Whats at stake in election 82

How big a mess are we in?

This election campaign has done a great deal to get us out of the mess. For the first time, there will now be a democratic mandate for whatever Government is elected to take whatever action is needed to get us out of the econoomic crisis. The campaign has also witnessed another breakkthrough - the public is no longer prepared to accept unncritically bland election promises for the political parties. Politicians are now being forced into an accountability which previously they managed to evade. They are being reequired to cost their programmes, to state how they will raise the revenue to finance them, and to commit themmselves to a reduction of foreign borrowing. There has never been anything like it before.

Not that the election by itself will solve our problems for they are indeed daunting. The primary difficulty is that our balance of payments deficit (the difference between what we spend abroad and what we earn abroad) has grown from a modest 3% of our Gross National Product (GNP) in 1973 to 13% in 1981. If this trend continues then we will plunge the country into a crisis at present unimaginable. Unemployment will soar, we may be unable to import at all, economic activity will drop disastrously - in effect the country will become an economic desert. This will be beecause the mountain of debt that we will require to bridge the gap between our foreign earnings and expenditure will become unmanageable.

Already the amount of foreign borrowing we have had to engage in to finance the balance of payments deficit has been massive. The Government foreign debt has risen in the following way since 1975:

1975   £ 570m.   
1976   £1040m.   
1977   £1040m.   
1978   £1060m.   
1979   £154Om.   
1980   £2210m.   
1981   £3730m.   
1982   £5000m. projected   

The rate of increase of the foreign debt would be cause for concern in itself but the real problem has been that this money has been used for purposes that have not constituuted productive investment. It has been used largely either to finance current day to day expenditure or for a variety of white elephants which have not yielded the output necessary to finance the interest re-payments on this debt.

The deficit in the current budget has risen from 0% in 1973· to 8% in 1981 - it would have gone to 10% in 1982 had corrective action not been taken. The wastefulness of much of our capital investment is underlined by the fact that the rate of return on this investment is now only about half what it was in the 1960's.

Thus politicians who talk about continuing to engage in foreign borrowing for "productive investment" should be treated with the gravest scepticism. A great deal of the foreign borrowing we have engaged in has been misused had it all been for genuinely productive investment we would not now be in this present mess, for we would have earned income from this investment to more than repay the cost of the interest charges.

There are reasons other than political fecklessness which have contributed to our present difficulties. One of these has been the growth in the numbers of people in the depenndent age groups - the numbers under the age of 15 increaased by 98,000 from 1971 to 1979. This inevitably pushed up public expenditure considerably, especially in the areas of education and health. That with the two oil crises of the 1970's did put a lot of strain on our public finances but to a large extent our politicians "copped-out" and failed to take the hard political decisions on etther increased taxaation or reduced public expenditure to deal with tlie situaation.

Another reason has been the rapid growth of the public sector. This has been partly due to the expansion of some of the semi-state bodies and the employment of more memmbers of the security forces. But there has also been an enorrmous rise in the number of civil servants over the last deecade. In 1971 there were 38,200 civil servants. Last year there were 60,500 - an increase of 58.4%. There seems little justification for the magnitude of this increase and again the political parties that served in Government during this period must share the blame.

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What needs to be done?

Many people', especially on the left of Irish politics, are suspicious that this obsession with the balance of payments, the current budget deficit and the borrowing requirement are merely jargon phrases for "screwing the working class." They point out that those who seemed most concerned about these issues rarely talk about unemployment or about the redistribution of income. That susspicion is healthy, but unfortunately there are some harsh realities to the world we live in which cannot be wished away.

Regarding unemployment, the hard fact is that unemmployment will continue to rise for the next year or so, possibly to above 170,000. This is a terrifyingly high figure and masks a great deal of human misery and frustration. But regrettably the choice is not now between full employyment and widescale unemployment - the choice is between high levels of unemployment now and disastrous levels of unemployment in four or five years time. This is the harsh .reality of the mess we have got ourselves into.

Therefore the first priority must be to ensure that things don't actually get much worse. This does involve a reducction in the borrowing rate and in particular in the current budget deficit. The recent budget was a step along this line and as such should be welcomed and there are indications that the public at large acknowledges this.

But the problem of the balance of payments must be tackled from the other side of the coin as well - we must not just buy less imports (and this is ensured by cutting borrowing), we must also export more. And the only way this can be done is by becoming more competitive. Again, the harsh reality of this is that wage and salary levels must be kept down.

This remedy is also perceived as an attack on the living standards of the working class and again there is an element of truth in this but only an element. Were this strategy adopted there would be less unemployment which would improve the living standards of a significant section of the working class. But even at that, this remedy is seen as antiiworking class and with good reason.

The fact is that it is unreasonable and indeed obscene to expect the poorer sections of our society to bear the brunt of the sacrifice that must be made to get us out of this economic mess, which was not of their making, and to provide employment for their fellow-workers while there is such gross inequality evident at so many levels of Irish society. The number of motor cars that purr through our streets that cost more than suburban homes is a manifestaation of this. The proliferation of high class restaurants where meals cost more than the take home pay of many workers is another. The massive capital gains that are made from land speculation is an affront to any civilised stanndards, as is the conspicuous wealth of an entrenched section of Irish society.

It is not alone unreasonable to expect workers to accept a regime of modest pay increases in the midst of this kind of inequality. Workers should not accept such a regime unnless significant changes are made in the nature of Irish society.

These changes should include the following:

- a property tax which would impose a levy on all property including homes.

- the increase in the higher levels of income tax and the jailing of tax evaders (tax evaders are jailed in the United States and as a result there is little cheating of the Internal Revenue - this measure would have the advantage of dealing with the problem of tax evasion among the self-employed).

- greatly curbing the tax allowances that are available to the self-employed.

- imposing a penal tax on capital gains from land specuulation.

- the ending of restrictive practices, especially in the professions, notably medicine and the law, thereby forcing down the fees of doctors and lawyers.

In addition there should be massive increases in those social welfare benefits which do most to alleviate poverty. Thus children's allowances should be increased from their present derisory level of £6 per month for the first child' and £9 per month for children thereafter to £50 per month per child. This would cost £300m. more than at present. These allowances should be subject to income tax, thereby reducing the net additional cost to about £20Om. in one year.

Old age pensions (non-contributory) should be increased from £27.55 per week to £50 per week. This would cost an additional £100m. Unemployment assistance should be inncreased from £21 per week to £40. Another additional cost of£100m.

These increased charges should be financed by (a) higher rates of income tax in the upper income brackets, yielding about £50m. (b) a property tax yielding £20Om. (c) lesser tax evasion, yielding a possible £40Om. (d) the remaining £100m. coming from VAT on food, clothing, footwear, the increased capital gains, tax on land speculation;bank levies etc. (the argument against V AT on food, clothes etc. is enntirely sentimental and has nothing to do with equity - if social welfare benefits which most help the poor are doubbled then the poor will be greatly better off even with the VAT on food etc.).

There are a number of other reforms which should also be undertaken. Of particular significance to us in Magill is the state of the mental hospitals. In 'our issue of October 1980 we published a full investigation into the state of the mental hospitals. We found that a large number of the 14,000 patients who Me in mental hospieals in this country, are subjected to conditions of squalor and delapidation, conditions totally unsuited to their therapeutic needs. We reported that in 1980 there was a decrease in the level of real current expenditure on the psychiatric services and that all capital projects, not approved for commencement in 1979, had been stopped. The situation hasn't changed since then.

There is also the issue of state cars. Each of these costs the taxpayer £40,000 per year (£14,000 for the depreciaation and running costs of the cars and the remainder for the employment of. two drivers and other relief drivers per car), giving a total cost of £1.28m. per year. At a time when the rest 'Of society is being called upon to make sacrifices in the national interest, it is positively obscene that expendiiture of this order should be incurred for such trivial purrposes.

Changes of this character would greatly alter the climate of economic and political decision-making. Then and only then would it be possible to get agreement on a level of wage increases which would ensure our competitiveness abroad, thereby relieving our balance of payments difficullties and generating employment.

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What should we do about the wh ite elephants?

The first thing to do is to ensure that we don't acquire any more of them. Proper project analysis will have to be undertaken within the public service and by the Dail before any decision is taken to proceed with them. It is unnsettling, to say the least, that Fianna Fail has given a firm commitment in the course of this campaign, not alone to going ahead with the Knock airport project - on which inncidentally an analysis was undertaken which pronounced the proposal as crazy - but also on the Whitegate oil refiinery. There are good reasons why we should have oil reefming capacity within our own control but this hardly applies at all to Whitegate which is quite unsuited to our present needs. At any event, commitment to this proposal before any adequate project analysis is an ominous warning of more white elephants to come.

That leaves the problem of the current herd. Again hard decisions are required, most of which will involve further unemployment. For starters, NET's Marino Point plant in Cork should be closed down. It is losing now about £37m. per annum. Most of this is accounted for by debt servicing which would still have to be repaid. But the major reason for closing the plant is that it wastes £30m. worth of Kinnsale gas per year. The cost of maintaining the jobs at Marino Point works out at about £100,000 per year per job. It would be much cheaper to continue to pay the workers their current wages and forget about it.

Then there is the problem of Aer Lingus. It is demanding £50m. in equity capital from the Government. It shouldn't be given and the company should be told to discontinue the operation of its North Atlantic route which is losing in exxcess of £20m. per year.

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Can Charlie Haughey be trusted to get us out of this mess?

Pleasant or not, Charlie Haughey's personal credibility has become a major factor in this election. In a sense his credibility has been an issue since he first became proominent in politics in the early 1960's - his vaunting poliitical ambition and his amassing of a huge personal fortune while in public life assured that. But it is all the more an issue now because of his record in office as Taoiseach and his performance as leader of the Opposition.

While Haughey had many outstanding qualities as a Minister in the 1960's, particularly when he was in Justice, he was a near disaster as Taoiseach. True he inherited econnomic difficulties, largely created by the implementation of the 1977 manifesto of which he was highly sceptical, but having recognised those difficulties at first he failed to do anything about them and instead plunged the country even deeper into the mire.

His problems stemmed primarily from a lack of political will. He was unable to stand up to the public sector unions in 1980, when public sector pay rose by 34%. Thereby he threw away whatever political gains had accrued from the stand of the Lynch Government against the post office workers in the early part of 1979, although it is only fair to record that the Lynch administration had grown wobbly kneed in late 1979 following the European e1ections.

But it was what he did in 1981 that he stands most inndicted for. As reported in detail in the last issue of Magill he dodged the hard political choices in January 1981 of cuttting public expenditure or raising taxation by falsifying the 1981 estimates for public expenditure. It was an act of enormous cynicism, one which disqualifies him from holdding senior public office in this country again. Then he enngaged in a spree of public expenditure of massive proporrtions in the run-up to the election which was largely ressponsible for getting us into the economic chaos we fmd ourselves.

Charles Haughey has a genuine commitment to the ideal of Irish unity and achieved a notable success in initiating the Anglo-Irish talks at the Dublin summit of December 1980. He has shown flair and imagination in the course of his political career but what he did in the first half of last year means that he should not be Taoiseach again.

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Can we trust the blueshirts?

We deliberately phrase this question in prejorative terms to remind readers that Fine Gael is not quite the liberal, vaguely social democratic creation of Garret FitzGerald, there are deep wells of reactionary politics innside the party and there must always be grave disquiet at the prospect of it getting its hands back on the tiller of power.

The memory of the repressive policies of the last Coaliition is still vivid, as is the collective sigh of national relief when that Government was driven from power in June 1977. The presence of Patrick Cooney in the present Govvernment is sufficient reminder of the fact that those days may not be entirely of the past - the fact that Garret Fitz-

Gerald felt constrained to place Cooney in charge of the sensitive department dealing with RTE and therefore broaddcasting freedom is enough of an indication of the extent to which the Blueshirt element still hold sway within Fine Gael. FitzGerald's own liberal credentials must be gravely suspect, given his compliance with what went on in late 1976, when sections of the Gardai beat up people in cusstody and there was a top-level conspiracy within the Gardai to cover up the attempted fabrication of fingerprint eviddence - FitzGerald has since been in a position to confirm the authenticity of what Magill has been writing on this issue over the last four years.

The recent re-enforcement of the ban on Provisional Sinn Fein candidates appearing on RTE is a further inndication of the reactionary nature of Fine Gael as is FitzzGerald's own continued characterisation of the problem of Northern Ireland often entirely in -terms of IRA violence, rather than the sectarian and repressive nature of the state.

FitzGerald's record on the economic front is not unnblemished either. At the last election Fine Gael not alone went along with the proposal to build an international airport at Knock but went on to top the Fianna Fail commitment by promising a £IOm. international sports complex as well.",1n addition, FitzGerald was responsible for introducing a programme for the last election that ackknowledged the serious state of the public finances and then went on to propose various ways of making them worse (public expenditure commitments which weren't costed and a refusal to give any commitment on how the current budget deficit was going to be reduced).

FitzGerald is also leader of a party that broke many of its election promises in just 7 months. The pretext it has given - that the situation was far, far worse than they had realised - is just not true. A senior economist close to the Fine Gael campaign last June estimated then that the current budget deficit would be £8S0m. in 1981 (about £60m. short of the actual officially projected deficit) and it was well known that this would have meant an opening deficit of about £IISOm. for 1982.

But all that said, it must be conceded that FitzGerald did start to face up courageously to the economic situation

when he came to power. His Government acted immediateely with the introduction of the July budget and although the Dail balance was precarious it didn't flinch from tough action in January either. This is in marked contrast to the performance of his predecessor.

FitzGerald also did two other remarkable things during his period as Taoiseach. In a speech in Kilkenny last Novvember he spelt out for the first time that it would have to be the middle classes who would have to bear the brunt of the economic sacrifice that had to be made and he stated, in contradiction of previous remarks of his on the issue, that future redistribution of wealth could not await future economic growth. This was a radical departure from the political orthodoxy first enshrined by Sean Lemass in the early 'sixties and pursued since then - the orthodoxy being that redistribution could take place only from future inncrements of wealth. He also committed himself to a crusade of constitutional, legislative and cultural change designed to de-sectarianise southern society. It was a commitment that marked him off from almost every major Irish politician the state has known since its inception.

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Who to vote for?

Effectively the electorate is faced with a choice between two potential future Taoiseachs, Garret FitzGerald and Charles Haughey. It will be clear from the above analysis that Magill advises on the basis of this choice to vote for FitzGerald. But the options are not entirely confined to these. We advise voters of Dublin North Central to vote for Bernadette McAliskey because the Dail needs radical, outspoken republican socialist representatives whose politics have been formed in the context of Northern Ireland.

The Dail also needs Independents, preferably in suffiicient number for the~ to continue to hold the balance of power. There is one thing this country does not need and that is stable Government. We had the most stable possible of Governments from 1977 to 1981 and it was because of its stability that they were so successful in vanndalising the country. Also it was the Independents who quite properly pulled the plug on the Coalition last month when they introduced a budget for which they refused to seek a mandate in last June's election. It is with special enthusiasm therefore that we recommend our neighbour Desie Hynes to the voters of Dublin South East.

We would also wish to recommend readers not to vote for the following. These are those who are currently squanndering £40,000 each per year in being driven around in State cars on business which has now clearly nothing to do with the public interest, rather their own personal electoral interest:

Michael O'Leary, Peter Barry, Tom FitzPatrick, Eileen Desmond, John Bruton, Liam Kavanagh, Patrick Cooney, John Boland, Paddy O'Toole, Alan Dukes, Michael Begley, Joe Bermingham, Eddie Collins, Donal : Creed, Michael D'Arcy, Barry Desmond, Mary Flaherty, Michael Keating, Ted Nealon, Fergus O'Brien, Jim O'Keeffe, Paddy Harte and Jim Tunney.

We have excluded Garret FitzGerald and Jim Mitchell from this list because there are apparently security reasons for these to have state cars. We have also omitted Gerry L'Estrange and Dick Spring because -they are currently incapacitated and are therefore less culpable than the others. A vote for any of the others above only encourages them .•