Economy

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If this is a recovery why are people getting poorer?

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On the same day that the CSO reported that the economy grow by 3.5% from a year ago, the Irish Times reported deepening gloom among households with survey respondents reporting decreasing disposable incomes. 45% of people said they were spending more on utility bills, and many others reporting increased costs of transport, healthcare and housing.

How is it both possible for the economy to be expanding at a decent clip yet the population is becoming poorer? Leaving aside the possibility that the population is expanding at a faster pace than the economy (which is not the case here), then either the data is false or all of the benefits of recovery and more are going to a minority of society. Or both.

The reality is that the CSO vastly overstate the improvement in the economy, which in reality is doing little more than bumping along the bottom. At the same time, the austerity policy works to redistribute incomes from poor to rich, from labour to capital, especially unproductive capital such as banks and landlords. If energy bills are rising in real terms incomes are being transferred to them from households. If rents are rising, real incomes are being transferred from tenants to landlords, and so on.

Fake exports, real stagnation

The export-led recovery that is so widely touted by supporters of this government and of austerity generally is a statistical fiction. Over time a number of commentators have pointed to the tax regime as a source of huge distortions to the external accounts. This facilitates the booking of costs, output and profits in this jurisdiction in order to avail of extremely low effective tax rates, way below even the headline rate of 12.5%. Constantin Gurdgiev at True Economics has also shown that this is a key factor in the current inflated level of GDP.

One marker of this distortion to the trade data is that the monthly CSO accounts show total goods exports of €23.2bn in the 3 months of Q3.  Yet the data included in the Quarterly National Accounts show exports at €27.3bn. There is a different methodology for the two pieces of data. But there is a truth gap between the real level of goods exports and reality, which has widened over time. In 2008 the export totals were almost aligned, with the GDP data showing exports just €1.8bn higher for the whole year. Now that annualised discrepancy amounts to €16.4bn. This is greater than the entire recorded improvement in real GDP since the trough of the recession at the end of 2009, which is €15.7bn. Without the fakery of an ‘export-led recovery’, statistically there is no recovery at all.

Because the export data is so distorted, it is important to consider the trends in aggregate domestic demand, which is the sum of household consumption, government consumption and investment (Gross Fixed Capital Formation).

Fig.1 Real Final Domestic Demand, €bn

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A Mini-Tax-Cutting Budget? Abolish the USC? Can It Get Any Worse?

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Christmas comes early for employers, high-income groups and right-wing ideologues.  The Sunday Times (behind a paywall) reports on demands from Government backbenchers to introduce a mini-budget in an attempt to salvage the Government’s fortunes.  And what would be the centre-piece of such an initiative?  The race is on between Fine Gael and Labour backbenchers over who can make the most outrageous tax cutting promises, including the notion that the Universal Social Charge (USC) be abolished.    Ho-ho-ho.

Let’s first deal with the idea of abolishing the USC.  Who would be the greatest beneficiary?

USC 1

As seen, someone on the minimum wage would get a boost of 2.2 percent in net take-home pay from the abolition of USC.  This rises to over 10 percent for those on €100,000 and it gets even more lucrative for those on very high incomes.  Abolishing the USC would be highly regressive – benefitting those on the highest incomes the most.

But this doesn’t tell the full story as the above refers to headline tax rates.  High income groups can hire an army of accountants to avoid paying large amounts of income tax, inheritance and gift taxes, capital gains tax – exploiting a huge array of reliefs and allowances and other legal tax reduction strategies.  However, that army is defeated when it comes to USC.  There is no getting out of paying it.  So, if anything the benefit to high income groups would be disproportionately higher than the chart above.

Let’s put this in Euros and cents.

USC 2

Someone on the minimum wage would get €7 per week; at the higher end they would get over €350 per week (that’s right, a €16,000 annual tax cut).  From my own, admittedly back-of-the-excel-sheet, calculation, over 46 percent of USC revenue comes from those earning €70,000 or above.  Less than 10 percent of USC revenue comes from those earning less than €30,000.  Guess who wins out in that tax-cut auction.

To be fair, some proponents of abolishing the USC claim that alternative means of getting revenue from high income groups can be introduced.  This is simply not realistic.  USC collects over €4 billion per year.  That’s over one-third of what income tax takes in.  How could you make it up?

  • Increase the top rate of tax from 40 percent to 57 percent.  That would do the trick (though as mentioned above, those who can afford accountants would be able to get around the high marginal tax rates).
  • Abolish tax relief on pension contributions, health insurance and mortgage interest.  However this would only bring in €1.5 billion – or 37 percent of the USC loss.
  • Abolish PAYE tax relief.  This would raise €2.8 billion – still, far short of the USC loss.  And every worker above the income tax threshold would lose €1,650, wiping out gains for all low and average income earners.
  • Increase VAT to nearly 30 percent.

There are other measures such as a wealth tax which the Nevin Economic Research Institute estimates could raise €250 and €500 million.  You could toss in increases on capital income (inheritance, capital gains) but there’s a limit.  Of course, there’s a real loss here.  Instead of using the additional revenue from wealth and capital taxes to invest in social housing, education and health, we would only be clawing back a tax break that we gave to higher earners in the first place.

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Don’t Mind What’s Going On – Feel The Spin

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You’d think there would be concern among commentators about the latest GDP numbers produced by the CSO.  After all, a quarterly growth of 0.1 percent is not that far from negative growth.  Or that consumer spending has fallen in the last two quarters (an interesting contrast to all those feel good anecdotes about increased consumer confidence).  Or that the explosion in export growth doesn’t quite tally with global trends or even other numbers produced by the CSO.

But there’s a class of commentators who are determined to cheerlead regardless. Michael Hennigan gives a flavour of these – with economists talking up the ‘fastest growing economy’ in the EU.  Sure, why not.

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Tweedledum Tax Cuts vs. Tweedledee Tax Cuts

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Apparently the Government, if not having an outright row, is at least engaging in a ‘strong debate and discussion’.  What’s it about?

  • The introduction of a Living Wage and associated reforms such as abolition of zero-hour contracts and minimum wage increase?
  • A comprehensive affordable childcare network – with savings of €400 to €500 per month for families with young children?
  • Universal access to free community health services – such as GP visits, outpatient services and heavily-subsidised prescription medicine?
  • Maybe a debt-relief programme – not only for households in arrears, but also for those caught in the terrible debt spiral of money-lenders and their interest rates which can exceed 100 percent?
  • Or a guarantee of an adequate income and home-help services for all people in retirement?  Or additional supports, such as a ‘cost-of-disability’ supplement for disabled women and men – of whom 50 percent are officially described as living in material deprivation?
  • Or a major drive to reduce rents in the private rented sector – through rent freezes combined with a new public enterprise drive to directly deliver quality, affordable rental units to private tenants?
  • Is the row about any of these or something similar (like eliminating all education-related costs such as school-books, transport, ‘voluntary fees’)?

No.

It is about which tax cuts the Government should pursue.  Good grief.

Let’s call it for what this is.  First, this is a deeply disingenuous debate – ‘my-tax-cuts-are-better-than your tax cuts’.  No Government Minister, TD, or candidate should be allowed to come to the doorstep, seeking votes by claiming ‘we can cut your taxes and still deliver European-style living standards – income supports, public services, economic and social investment’.  To make such claims is either hypocritical or completely indifferent to how the real world operates.

Living Standards 1

Second, tax cuts will undermine the next government’s ability to actually improve people’s living standards – affordable childcare, affordable rents, reduced public transport fares, free and comprehensive primary health care, real free education, etc.  Let’s not forget that Irish living standards are closer to Greece’s than it is to most other EU-15 countries.  Question:  how will a couple of extra Euros close this gap?

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Now Let Us Plot the Great Social Expansion

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Are we getting into election mode? We have Government Ministers promising every tax cut possible while warning of the pestilence that will descend upon us if anyone else gets elected to office. No doubt, parties are preparing their election manifestos, poster and leaflet designs, and candidate strategies. Good luck to some of them.

We know what the Government parties intend to do – pursue real spending austerity as identified here. They will cut primary expenditure (excluding interest) by 9 percent, public services by 8 percent and investment by an incredible 15 percent in real terms; that is, after inflation. They will do this in pursuit of an economically reckless, socially callous and fiscally irresponsible and unnecessary goal: eliminate the deficit by 2018. In fact, they intend to run a small surplus. We have an investment crisis, a poverty crisis, an enterprise crisis (in the indigenous sector), and a public service infrastructure degraded after six years of irrational austerity. Yet the Government intends to stand idly by while it pursues budget fundamentalism.

Fiscal Space 1

However, while they have outlined what they intend to do with expenditure (cut it in real terms), they have not revealed their taxation policies. They’re projections are based on ‘no change of policy’. If they reduce taxation – and maintain their deficit elimination target – they will have to cut spending even further. But they’re hiding that little scenario.

The Government hopes to trap progressive parties and independents. They will say ‘if you want to increase expenditure, you will have to raise taxes’. They will accuse progressives of wanting to increase taxes on workers. Given that workers have suffered falling real wages while at the same time seen the effective tax rate increase by nearly 25 percent since the start of the crisis (never mind the cuts in income support such as Child Benefit) any hint of increased taxes is not likely to be met with hurrahs.

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Deprivation Nation

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Ireland is a deprivation nation.

All manner of numbers and stats regarding growth and employment numbers are thrown around which feeds into the illusion of the ‘Celtic Phoenix’.  But there is a grim reality – which doesn’t feature much in the popular debate:  we are a society riddled with high levels of poverty and deprivation.  And recent EU Commission data shows we have much higher levels than most other comparable EU countries.

We are familiar with the CSO’s deprivation measurement.  This based on people experiencing at least two of eleven deprivation experiences (unable to afford food, heating, clothes, etc.).   On this basis, they estimate that over one million people – or 28 percent of the population – experience multiple deprivation experiences and, so, are categorised as living in deprivation conditions.

The EU Commission uses two measurementsmaterial deprivation’ and ‘severe material deprivation’.  These are harsher benchmarks than what the CSO uses (they both work off the same database – the EU Survey of Income and Living Conditions).  The EU Commission use nine deprivation experiences in which people cannot afford to

  • Pay their rent, mortgage or utility bills
  • Keep their home adequately warm
  • Face unexpected expenses
  • Eat meat or proteins regularly
  • Go on holiday
  • Own a television set
  • Own a washing machine
  • Own a car
  • Own a telephone

For the EU Commission, ‘material deprivation’ measures the percentage of the population that cannot afford three of the nine items.  ‘Severe material deprivation’ measures the percentage that cannot afford four of the items.

How does Ireland compare to other EU-15 countries?

Deprivation Nation 1

This is pretty staggering.  While it is not surprising to see Greece with the highest level of material deprivation, Ireland is right up there at the top – marginally behind Italy but ahead of poorer countries like Portugal and Spain.  Material deprivation in Ireland is 58 percent higher than the EU-15 average.

  • There are over 1.1 million people in Ireland living in material deprivation – a quarter of the population.

When we turn to ‘severe’ material deprivation (remember – that is experiencing four out of the nine indicators above), we see a similar pattern.

Deprivation Nation 2

Ireland remains in third place – behind Greece and Italy – and over 33 percent above the EU-15 average.

  • There are 450,000 people in Ireland living in ‘severe’ material deprivation – or one-in-ten people.

The growth in the number of people suffering deprivation has been substantial.  Between 2007 and 2012, the numbers increased from 450,000 to over 1.1 million – doubling in the space of five years.  There is a similar pattern among those suffering from ‘severe’ material deprivation – rising from 190,000 to over 450,000 – again, more than doubling.

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Trailing Behind Europe in Employment Growth

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Here’s a quick post:  Had an interesting and informative twitter exchange with Tom Healy, Director of the Nevin Economic Research Institute and Dan O’Brien from the Sunday Independent on foot of the CSO’s release of new job numbers.

Jobs growth in the third quarter was 10,400 seasonally adjusted.  For the same period last year it was nearly 18,000 but we know there are serious flaws in 2013 employment figures given the CSO’s warnings about the impact of their revision of their sampling base.

So, 10,000 jobs growth; for the year it is 15,400.  This is better than a loss and going in the right direction.  But is it going fast enough?  It it well balanced across all sectors?  Is the glass half-full or half-empty.

What was interesting in the twitter exchange was how we compared to EU jobs growth.   The fact is that our jobs growth this year fares poorly with the rest of the EU. The data we have goes up to the 2nd quarter of this year.

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Make the Economy Better – Abolish Zero-Hour Contracts

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Minister Ged Nash launched an investigation into the extent of zero and low-hour contracts in the labour market.  This is most welcome – we need this information which is not available in official surveys (though it should be noted that the investigation into low-hour contracts could be extremely limited as they are only examining eight hour or less contracts – whereas low-hour contracts can go as high as 20 hours).

But what would be even more welcome would be an announcement that zero-hour contracts will be abolished.

I will refer to zero and low hours contracts as precarious contracts.  These contracts require employees to be available for a certain number of hours per week, or when required, or a combination of both – but without any guarantee of work.

Under Irish law, if the employee gets no work, then the compensation should be either 25% of the possible available hours or for 15 hours – whichever is less. If the employee gets some work, they should be compensated to bring them up to 25% of the possible available hours.   Here are a couple of examples:

  • Janet is required to be available for work for 20 hours a week.   She gets no work.  She must be paid, nonetheless, for 25 percent of the available hours – five hours (this is less than 15 hours).
  • Bob is, also, required to be available for work for 20 hours a week.  He gets four hours’ work.  Since he is entitled to five hours payment (25 percent of his work availability), he get an extra hour payment.

I don’t intend to list all the negative impact of precarious hour contracts on workers.  Suffice this piece from Paul Mills writing in the Examiner:

‘The ‘employee’ is effectively reduced to a commodity like a tin of beans on a shelf waiting until someone comes to pick him or her up. It is not sustainable and is effectively immoral.

This type of contract means that the employee has no guaranteed hours or roster but must be available for work.

Whilst the system is undoubtedly beneficial to the employer, it puts the ‘employee’ at a serious disadvantage. It means there is no sick pay, only limited holiday pay, and getting a loan or a mortgage is impossible. In fact there is no guarantee of any work, so no guarantee of any pay and all that leads from that.

It takes us back to the days when fruit pickers, dock workers, farm labourers and general workers stood at a designated corner and waited for an employer to come by in the hope of being selected to work that day.’

Well put.

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We Won’t Back Down: Statement from Communities Against Water Charges

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Statement from Communities Against Water Charges

We Won’t Back Down

On Monday the 24 November 2014 we expect four of our friends and neighbors to be committed to prison for exercising their right to peaceful protest. They are to be punished for failing to abide by a High Court injunction granted to GMC Sierra which requires them (and any other protester) to, among other things, remain at least 20 meters away from workers installing unwanted water meters.

This injunction, in spite of the High Court Judges claims to the contrary, obliterates any meaningful right to protest against the installation of water meters. For that reason protesters throughout Dublin, and the rest of the country, have rejected this illegitimate interference with their right to protest, and have continued their dignified resistance to the installation of water meters, and the water charges regime.

This injunction, and the expected imprisonment of our friends and neighbors on Monday, represents another attack on the people of this country, and on the right to peacefully resist and oppose the unjust policies of an unrepresentative government. In the coming weeks and months, we expect the establishment to engage in many more attacks on our movement, using the law as one of its main instruments.

For this reason, we have been working with groups around the country on building legal defence funds: this is a collective struggle for our basic rights and a better future. For that reason, any person that ends up in court for resisting this illegitimate tax and attempt to commodify the most basic of necessities, needs to know that they will not be alone, and we will stand with them. We therefore call on the Right2Water Campaign, it’s affiliated unions and the political parties that have stated their opposition to the water charges, to contribute what they can to the Peoples Defence Funds.

If, as feared, our friends are imprisoned on Monday we are calling for a mass, silent candlelight vigil outside of the prison they are committed to (most likely Mountjoy Prison in Dublin).

As the struggle against this unjust double-tax enters a new phase, and a beleaguered government begins to lash out with all of the means at its disposal, we will make it abundantly clear that fear will not carry the day in this contest, and that nobody who stands against this injustice will stand alone.

Communities Against Water Charges

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Guaranteeing Recidivism

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This article originally appeared in Irish Left Review, Issue 2, Vol 1., published in November 2013. 

Recidivism (from recidive and ism, from Latin recidivus “recurring”, from re- “back” and cado “I fall”) is the act of a person repeating an undesirable behaviour after he/she has either experienced negative consequences of that behavior, or has been treated or trained to extinguish that behavior.

In June 2013, the ongoing rumblings of discontent at the blanket guarantee decision exploded on to the front pages with the publishing of the ‘Anglo Tapes’ recordings by the Irish Independent. After three bank inquires of a sort, through the Nyberg Report, the Honohan Report and the Public Accounts Committee Inquiry, the remaining fog around the events leading up to the guarantee and what happened on the night and early morning of 29th and 30th of September 2008 was such that it only took the selective leaking of a fraction of the tapes held by the ongoing criminal investigation to stoke up public rage and renew calls for a proper inquiry or tribunal[i].

This continuing fog and the far reaching consequence of the decision have led many to reach all sorts of conclusions about who ultimately was responsible. In 2013 commentators like Fintan O’Toole[ii] and Stephen Donnelly TD appear to think that the protection of Irish banks provided by the 2008 guarantee was so devastating for the Irish economy that it must have been insisted upon by the ECB.

More often than not, however, this regularly repeated belief is a conflation of the 2008 guarantee with what Brian Lenihan, and later Michael Noonan, suggested was the insistence of the ECB that unguaranteed senior debt must be paid back after the 2010 bailout.

There is no indication of ECB involvement in the 2008 decision despite Brian Lenihan’s retrospective claim in 2010 that it was impelled by Jean Claude Trichet’s voicemail directive in 2008 to ‘save our banks at all cost’[iii]. On the contrary there is plenty of evidence that there was widespread surprise and anger in Europe at the ‘unilateral’ move and the problems it created, as well as pressure to change it.

It is important to understand that the original guarantee was an Irish decision alone, without any outside involvement, because it helps us dissect the nature of power and class in Ireland. The facts need to be separated from the myths in order to appreciate how decisions like it continue to determine the shape of the economy and the nature of Irish society.

The action in September 2008 is an illustration too of how a type of ‘rentier’ class in Ireland are able to exploit Ireland’s resources without consideration of the consequences for wider society. These rentier capitalists benefit from the managing of assets, whether through financial services, the movement of corporate profits tax-free or investment property. Their interests are boosted by the state leading to the side-lining of productive capital and the continually undermining of labour’s position[iv].

The guarantee was not put in place simply to maintain liquidity to Irish banks. Officials and politicians knew enough to be aware that the problems at Anglo Irish Bank and Irish Nationwide were far greater than one of a temporary lack of liquidity due to a crisis elsewhere. Funds from the Central Bank of Ireland had been provided to Irish banks through unprecedented quantities of Emergency Liquidity Assistance. Banks in other countries were experiencing similar problems and received extraordinary quantities of emergency funding from their central bank during the crisis in September. Yet, significantly, no other EU country provided an unlimited guarantee.

In Ireland’s case the problem was twofold. One, to keep cheap interbank lending available to Irish banks, they needed a guarantee that would remove the sense that Irish banks were increasingly high risk because of their over-exposure to collapsing property markets.

Two, in order to keep the level of emergency liquidity available to ensure that Anglo Irish Bank and Irish Nationwide remained open they needed a guarantee that would make an insolvent bank ‘solvent’. The dangers of this approach were clearly outlined before the decision was taken, yet we are still asking ‘why did they do it?’

To try and answer that question we have to go back to the last time the Irish government provided an unlimited guarantee to the banks to enable them extract themselves from a speculative fiasco even though there was incredible risks to the wider economy by doing so.

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The Government U-turns itself into a Home Tax

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Let’s recap.  The Government has been forced to:

  • Stop Irish Water’s access to PPS numbers
  • Provide certainty to household payments
  • Reverse the sanction of reducing water flow to a trickle for non-payers
  • Provide new statutory guarantees to keep water service under public control
  • Scrap the system of social protection subsidies and tax breaks which would still leave hundreds of thousands of people in work without financial support
  • Delay the introduction of bills
  • Increase the cap from nine months to at least four years
  • Make the roll-out of water meters redundant in the medium-term
  • Introduce new governance measures (probably when the Evira/Irish Water boards are reviewed in a few months’ time)

The Government has u-turned so much it doesn’t know which direction it is going (if there are other u-turns and cul-de-sacs please let me know).

And now the Government looks to u-turn itself back into re-introducing the household charge – that pathetic, fiscally useless, regressive tax.

It appears the Government will introduce a two-tier charge on all households connected to the public mains (approximately 80 percent of all households).  A charge for a one-person household will be capped at €176 per year; for a household with two or more adults will be capped at €276 per year.  All households can avail of a Department of Social Protection rebate of €100.

Let’s be clear about this:  this is a household charge (or a home tax if your will – since it won’t be confined to property-owners; it will apply to tenants as well).  This is no different to the household charge except that the charge is higher and differentiated by the number of adults in the household.

This has nothing to do with water, except that you just happen to use water.  The water allowances will remain in place.  But for all practical purposes the cap will be the effective charge.

The goal of conservation has been undermined.  A household that conserves water will be, for all practical purposes, charged the same as a household that leaves their en-suite Jacuzzi on all night. Theoretically, one could reduce their charge through conservation – but any reduction would amount to only a few cents per week, such is the impact of the cap.  The incentive is small to the point of near non-existent.  And this looks likely to remain in place until at least 2018 and maybe longer.

It is worth noting that the cap will act like a flat or fixed charge.  Prior to the local election the Labour Party made much play of the fact that they stopped the imposition of a fixed charge for water.  Now the Government has u-turned itself into just that – a fixed charge.

And the flat or fixed charge will be regressive.  We can see the trajectory of the cap as it impacts on household income.  This uses the data from the Household Budget Survey 2010.  The magnitude might be slightly different today but the distributional impact will be pretty much the same.

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Water Charges and TTIP!

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The water charges can and must be defeated by resistance and non-payment but water, as a human right, must also be secured as a publicly owned and controlled resource universally available. Remember, we had to fight water charges in the 1980’s and again in the 1990’s so let’s make this win a permanent one.

The origin of the present water charges lies in the EUs Water Framework Directive (2000) which provided for full cost recovery for water use and whose Article 9 states:

Member States shall take account of the principle of recovery of the costs of water services …’

It also required Member States to have in place water-pricing policies by 2010. The Directive was transposed into Irish Law in 2003.

So, the origins of these punitive charges, this time around, are the Water Framework Directive which seeks to commodify water provision through the establishment of the principle of recovery of the costs of water services. The EU took advantage of the ‘bailout’ to make it a condition of the ‘loans’.  This will open the way for the sale of Irish Water either in whole or in part, ostensibly to complete the single market or to promote competition ‘in the interests of the consumer’. This is just one reason why there is such resistance to a constitutional referendum to permanently retain Irish Water in public  ownership – the other is TTIP.

The Transatlantic Trade and Investment Partnership (TTIP), is currently being concluded in secret by the EU and US. Both sides have made clear their intention to use TTIP to get access to what is described as “public monopolies;” that is, public utilities including water. These services would then be vulnerable to greater outsourcing and private tendering for service delivery and eventually, to privatisation.

TTIP would open up public procurement contracts to the private sector, meaning that social, environmental or “public good” goals in public procurement would be removed. A private monopoly can fix its price at an unaffordable level, as Bechtel did in Bolivia, leading to a popular uprising; the termination of the contract and replacement of the government.

It would also make the nationalisation (or renationalisation) of services or resources virtually impossible, as incredibly, corporations would be able to sue for loss of future and expected profits. This is facilitated by the inclusion of an (ISDS) Investor – State Dispute Settlement clause in TTIP.

 

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Resisting the Water Charges and Defending Our Right to Protest

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Statement from Communities Against Water Charges
Resisting the Water Charges and Defending Our Right to Protest

We are residents of a number of communities in Dublin North East. Over the last number of months we have come together to resist the installation of water meters in our areas, and to oppose this unfair double taxation that the government calls water charges.

For most of us, this is the first time in our lives that we have engaged in any sort of protest and have only done so because we simply cannot take any more of this government’s austerity agenda. At all times we have sought to resist the installation of these meters in a peaceful, dignified and resolute manner.

We are therefore appalled at the recent developments in how An Garda Síochána have policed our protests, and with the blatant campaign to vilify and demonise us that the government and Gardai, supported by segments of the media, launched in recent days.

They have claimed that Gardai are routinely assaulted at protests, and that our movement has been infiltrated by a “sinister fringe” or by “dissident republicans”. We categorically reject these claims. In recent weeks we have been subjected to heavy handed and abusive policing by the Gardai. Men and women, protesting peacefully, have been pushed, pulled and punched by Gardai. To our knowledge not one of our fellow protesters has been convicted of assaulting a member of An Garda Síochána, and violent protest is not something we would endorse or tolerate.

With respect to the claim that our movement has been infiltrated by sinister elements, we reject this also. We are the people on the streets, day in, day out, peacefully resisting these meters; we are mothers, fathers, parents, pensioners, workers and unemployed – we are not sinister, dissident republicans.

In light of these developments, we are genuinely fearful that the Gardai, at the behest of the government, are preparing to become even more aggressive towards our protests and to eviscerate our right to protest.

We therefore call on all of the people of Ireland to come out and support us this coming Monday, 10 November 2014, in Dublin North East. We fear that GMC Sierra will attempt, with heavy Garda support, to enter our areas and install meters that we do not want. It is our intention to continue to resist this unjust tax in a peaceful and dignified manner, but we fear that the decision has been made to strip us of a meaningful right to protest.

Each and every one of us has resolved to resist this tax and these meters, we will continue to do so in a peaceful way, but if we are to succeed we need the support of other communities. If we all stand together, we can resist these charges, retain water as a public good and human right, and vindicate our right to protest.

Communities Against Water Charges
communitiesagainstwatercharges@gmail.com
09 November 2014

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The Government Should now Come Clean on Water Charges

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I admit I can’t let this issue go but such is the misrepresentation, partial information and deliberate obfuscation being put out in the debate that it goes beyond a narrow calculation.  It actually reveals a Government determined to hide the facts in pursuit of a policy which caused over 150,000 to demonstrate last weekend.

Yes, I’m talking about water charges – but specifically about the estimated impact on the deficit if water charges were removed.  And now Dr. Tom McDonnell over at the Nevin Economic Research Institute has done his own sums – and they mirror what I had previously calculated here.

The Government is claiming that removing the water charges would ‘cost’ €800 million (this was run out again on Morning Ireland today).  Is this correct?  No.  Let’s look at how the Government is obscuring the real numbers and see if we can find the right ones.  If this gets a little ‘number-dense’ please stay with it for it is about more than just abstract calculations; it is about how the Government is treating this issue and the public at large. All numbers are approximate and rounded.  I have produced a summary table below.

  • First, the total cost of water service provision is €1.3 billion (€700 million in current spending and €600 million in investment).
  • Second, the Government is committing €500 million from the Local Government Fund to Irish Water.  This is ‘on the books’; that is, this is counted as government expenditure.
  • Third, this leaves a saving to the Government of €800 million.

So far, pretty clear. The Gvvernment’s argument seems to stack up.  But, no, this is not the case.  Because the Government is losing €250 million in revenue.  This is the amount collected through commercial water charges on businesses  This used to Government coffers.  Now it belongs to Irish Water.

So the Government gains €800 million savings on the expenditure side but loses €250 million on the revenue side.  This leaves a saving of approximately €550 million. This is pretty much the same number that Dr. McDonnell arrives at:  €527 million.

Ok, so we have sorted that out.   The actual cost  of removing water charges would be €550 million – yes?  No, that’s not it either.  Because the Government is spending money as part of the move to water charging – spending that wouldn’t exist if there weren’t the charges.  Dr. McDonnell states that he doesn’t factor these in.  So let’s do that.  There are three expenditures:

  • First, Social Protection is increasing subsidies to the Household Benefit Package and recipients of the National Fuel Allowance scheme ‘to offset the cost of their water bills’.  This will cost €66 million.

Finally, the cost of providing free water allowanced for children is ‘on the books’; that is, it is counted as government expenditure.

‘Social transfers in kind include such items as free travel on public transport, fuel allowances and the child-based free allowance related to water charges.’

‘How much does this cost?  The Government doesn’t say.  But we can estimate.  There were approximately 1,170,000 recipients of Child Benefit.  Each one of these children should be receiving a free water allowance of 21,000 litres per year.  On the basis that this will cost €102 per child, this brings the total cost to €119 million.  But this is just an estimate so let’s be conservative and round it down to €100 million.

When we add up these costs – Social Protection subsidies, tax relief and free water allowances for children – it comes to €200 million.  This will ‘cost’ the Government.

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