Fine Gael and Labour – Meet the Fiscal Spacers

“This time next year Rodney, we’ll be millionaires” – this was Del Boy’s famous catchphrase from Only Fools and Horses in the early 1980’s. It played on the fact that the two brothers always hoped for a better future despite the fact that their hair-brained schemes never seemed to quite come off. Usually, it is government spin-doctors accusing the Left of being economically illiterate, but with an election just around the corner, it is they who have dreamed up the bonkers concept of a fiscal space. Lost in space would be more appropriate.

According to Noel Whelan in the Irish Times, the fiscal space is a recently introduced economic concept best described as “a hoped-for increase in national disposable income”. ‘Hoped for’ are the operative words in the sentence, given the fact that the whole thing relies on revenue forecasts that will only come true if the economy continues to grow at 3.1% every year between now and 2021. The idea that anyone can predict this far ahead should be held in contempt, particularly when we remember that (1) very few mainstream commentators predicted the crisis of 2008 and, (2) the global economy is in a precarious state, with China slowing dragging the emerging markets into recession. If the global economy continues to falter, there is every chance that Ireland will soon follow suit.

It is true that a combination of extremely low oil prices, extremely cheap money and extremely favourable exchanges rates (against both the dollar and sterling) have helped the Irish economy to export its way to a paper recovery. However, being a small open economy also means that when the next global crisis hits, Ireland will be disproportionately affected. Any serious economist knows that making predictions like these is foolhardy in the extreme. But of course the whole idea of a fiscal space is nothing more than a blatant attempt to hoodwink the electorate into voting for the government. Having spent five years imposing austerity and pleading poverty, the government have suddenly found its way into the promise land of the fiscal space. Let’s look at some of the facts.

According to Fine Gael there could be as much as €12 billion in extra goodies waiting for us in the next Dail session. ‘Lie’bour’s Brendan Howlin has been busy proclaiming the very same figure, despite the fact that the Department of Finance have told them that they are double counting this fantasy money to the tune of €2 billion. Be-that-as-it-may, the real message in the fiscal space is not hard to decipher. The recovery is only just around the corner, but you need to stick with the government if you want your reward at the end of the rainbow.

When FG promise to abolish the Universal Social Charge it is done through the magic of the fiscal space. When Labour wants to stand over its affordable childcare programme the fiscal space is trotted out as the panacea. In the middle ages the Catholic Church infamously sold spaces in heaven in the form of indulgences and here we have government lackeys indulging in the same sort hocus-pocus.

At the same time as they declare the fact that they will have an extra €12 billion to give away, FG have been saying that they want American style taxes and (by extension) America style social services. This will mean that taxes are slashed for the richest in society, making it very unlikely that ordinary workers will get any space from the current austerity. Irish people should not be hoodwinked any longer. The establishment have made promises like these for nearly 100 years now and they never deliver. Each new election brings a whole series of new promises that are quickly broken as soon as the votes are cast and sealed.

People Before Profit rejects everything about this sham debate, particularly when the government could generate actual fiscal space by taking on the richest members of our society. Instead of spending make-believe money, PBP wants a radical redistribution of the wealth that already exists in our society. We want the fiscal space that would come from refusing to pay the roughly €9 billion to faceless bondholders. We also want the fiscal space associated with the €4 billion in unpaid taxes by the big corporations. This is the real way to give people some fiscal space, but the government never want to take any of the wealth that actually exists in Irish society.