JM Thorn

21 July 2009

The report of the Special Group on Public Service Numbers and Expenditure Programmes, often dubbed as An Bord Snip, gives a clear indication of the huge attack that is being prepared for the Irish working class.  It sets out a comprehensive programme for the dismantling of public services and the reduction of wages and conditions across the board.  Though nominally independent, the Special Group, in terms of its remit (indentifying savings in public spending) and its membership (drawn from finance and academia), was fixed to produce a report that fitted with the objectives of the Government.  Its purpose is to give a pseudo intellectual gloss to some of the measures that the Government wants to introduce in its next budget.  The Group’s nominal independence also allows the governing parties to distance themselves from its most unpopular proposals.  We are told that nothing has been decided yet, and the report produced by An Bord Snip is merely a “menu” of options. 

Bord Snip’s menu

So let’s take a look at what’s on the menu.  In broad terms it proposes some €5.3 billion worth of spending cuts which coves the full range of public expenditure. However, the deepest cuts come in the areas of health, education and social security.  It proposes that 17,000 job cuts across the public service, the bulk of these going in education (7,000) and health (6,000).  It also proposes an increase in the number and level of user charges for public services.  This comes alongside a proposal for a 5% across the board reduction in welfare payments and reductions in the wages and terms and conditions of public servants.  It is a triple whammy of job cuts, reduced wages and higher charges - a combination that would significantly reduce the living standards of Irish workers. Of course this is the objective of the Government and employers – to make the working class pay the price of the economic crisis.  When we look at the An Bord Snip proposals in more detail we get a sense of how heavy that price could be. 

Education 

The sector that would be hit hardest is education.  Already under strain from years of underfunding, resulting in one of the highest pupil to teacher ratios in the EU, it faces the prospect of losing seven thousand staff members.  Other measures include the closure of rural schools, longer working hours for teachers, outsourcing and rationalisation.  All this would translate into a 7.3 per cent cut in the numbers working in education and the overall €746m annual savings to the education budget - a 7.9 percent reduction in the 2009 estimated spend for the sector. 

Within the education sector primary schools would take the brunt of the cuts, with the recommendation to axe 2,000 of 10,500 special needs assistants, reduce English language support teachers and increase class sizes beyond the rise already due in September.  Given that many primary schools are being propped up and kept going by fundraising and parent contributions, the impact of a 20% cut in school funding could be devastating.  The closure of schools would also mean an increase in the number of parents having to pay for transport fees, which the report says should rise from the current  €138 a year per pupil  to €500, and even further in time. 

Health 

The report demands that over €1.2 billion to be cut from the Health Service Executive’s budget in the next year alone.  To achieve such drastic savings it makes a number of recommendations.  As in education, a big element of this is cutting jobs and reducing working conditions. It calls for staff cuts of six thousand “at a minimum” by the end of next year.  There would more outsourcing of services, and less reliance on the permanent and pensionable staff to do certain duties.  This represents further privatisation and the creation of a two tier workforce within the health service, with contracted workers on poorer pay and conditions. 

Alongside reductions in staff and the inevitable deterioration in service, patients would have to pay more for those services.  The report recommends that people attending AE without a GP certificate should pay €125 a visit.  Medical card holders should pay €5 per prescription, while those on the Drug Payment Scheme should pay €125 a month for medicines.  People on the Long-Term Illness Scheme would also face the €5 prescription charge.   Thousands of people on low incomes would lose their medical cards under a proposal to lower the qualification threshold.  Also axed would be the entitlement to hold on to a medical card for three years if a person gets a job after being out of work for 12 months.  Workers who pay PRSI who are currently entitled to some of the costs for attending a dentist, an optician and money towards the cost of hearing aids, would lose such assistance.  Elderly people and people with a disability who avail of home care packages to support them would be means tested for the first time.  The report also calls for a review of the Hepatitis C/HIV tribunal, which was set up to compensate people who received infected blood and blood products.

Social welfare

Previously social security had been one area of spending that Government had left largely untouched.  The An Bord Snip proposals therefore mark a major shift.  Its report claims that there is “clear case” for a 5 per cent cut in social welfare rates which would save €850 million a year.  It calls for a flat-rate €30 cut in child benefit payments to be imposed, saving more than €500 million.  The amount of child benefit received by parents would be cut by between €30 and €67 per child per month, depending on the number of children they have.   Currently the State pays €166 each for the first two children in child benefit, but this would fall to €136 a child.    At the moment, third and subsequent children get €203 a month. It is recommended that child benefit for these children be cut by €67 a month. 

Older people would also be hit hard by the report’s recommendations.  These include a 5 per cent cut in State contributory pensions payments which would translate into a reduction of €11 a week in the weekly pension of €230.   Over a year this would amount to a €600 cut. There is a suggestion that the age at which people can claim a state pension be raised.    The report also calls for the taxing of what is called the household benefits package for older people. This is where elderly people get an allowance to pay their electricity and telephone bills and get a TV licence free of charge.  Higher contributions would have be made by those in nursing homes, and home care services would be restricted.

Other benefits to be cut or made more restrictive would include rent supplement, paid to those on social welfare, family income supplement for those on low incomes,  illness benefit and disability allowance. The Government is cautioned not to bow to pressure to reintroduce the Christmas social welfare bonus which is “no longer affordable”.

Local government 

One of the biggest potential costs to be incurred by workers arises from the proposals on the restructuring of local government.  The report calls for a €100m cut in funding to local authorities, and a reduction in authorities from 34 to 22.  It also says that authorities should be “self-financing in the long term”, meaning that householders could be faced with a raft of new service charges.  The report suggests the introduction of water charges as a new source of revenue for country and city councils. 

Pay cuts

While much of the An Bord Snip report puts forward proposals to cut what could be termed the “social wage” i.e. social security and public services, it also targets the pay of public sector workers.  This is not just about lowering the pay bill through redundancies, but also reducing pay levels.  The report calls on the Government to   initiate a benchmarking review of public sector.  Significantly, such a review would have a remit to look at international pay rates and not confine itself to domestic comparisons.  Potentially the benchmark for public sector pay could be based on the lowest level within the EU.  This really is the race to the bottom.

More cuts to come 

The proposals in the An Bord Snip report, combined with the cuts already announced in the emergency budget, represent a massive assault on the living standards of the Irish working class.  Workers are being hit by a three-punch combination of job cuts, reduced wages and higher charges.  But the punishment doesn’t end with the measures outlined in this report.  The stated aim of the Government is to reach a position in 2013 where the budget deficit – the amount it borrows each year – is less than 3 per cent GDP.  When the financial collapse hit last summer it was looking at a deficit for this year of something in the region of 16 per cent of GDP or over €27 billion.  The various measures announced since then, starting with last summer’s cutbacks and including the two subsequent budgets, have trimmed this figure to somewhere in the region of 11 per cent or €20.3 billion.  The measures in the An Bord Snip report would get this figure back towards single digits.  However, that still requires further cuts.  The chair of the Special Group Colm McCarthy has claimed that the measures taken so far, combined with those set out in its report, would only take the Government half way towards its objective.

It should also be noted, particularly with the Lisbon Treaty referendum coming up in October, that one of the main drivers for such massive cuts is the EU.  The 3 per cent budget deficit target that the Government has set is actually part of terms of Ireland’s membership of the single currency.  This exposes the myth that the EU is somehow sheltering Ireland from the worst of the recession.  The fact is that the EU is one of the main forces behind the austerity measures we see in Ireland and across Europe.

Political response

The striking thing about the response to the An Bord Snip report is the degree of unanimity across the main political parties.  The governing parties have welcomed the report, putting forward the phoney patriotic argument of everyone sharing the pain, while stressing that its proposals are a “menu”, which means that they will be selected as political expediency dictates.  If anything the opposition parties have been more positive, with Fine Gael claiming that it had been putting forward similar proposal for years and Labour saying the that job cuts outlined are achievable.  The only variation is their claim that they can implement the cuts in a more humane manner, surgery as opposed to butchery according to Labour leader Eamonn Gilmore.

The response of the trade union leadership has followed the usual pattern of outrage and empty sabre rattling.  They remain firmly committed to social partnership and are determined to show their worth to the Government and employers in the efforts to overcome the crisis.  Indeed, the menu format of the An Bord Snip report may have been designed partly to draw the trade union leadership into helping implement the cuts.  If there is only €4 billion of cuts in the next budget, as opposed to the €5.3 identified in the report, then trade unions will hail this as some sort of victory.

The most important thing for workers is to be independent both organisationally and politically.  Workers need to organise at a grassroots level to resist the attacks and challenge the complicity of their own official leadership.  Moreover, socialists need to challenge the idea being promoted by political parties and the capitalist media that  “generous” benefits and public services or privileged workers within the public sector are cause of the current crisis. These are arguments designed to confuse the public and turn one section of workers against another.  We have to make it clear that this is a capitalist crisis, responsibility for which lies with the financial institutions and property developers and successive Governments that have done so much to serve their interests.   Rather than sharing the pain, which in practice means everything coming down on the working class, those who bear responsibility for the crisis must be made to bear the cost.  It is only by making a fundamental break with the current consensus that workers can have any hope of defending themselves.