Here comes the crisis - let's go on holiday

The country is about to face its severest crisis since Independence.

The entire economic solvency and inndependence of the state is at risk and the crisis is now just around the corrner - scheduled for 1983.

The most dramatic representation of the crisis is in regard to the current budget deficit - i.e. the money which the state borrows for current expendiiture because of the excess of expendiiture over income from taxes and other sources.

The targeted deficit this year was £679m. Independent economists are now virtually unanimous in agreeing that the out-tum will be almost £l,OOOm. This latter figure will be the base for the opening deficit for 1983. But on top of the £l,OOOm. will be the following items:

* an excess of expenditure buoyyancy over revenue of around £15 Om (This primarily because of increased unemployment which will result in higher social welfare payments and lower taxation revenue).
* increased debt service of around £250m.
* loss of revenue, as compared with 1982, because of the Fianna Fail deevice of bringing forward tax payments from next year to this year - this amounting to £150m
* increased public service pay arissing out of the effective freeze of speecial pay awards in 1982 - this amountting possibly to £1 OOm. (The public sector unions have the capacity to ensure that they get what they want through selective strikes, for instance in the Tax Offices and the Social Wellfare bureaus.)

Thus, the opening budget deficit for 1983 will be of the order of £1,650m, almost 12% of the Gross National Product.

Already we have by far the worst current budget deficit proportionate to GNP of any country in the western world. In early 1980 Charles Haughey, then newly installed as Taoiseach, sounded the warning bells when the deficit for the year previously was 7%.

It will just not be financially posssible for us to maintain any kind of credibility abroad if we do not do something drastic about this slide, and the Government will be forced to atttempt to get the deficit back to around £900m for 1983.

This will entail cuts in public exxpenditure and taxes, amounting in all to about £750m. To do this through increases in income tax alone would amount almost to a doubling of the tax rates - this gives an idea of what is involved.

It would seem not to be politically possible for any Government now to take the measures that are necessary to restore the country to financial rectitude. Our present political sysstem does not permit Governments to take such unpalatable measures our politics is that of bloom and boom, not doom and gloom, to coin a phrase.

It is not easy to contemplate what the outcome may be. It is perhaps possible that the above pessimism about our political system is unfoun-. ded and that the Government next January will take the necessary meassures and will thereby' get the support of Fine Gael - it could hardly expect the support of Tony Gregory or of The Workers' Party for such measures.

The consequences of these meassures in our political and economic system would be - or rather will be - severe. While output will probably rise over the next few years with the growth in the international economy, there will be continuing deflation here because of the drain of resources out of the country to service the foreign debt. Unemployment will continue to rise; companies dependent on a rise in consumer expenditure will be furrther strapped and many inevitably will go into liquidation - that future is bleak.

Much bleaker is the scenario, whereeby the Government, for one reason or another, fails to carry through such a programme. In that case the current budget deficit would certainly rise to around £1,500m in 1983 and the opening deficit for 1984 would be in the region of £2,000m. The curtains perhaps would not close on us in 1983 were the Government not to act, but it is impossible not to envisage drastic action being forced on us in 1984. The kind of drastic action that would then be necessary would possibly include massive lay-offs in the public service, as well of course as the destruction of much of the private sector.

These prognostications may well be dismissed as alarmist, but over the last three years the worst fears of the gloomiest economists have come true. The public finances have got worse year by year, the chances of recovery from our self-created mess has receded.

Given the age structure in this country, given the already ample eviidence of alienation as represented for instance in the crime statistics, it is difficult to see how our fragile poliitical system could withstand the presssure that these kinds of economic calaamities would entail.

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GARRET WHISTLING IN THE DARK

Garret FitzGerald (right) confronted the nation's economic problems more courageously when in office than anybody else has done: However, since the February election his credibility has been seriously undermined by a series of events. First there was the decision, against all professional and independent advice, to take over the Whitegate oil refinery. Then there was the "go-ahead" for Arigna, an electricity generating station the ESB doesn't want. He followed this with a complete capitulation of the V AT on clothes and footwear and the abolition of food subsidies, the issues which caused the February election in the first place. Since going out of office he has allowed his party rto play Parliamentary games over the Finance Bill and to vote in favour of keeping the Fieldcrest factory in Kilkenny open.

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It would seem unlikely that the present alignment of forces, with Fianna Fail and Fine Gael taking beetween them over 80% of the vote, could persist. It could be argued that out of the economic chaos there would spring a workers' revolution, which would liberate the masses and create a socialist democracy in Ireland. The suggestion seems preposterous. No constituency has been created in Ireeland for socialist politics. The Labour Party has copped out of the process. The Workers' Party is not in the bussness of creating mass support for socialist politics - it aims to achieve its objectives, which are at best only arguably socialist, through conspiracy and manipulation, not through open mass action.

The drift of political events and opinion in Ireland is not towards any form of socialist revolution but toowards a right wing resurgence. One example of this is the degree to which the Gardai have entered the political fray in recent years - they, as a body, have openly opposed proposals to aboolish the death penalty, they have exxpressed themselves very much in favvour of more draconian laws to deal with the crime problem, some of them have corne out in favour of extradiition, they browbeat the GAA into proohibiting the playing of republican songs at their grounds etc.

The significance of this developpment is not really in relation to the specific issues which have been raised, for police forces everywhere .are innstinctively in favour of more repressive laws and for the death penalty. Rather, the significance is in terms of the deggree to which the Gardai have pushed their viewpoint - for being a force outside the political arena and strictly under political control,' they have emmerged as a political force in their own right and successive Ministers for Jusstice have had to be wary politically in dealing with them.

There is also the evidence of wideespread public demand for very right wing solutions to the crime problem. One indication of this has been the exxtent to which the issue has pre-occupied the Gay Byrne Hour for instance.

Even during the height of the Coalition's repression in 1976 there was considerable public opposition to what was then being done. Nowadays, there is less evidence of public conncern, for instance about the continued existence of the Special Criminal Court, about the operation of the Criminal Law Jurisdiction Act, which Fianna Fail promised before the 1977 election it would repeal etc.

The wormens' movement has also taken a battering. Organisationally, it hardly exists. Campaigns on womens' issues have virtually fizzled out and in their place has arisen the anti-abortion movement, which whatever its intenntions, is inherently unsympathetic to womens'rights.

These may be only elusive indicaations of the drift of public opinion. Nonetheless they seem more tangible than any indications of a drift to the left. Thus if the present political sysstem is to disintegrate, the outcome is more likely to be a right wing and more repressive regime than a sociallist solu tion.

Meanwhile the politicians have taken themselves off for a 13 week break from Parliamentary duties, as though the country didn't have a care in the world. If Parliament has any relevance to our circumstances, then surely it should not be in recess for five months of the year. The Dail meets on half the number of days per year that the British House of Commmons meets - there seems to be no obvious explanation why this should be.

Before the Dail went into recess there was ample proof of the indiffference that the political parties display to the problems which the country faces. The party of economic rectitude, Fine Gael, voted again and again on specific measures of the Finance bill, which would have had the effect of cutting Government revenue and worssening the state of the public finances. That party also voted in favour of keeping the Fieldcrest factory in Killkenny open at the cost of some furrther millions of pounds to the excheequer.

Fine Gael's credibility as a party that could handle our problems has been badly dented since the election. Apart from the performance on the Finance' Bill and on the Fieldcrest issue, there was the extraordinary conncession by Garret FitzGerald on the V AT on clothes and footwear and the food subsidies - the issues which caused the February election in the first place. But worse than that, beefore leaving office, the Coalition

Government took two decisions - on Whitegate and on Arigna - which will add greatly in the future to the country's economic difficulties.

The Labour Party has lost almost all vestige of any credibility it ever had. The February election saw it sink further in terms of the popular voteeits fourth successive decline since the 1969 election. Although the party managed to hang on to 15 seats, there are indications that it is on the verge of an electoral precipice which could see its demise over two more general elections.

The euphoria with which the party greeted the absolutely predictable and entirely insignificant result in Galway East was itself an indication of the degeneracy within the party.

Fianna Fail meanwhile trundles from crisis to crisis. The position of Charles Haughey within the party remains in doubt, in spite of the East Galway success - however unfair it may now be, the fact is that Haughey is seen as a symptom of our economic malaise, rather than a saviour from this malaise.

There are indications however that some Ministers, formerly of the bloom and boom brigade, notably Ray MeeSharry and Albert Reynolds, have corne to a realisation of the nature of the country's distress. Whether they personally have the political will to take the necessary measures and wheether then they can persuade their Taoiseach and the rest of their collleagues to go along with them is anoother matter.

A clue to this latter question will corne when the economic plan is finnally published. Leaked versions of it, which have corne to the attention of this reporter, suggest that it will be full of pious aspirations, such as dramatically improving the country's competitiveness over the next four years, without taking the necessary tough decisions on exchange rate policy and on public service pay, which are necessary concommitants of this.

With the best political leadership the country can muster, weare in for three bleak years. More likely, given the political leadership that is on offer, weare in for much worse.

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CHARLIE STROLLING IN THE WILD

Opposite is a photograph showing a group of men walking, apparently aimlessly, down Barrack Street in Loughrea on Tuesday, July 20 last. The group included the Taoiseach, Charles Haughey, the Minister for Industry and Energy, Albert Reynolds, the Minister for Justice, Sean Doherty, the Minister for Finance, Ray McSharry and Junior Minister, Gerard Brady. All these people are being paid substantial salaries to look after the nation's affairs. While the country's economic fortunes were deteriorating rapidly, several Government ministers spent days on end tramping the roads of East Galway on matters not at all to do with the nation's interests but solely with their own political survival.

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