft details, by quarter of each year, how the government intends to implement an incredibly far-reaching austerity programme to help get us back on our feet.
"The National Recovery Plan lays out our strategy for staying the course of needed reform in a way that is socially fair and protects the most vulnerable."
Okay, socially fair and protects the most vulnerable; that sounds good. How will we accomplish this?
"A lowering of personal income tax bands and creditors or equivalent measures to yield €945m in 2011 and an extra €300m in a full year."
So we'll tax the poor to make a greater tax haul. I can't think of a much fairer way of going forward. It's not like the rich bankers had anything to do with this situation, it's got to be the working poor who started the crisis.
"A reduction in pension tax relief and pension related deductions to yield €155m in 2011, and an extra €105m in a full year"
We'll hit the pensioners up for more money. I'm sure I've heard that the pensioners were somehow involved in the speculation bubble... or was that German, UK and French banks? Sometimes it's hard to keep things straight.
"A reduction of existing public service pensions on a progressive basis averaging over 4% will be introduced."
We'll cut public services like the bus, that should go a long way towards protecting the most vulnerable no? But just protecting people by reducing public services is hardly enough. The EU/IMF plan has gone much further in recognising the need in:
"Taking steps to tackle unemployment and poverty traps including through reducing replacement rates for individuals receiving more than one type of benefit (including housing allowance)."
In other words, we will ensure people on the dole get less money. I have apparently been woefully naive because I always assumed that poverty had to do with not having enough money - not having too much of it.
So, not only are the EU/IMF going to protect the most vulnerable. They are also cutting the dole to increase employment. How is it that employment was low with a higher social welfare payment previous to the collapse? Could it be that the employment figures might have something to do with
the availability of jobs? Certainly not!
While one can understand how the lay person might be confused and think unemployment stems from not enough jobs, the EU/IMF are willing to carefully explain the real problem to us. It seems that, in fact, it's necessary to take aggressive steps towards lowering unemployment in a very similar way to how they will help to stop poverty traps, giving people less money. In the service of this we will:
"Reduce by €1 per hour the nominal amount of national minimum wage"
The plan also takes important steps to assure that no attempts are made to stop helping people out of their poverty traps later. They'll be doing that by requiring the following:
"The government will introduce a Fiscal Responsibility Law which will include provision for a medium-term expenditure framework with binding multi-annual ceilings on expenditure in each area by Q4 2011. This will take into account any revised economic governance reforms at EU
level and will build on reforms already in place."
In order to assure that our pensioners are also being helped out, beyond the already mentioned increase in taxes which will help protect them, our government must also pass the following legislation:
"To put the public service pension system on a more sustainable basis - pension entitlements for new entrants to the public service will be reformed with effect from 2011. This will include a review of accelerated retirement for certain categories of public servant and an indexation of pensions to consumer prices. Pensions will be based on career average earnings. New public service entrants will also see a 10% pay reduction. New entrants' retirement age will also be linked to the state pension retirement age."
Good, nothing could be fairer than locking people into their socioeconomic status in their old age and lowering everyone's pay substantially. And it's only fair that the people getting pensions of €300,000 are treated the same way as those getting €30,000 a year. Imagine the torment someone would already have to endure with the pension lowered from €300,000 down to only €270,000! It's hard to imagine how they'd put food on the table.
Lots of other important initiatives are also detailed. The bank bailouts are to continue in the first Quarter of 2011. Further toxic assets will be offloaded to NAMA and those assets will be compensated with NAMA bonds. Recapitalisation will take place, and our pension fund will be dumped into our zombie banks to ensure that they remain undead. I'd personally rather have a zombie bank than a pension. Who wouldn't!