Budget 2024: Part One
Not €10 billion, €25 billion!
The reality of imperialist domination behind the Irish budget
27 September 2023
Ministers Michael McGrath and Paschal
Donohoe.
In the run-up to the Irish budget for 2024 the level of comment and debate is steadily rising. Amidst all the sound and fury, it is not generally understood that we are at the end of the process of constructing the budget - the main outlines were in place in mid-July.
The period since has involved refining details and drawing civic society into the tent where they will support the overall programme while being free to question or oppose individual elements. The result is a corporatist structure in which no-one questions the subordination of Irish politics and its economy to imperialism.
The initial steps, a pre-budget forum in July, saw Minister for Social Protection, Heather Humphrey, host a meeting of over 60 organisations. The Forum offered:
"an important opportunity for community and voluntary groups, trade union and employer representatives to discuss and debate policy issues and present their thoughts and views on the upcoming Budget".So, the majority if the audience were churches, charities and other NGOs who draw substantial revenue from the Government and who will raise issues relating to greater funds for their sector rather than any critique of the overall budget strategy. Hidden in the crowd are IBEC, the employers’ organisation, who essentially are the government and will have already crafted their demands. Also hidden in the crowd is the trade union leadership, who represent a far larger sector of the population than any other group but who are enmeshed in endless partnership institutions and who long ago agreed to stay within the limits set by the needs of local and transnational capital.
So, the real role of the forum is to bring an appearance of national consensus to a strategy already agreed. Everyone will remain free to criticise and propose amendments, but the structure of the budget will be set in stone.
In the weeks before the budget announcement, debate has begun. It focuses on three main policy areas: tax, social spending and investment. Fine Gael, a party of the right, will call for another wad of cash for the rich. Fianna Fail will advance further populist measures to reassure the working class and Sinn Fein will try to outflank them on the left. The trade unions and the reformist socialists will call for increased social spending and, with the Greens, more infrastructural spending.
The hardest criticism of the outline budget plan came from the Irish Fiscal Advisory Council (IFAC). It has urged the Government to stick to its spending rule in October's Budget. The government passed a law to restrain spending to 5% of GDP and appointed IFAC to oversee this. It broke this limit last year and is going to do so again. In what will essentially be an election budget it will not balance between tax cuts, short term social measures and infrastructure, but will spend on all three.
The council argues that this will lead to runaway inflation and eventual collapse. By sticking to the rules however, there may be a €1.3 billion shortfall in meeting the cost of just maintaining public services and there will be a higher income tax burden.
The council's proposals line up with the government's longer-term strategy of holding on to corporation tax revenue as a "rainy day fund", to be spent in the future.
Government supporters, and much of the opposition, agree that there is nothing that can be done outside the four walls of tax, social spending, infrastructure and a national piggy bank.
But of course, anyone who had a large sum of money would invest it to increase their wealth. Why can't the Irish state do this? The answer is that any large-scale public investment would see the state in competition with capitalism itself. In housing, a large direct state investment would immediately lead to a fall in the price of housing and a collapse in the guaranteed 4% profit paid to transnational investors.
The reality of Irish tax strategy was unveiled in a conversation between Owen Reidy of the Irish Congress of Trade Unions and Danny McCoy of IBEC, the employers’ organisation.
Reidy was entirely disingenuous, claiming that ICTU opposed the government's housing strategy and supported a left alternative. In reality ICTU accepted the Housing for All strategy and essentially disbanded the Raise the Roof campaign. As the housing crisis grows, its new policy is for state intervention. A housing body would use state land to build houses for private sale with a condition that the new homeowners who change to another house sell back to the new body at the original price.
This policy, strikingly similar to Sinn Féin pronouncements, remains firmly within the private provision of housing. The only result would be the transfer of public land to the private sector. The provision of public housing, the only way to break the primacy of landlordism, is not discussed.
Danny McCoy of IBEC, for completely reactionary reasons, clarifies the issue. The number is not the current €10 billion surplus. It is the overall figure of €25 billion corporation tax involved in the current budget. All other things being equal, the Irish state needs €15 billion from a handful of transnational countries just to stand still.
So, when the budget is published, there will be all sorts of criticisms of distribution of cash. The absolute dependence of the Irish state on the transnationals will be ignored, as is the seamless and silent integration into the NATO war machine following a phone call from the US.
Yet not one line of the statement will challenge the transnational companies which dominate the Irish economy. And the left will carefully ignore the consequences of that.
So, the budget will reinforce the removal of a temporary no-fault eviction clause and will contain proposals for tax breaks for landlords. The left warned that this would lead to a surge in homelessness. They were proved correct, but there was no new campaign on the issue and they all cohere around the idea of a left government led by Sinn Féin, with no proposals to break out of imperialist rule.
The claims of the 26 County Irish state as one of the richest countries in the world is countered by the reality of a budget determined by their absolute dependence on a handful of transnational firms. A new socialist movement will be built by confronting this reality, not by ignoring and adapting to it.