Madam, – Fintan O’Toole (Opinion, July 21st) is right to draw attention the background, instincts and ideology of the members of “An Bord Snip”. In doing so, however, he betrays much of his own ideology and flawed orthodoxy.
He contends that the economic crisis was caused by “the banks and developers”. This is facile. The banks and some developers certainly share much of the responsibility for this crisis, but absolving all others does not stand up to scrutiny. This is particularly true of the crisis in the public finances which he argues are merely “a function of the real economy”.
When the Rainbow Government left office in 1997, voted current account spending stood at €16.8 billion or 27.8 per cent of our national income. This year, it will reach €56.6 billion or 40 per cent of our national income. If you include non-voted current account spending and capital spending the figure rises to €62.4 billion or 44.6 per cent of gross national income (GNI).
Next year, public spending will break the 50 per cent barrier, making Ireland one of the highest spending countries in the world. Higher than many countries with far better public services, greater equality, a larger national debt to service, a large military to sustain and many more pensioners to support. Ireland’s fiscal mess is not a function of the real economy. Rather, it stems from the policies of a reckless government which taxed and regulated the economy like right-wing conservatives, but spent public money like left-wing socialists. Expediency was their only ideology. Instead of using the boom’s windfall tax receipts to fund increases in current spending which in turn fuelled inflation and the asset bubble, the Government should have sought to slow the economy by restricting spending, maintaining the tax base and saving more money for a rainy day. Blaming developers and bankers for these colossal policy mistakes overestimates their influence. The politicians who presided over these massive increases in spending and the interest groups and commentators who encouraged it must also accept culpability. The same applies to their tax breaks.
The global economic crisis challenges us all to question free market economic orthodoxies, but we should not do so in a reactionary way. One thing we have learned from the past 10 years is that the old social democratic orthodoxy that increases in public spending automatically result in better public services or greater equality has been disproved. We have also learned that the old fiscal conservative orthodoxy of balanced budgets and a counter-cyclical fiscal policy is a wise one that we should have followed.
Mr O’Toole says that the McCarthy report should form part of an à la carte menu which should also include cutting corporate welfare, tax reform and capital stimulus. I agree. But with a deficit of €15 billion, “An Bord Snip” is likely to be the appetiser for a very bitter meal. – Yours, etc,
Madam, – One of the recommendations of the McCarthy report is the discontinuation of the Family Support Agency (FSA), with a consequent saving of €30 million. This is misleading. Looking at the FSA annual report of 2007, the budget allocation of €35 million is broken down, €18 million support to the Family Resource Centres and €10 million approximately to counselling organisations, both of which help the lives of the most disadvantaged and vulnerable people in this country. The balance of the budget is divided between the running of FSA and providing the Family Mediation Service, a recognised essential service for couples who want to negotiate the terms of their own separation with the help of a mediator.
In other words, it is not by the discontinuation of the FSA that savings of €30 million would be achieved, rather it is only by axing the Family Mediation Service, stopping grants to counselling organisations and the core funding to the Family Resource Centres can this be achieved. It is hard to credit that a caring Government cherishing its people equally could countenance such a crass measure. – Yours, etc,