Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
AS A WOMAN who has lived my life on the side of those who have least in our society, I have tried to advocate consistently for those living with poverty and inequality. Over the past thirty years I have worked side-by-side with members of the Tallaght West communities, and so I know that the financial bust that created the Eurozone crisis has hit my colleagues and friends the hardest.
As an Independent Senator I do not represent any party’s views. I am committed to the principles and values of progressive change, social sovereignty as well as economic sustainability.
I bring these interpretive levers to my analysis of the Fiscal Stability Treaty and to the referendum that is placed before us as Irish citizens who are members of the European Community.
Do we need the fiscal discipline of a low deficit, a sustainable debt and an automatic enforcement mechanism through European oversight if we don’t follow these rules? I say ‘Yes.’ I believe that if all members of the European community, including Ireland, had maintained fiscal discipline the euro would not be in the crisis that it is today, with the consequent increase in poverty, unemployment and the lessening of social protections for our people. Fiscal discipline is fiscal discipline. It is not the equivalent of ‘austerity.’
Will Ireland need to tap the ESM for a second bail-out? Again, I say ‘Yes.’ Our sovereign debt is heading towards €200 billion in 2015, our bank debt is €64 billion and there is little growth predicted in the next couple of years. Most likely we will need inexpensive money to plug the gap between our income and expenditure post-2015. The ESM is a solidarity mechanism for Europeans. If we don’t have access to European solidarity, social protections for our citizens and residents who need it most will decrease.
This is not the whole story, though.
Do we need something more than fiscal discipline if we are to make progress on social equality as well as economic sustainability? I say ‘Yes’. We do need substantial growth measures and I believe that a ‘yes’ from Ireland provides us more leverage to achieve those than a ‘no’.
But most importantly, we need a fresh Irish vision for social equality. We need to rebuild our social infrastructure with social investment measures. Growth must be geared towards growth for everyone. A Yes will give us the best opportunity to bring about radical change. My commitment is to progress the promise of a Yes vote.
Senator Katherine Zappone is an independent member of the Seanad.
To embed this post, copy the code below on your site
The Senator said “Will Ireland need to tap the ESM for a second bail-out? Again, I say ‘Yes.’ Our sovereign debt is heading towards €200 billion in 2015, our bank debt is €64 billion and there is little growth predicted in the next couple of years.”
Little growth predicted for the next couple of years? Wonder if that has to do with austerity and no investment? You are asking us to vote yes to long term austerity Senator. Not in my view a good idea at this time.
Can I ask you a genuine question? How do you propose to fund investment in this country without austerity measures?
Indeed you can Arch. you will note I said at this time. I didn’t say that we should stop cutting back on expenditure that is wasteful or not required. I strongly disagree in this fiscal compact we need to be able to pace our own return to balanced budgets. Tying ourselves to treaty is not the way to do that. Regarding funding there is the national pension or what’s left of it. Seems we have to sell off the state silver as well. All that money should be re-invested in Ireland not just a third or half as now being suggested. Would also suggest we stop paying off the banks €2.55 billion paid over today I believe.
Question to you in return. Do you believe austerity only will generate growth which we all want to see regardless of being for or against the fiscal compact.
Kerry, you do know the rules of the treaty are not enforceable untill 2019? You do know that the 7 years between now and then will reduce the burden through growth and inflation. You do know then that we are not expected to reach targets immediately. You do know this, right?
Kerry: With regards to your reply – if we sell of the entire national pension fund (which I have to add, is already invested in our country by way of Irish equities – the highest returning equities in Europe this year), how will we provide pensions to everybody who is, by law, entitled to one? To answer that, we can (a) borrow or (b) raise taxers. In your reply, both of these scenarios are impossible to finance, as you said yourself, you are against austerity, option (b) cannot be applied. If we go with option (a), we will have to return to the global capital markets which we have just burned, who will quite reasonably charge us upwards of 25% (if we’re lucky) interest on this finance. To fund this interest austerity will prevail, so really selling the national pension is not an option.
With regards to the “state silver” – are you suggesting that there is a vault somewhere in the country filled with billions of euro of silver? If so, please tell the government the location – they’ll be glad to know they have that at their disposal. I’m not sure they know that it’s there!
If we stop paying the banks the debt which the Irish government has legally assumed, they will never again lend to us at reasonable rates, which is fair. Imagine this – a few of your friends lend you €100 each, and you decide, “nope, I can’t repay it it and I won’t repay it” -do you think your friends are ever going to lend money to you again? If they do, and by right, they will charge a huge amount of interest because of the overwhelming risk associated with it (i.e. not getting their money back).
Do I believe austerity will generate growth? No, not immediately, but it gives us the steps to achieve growth. I do believe however that it will prevent Ireland from being in a situation such as this again. I do believe that it will help us reduce our debt. I do believe that it will reduce the costs of financing the country. In turn, this will spur growth, once we have a stable financial position. It will allow future generations a chance to borrow money to invest in the economy at a reasonable rate of expense.
Ok time for some facts At no point in the last 50yrs has a government increasing spending ever and I mean EVER led to sustained growth I always has the opposite effect .Here are a few of the studies. A 2011 paper by Davide Furceri and Ricardo Sousa studying 145 countries over 47-years found every one per cent of GDP rise in government spending reduces private consumption and private investment by 1.9 per cent. A 2011 study by António Afonso and João Tovar Jalles of 108 countries over 38-years found that there is a significant negative effect of size of government on growth. A 2008 study by Asa Johansson and colleagues of 21 OECD countries over a 35-year period found that every one per cent rise in tax as a share of GDP is associated with a 0.14-0.27 per cent fall in GDP. A 2009 study of 15 EU member states by Mihai Mutascu and Marius Milos found that the optimal public spending share of GDP was 30 per cent..
I know that facts are never allowed to influence politicians but facts are still oh whats the word oh ye TRUE!
@Jeff: A rise in government spending reduces private consumption and investment – does that make sense? Also, what’s your point?
Even if this state had huge reserves of silver as you try to imply is what the other poster suggested (which by the way is incredibly underhanded thing to do when everyone knows that that phrase means and choosing to ridicule someones choice of an idiom a desperate attempt to take away from the point that the person is making) this government would simply give it away for nothing, like the previous government did with Corrib gas and the way this government is trying to do with Oil in the Irish sea.
Let me ask you a truly serious question that no matter how many times a government politician asks they never answer. How will we start cutting another 7 – 9 billion from whenever we have to start paying after the already savage cuts that have taken place and are yet to take place under the “bailout” programme? How does a debt reduction plan to stimulate the economy when the very fiscal and monetary policy that we are struggling to keep afloat, has led to a situation of more debt than money circulation? Tell me those answers without invoking the word growth(because in the context as money as debt, you don’t get growth without increased debt) or turned the corner and then I’ll both shut up and vote yes.
Governments spend tax tax comes from people and corporations, more spending + government borrowing means higher taxes now if government decreases spending but instead of leaving that money in the private sector it uses it to fund borrowing you have a worse outcome no government investment or private ,this is what a yes vote will force on all future Irish governments ,there can be no economic growth ever under those circumstances and anyone who says different is a liar or a fool
@Ian – I have reason to ridicule somebody saying the state should sell it’s silver- I recognise that it was an idiom. However, this argument is always put up – the state should sell this and that – without actually saying what this and that is. I cannot simply ignore a point which is ridiculous without ridiculing it. Honestly, what is meant by “state silver”?! This fiscal stability treaty will not encourage growth, I cannot argue with that. What it does provide is a measure to ensure we do not end up in this situation again. What could be wrong with that? Wouldn’t you like to ensure that future generations do not have to experience what we are experiencing now?
@Jeff: I don’t mean to cause offence, but I honestly cannot understand a single thing you are writing, could you make your point simpler and use punctuation?
First of all you didn’t address the question I asked. Second, this treaty doesn’t do a damn thing to address the underlying cause of our current problems. Taking on huge levels of more debt then sinking into private banks rather than the public, hoping to stimulate our economy. The only economy its likely to stimulate is the Swiss economy. Debt is the heart of the problem, incremental budget deficits contribute slowly over time to the debt levels but it also has the effect of producing more money within the economy. The only problem with this model is when the debt isn’t used to invest in the economy and is instead wasted. I.E. Bailing out banks.
Now I’m all for monetary reform to end our dependency on private bank debt, but what we are doing is trying to eliminate the debt while not addressing the deflationary effect which will inevitably follow due to the overall reduction of the money supply is just crazy
@Ian: I never said this treaty will solve all of our problems, I reiterate, it will prevent this situation from happening again. We are taking on more debt to finance the country, not to bail out the banks. Our debt financing costs will also be lower with a yes vote. With this treaty, budget deficits will also be controlled and restricted.
You’re argument about the money supply does not make sense – nobody is burning euro notes. The supply and value of the Euro will remain constant, ceteris paribus.
I’ve already pointed out that this treaty will do absolutely nothing to stop this situation happening again, you still haven’t answered my original question
My argument regarding money supply is entirely valid. The debt is created without the physical euro’s being there to pay it, let alone with interest. Bank debt now outweighs the total money supply in our society, and without creating more debt , the debt plus interest cannot be repaid. If you want growth, in the current monetary policy, you HAVE to create debt. Now if you want to change that underlying model, I’m all with you, but our politicians are asking to two contradictory things at the exact same time. This treaty will only eliminate any possibility of growth before starting off anywhere. You can’t institute austerity and expect growth from it. Its crazy talk
@ Jeff Kennedy
You write:
“….A 2009 study of 15 EU member states by Mihai Mutascu and Marius Milos found that the optimal public spending share of GDP was 30 per cent……”
This is complete & utter ‘neo-liberal’ ideology garbage, not economics.
Scandinavian countries with gov budgets at around 50% of GDP have been barely effected by the global crisis, and have scored up at the top for quality of life for decades.
You might also care to reflect that NOT ONE of global economics modelling institutions had the SLIGHTEST CLUE that the crash caused by financial was coming, mere weeks before global banking behemoths had to be bailed out with $30 TRILLION of Fed finance or the whole global system would have melted down.
This is because the entire edifice of mainstream economics is based on numerous bogus assumptions that bear no relation whatever to the real world. Mainstream economics has been completely captured by the vested interests of the financial sector elites over the last 3 decades. They continue to profit at the expense of ordinary citizens.
The Euro common currency structure itself is deeply flawed by design – another product of vested interests of the financial sector elites.
The US, UK & Japan are all carrying far more gov debt than Euro countries. They do this because they have sovereign central banks & determine their own borrowing interests, not financial ‘markets’ as in the Eurozone, which has, effectively a privatised central bank which operates in the interests of private finance, not citizens. The result is that Euro countries, at a time when counter cyclical spending is most needed are being forced to pay 3, 4 & 5 TIMES the cost of borrowing to profiteering private interests.
If you don’t understand why counter cyclical spending is required during a recession, then you should learn some macro economics yourself rather quoting politicaly inspired cr@p from the useful (& well remunerated) idiots of those who have caused the whole mess in the first place & continue in that vein.
The fiscal compact is more of the same thinking.
But did you know that the ESM which this treaty also signs us up to, is mandated to bail out banks as well as countries? Based outside the EU in Switzerland it is to be beyond any legal jurisdiction or recourse, yet can demand funding from us at 7 days notice.
So, by signing this treaty into law, Ireland is setting itself up to borrow yet more money at punitive rates from private finance to then bail out that private financial sector when its casino operations threaten to bust the whole banking system. Sound familiar? (It should.)
As a (small) part of the fundamental reform needed for the Euro shared currency, +some+ kind of fiscal rules (but with much more flexibllity) would be appropriate. But it is hardly a priority & should not be agreed in isolation whithout the full package on the table.
As we see, the continuing agenda of EU/Euro elites is destroying the social cohesion that was the original ethos.
Both in our own interests & those of the future of Europe as a whole, we should vote NO to this steamroller attempt at a complete takeover of democratic rule by financial & wealthy elites. There is nothing urgent whatever in this treaty.
@Jeff: This might change your mind:
http://www.irishtimes.com/newspaper/opinion/2012/0529/1224316859011.html
If the senator feels so strongly that we need fiscal discipline along with all the rest of the Senators, TDs ministers and Taoiseach, then why have they not put forward proposals to slash their telephone number salaries. This is a complete and utter disgrace. They say they want fiscal discipline, but these guys are part of the problem, and are not showing real leadership towards solving the problems they have caused this country.
If FFg/Labour/FF are so serious about a Yes vote, let them make a move this week to reduce their salaries to reflect the actual responsibility they have in a country our size. There are more people living in the greater Manchester area of England, than there are in the whole of the 26 counties. The councilllors running Manchester are working for 1/3 the wages and benefits are TDs and senators are getting.
If they truly believe in the Yes vote, then let them demonstrate their conviction by addressing this issue, this week. Otherwise we know they are only looking for future bailouts to secure their own wages and pensions.
Ah but sure, how can we the people of Ireland expect our fair TD’s to pay their due charges on property in Portugal with reduced salaries? That would be irresponsible of us.
^^^^^on the ball^^^^
both posts
Act if they reduced their salaries now as a token gesture to manipulate more people into voting Yes then surely…
AH f*ck it, POPulism YAY!
So Katherine essentially you’re telling us that you’ve decided to no longer fight for those who have least.
Radical change? By piling debt on top of debt? That’ll do the trick alright.
All the buzzwords in the world can’t hide the fact that you are talking complete and utter nonsense.
So the senator is going to fight for those who have the least by supporting a continuation of a policy that has hurt those same people the most.
Must be opposites day in the Seanad,
Zappone is a Labour senator and has voted with them at every turn
Vested interest yet again!
If she’s so worried about those living with poverty and inequality why hasn’t she been vocal about the 2.25 billion being paid over today? I fail to see how piling on more debt on debt and giving away our economic sovereignty can be reconciled with bringing about radical change. All she is doing is advocating keeping the status quo in place which is the reason why people are living with poverty and inequality in the first place.
Forked tongue article from a politician.
Zappone is just another good reason to abolish the senate.
Why is an unelected senator given a platform to air views
Let her vote whatever way she wants, for whatever dumb reasons n’ shut up about it
Zapp ‘em all!!
Or just Zapp one?
Katherine, (*deep breaths*) this in no way will help the least well off in our society. The treaty is designed to continue fleecing the proles while the financial terrorists continue their malevolent reign. I suspect you know that too, but as a politician (independent or not) you know which side your bread is buttered on and have little to gain from what is right and just so more of the same please!
Katherine, your rationale makes no sense.
Some people seem to forget the austerity measures that have ALREADY taken place.. Income levies, health levies, Universal Social Charge and further stealth taxes! All these measure have reduced the domestic demand and have compounded the recession even further, thus bringing about more job losses and more pain.
You are incorrect in your assertion that the fiscal rules within this treaty would have stopped the crash in 2008 also!! Because of the hyper inflated tax base from property bubble, the government was actually running surpluses and thus why spending increased year on year! This treaty further cements the losses of the German pension and investment funds onto the shoulders of the Irish people, by including the bank debt into the deficit ratios, that we have to reduce to .5% GDP and that includes paying and servicing the bank debt ! We haven’t a hope of achieving that without further cuts to those from
Half way down and further repression of domestic economy! Have I nullified your arguments enough?….
Ghastly piece.
It escape the Senator that constitutional provisions can be either democratic or antidemocratic. They can alter the balance of power in favour of the many, or in favour of the few. The Fiscal Stability Treaty does the latter. It removes decision making powers from parliaments, prioritises the repayment of debts above the funding of any other public service.
Moreover the European Stability Mechanism is only a solidarity mechanism for those wealthy Europeans who engineered the current crisis and who profit from privatisations, the dismantling of European welfare state provisions, and the sovereign bond market. Meanwhile, as member states are increasingly oriented towards serving the needs of finance capital AKA ‘the markets’ AKA ‘investor confidence’ at the expense of their populations, real European solidarity, which is to say, solidarity between the peoples of Europe against these parasites, will be eroded, as the political class in each member state begins to rely increasingly on the rhetoric of ‘national interest’ in order to implement deeply unpopular policies.
It will also make the Senate even more irrelevant, but that’s a minor issue. Vote NO.
Well said Richard. That’s it in a nutshell. All of this is about the parasites continuing to bleed the people of Europe dry. Its nothing to do with better fiscal controls, growth, stability or any of the other bs terms used to describe the sweeteners in the poison.
The good senator writes: “” I believe that if all members of the European community, including Ireland, had maintained fiscal discipline the euro would not be in the crisis that it is today, with the consequent increase in poverty, unemployment and the lessening of social protections for our people. “”
Yet before all this blew up 15 people were dying each and every day due in no small measure to the shameful and sordid inequality on this island. That’s 5,400 premature (and preventable) deaths every year. SOURCE: http://bit.ly/JXj1uX
There were no emergency midnight meetings in Govt. Buildings, no Ministers were roused from their slumber to attend to this attrition rate. Neither Fine Gael or Labour made this attrition rate – of the vulnerable in our society – an issue in the General Election. It is not an issue in this Referendum … indeed we know from the actions of this Government and the previous Fianna Fail/Green Party Government that they regard bankers and developers as more worthy of protection that these 5,400 people.
The ‘social inequality’ the good senator fears is to become one of those 5,400 premature deaths and a Yes vote will ensure she doesn’t become one.
Yes, make yourself as useful as possible Senator. The Enda and Eamon comedy roadshow will be sure to remember and I’m sure reward you for your commitment to their cause. The abolition of your extraordinarily expensive little Tea & Biscuit discussion group is imminent and I suppose it is only wise of you to throw in your lot with those that will be of most use to you when your cookie finally crumbles. Appointments to the board await you.
Can’t say I buy your opening line for a second. My memory is not so short that I cannot recall how useful the Seanad was to the government when they moved to change the rules on their retrospective liability for money owed to citizens that had overpaid by many thousands for nursing home care in the not so distant past.. Your little club happily rubber stamped that indiscretion on behalf of the government of the day. Thankfully our last president was a constitutional lawyer with nothing to lose, unlike her colleagues in the Seanad.
The Seanad is comprised of little more by way of expression than a varied and colorful selection of farts in the wind. You and your crew collect substantial salaries and associated expenses for doing sweet F.A, lets be realistic here, you yourself collect just shy of €100,000, and you have the gall to fly the flag of civic virtue with one hand whilst expressing a citizens need of fiscal discipline. I’ll give you 10/10 for that brass neck of yours.
Politicians are now for the most part seen for what they and no amount of flag waving and self aggrandizing is going to change that one bit.
@ Journal
hope you have another independent lined up for an article tomorrow about why they will be voting NO.
i doubt it.. all the media in this country is 100 percent in line with the govt
Senator Zappone is a politican of compassion but also pragmatism and it shows in her rationale towards this treaty. Unlike many politicians of the left, she isn’t prepared to use the poorest as guinea pigs in some sort of economic experiment on Irish self-sufficiency. In the main, the politicians advocating a No vote are the very same people that claimed Ireland didn’t need a bailout in the first place. Even when the dogs on the street knew that we had no choice but to call the IMF in, Sinn Fein were bizarrely arguing that the pension reserve fund was enough to sort out the country’s economic woes. I think a lot of people want to view this referendum as a referendum on bank debt. If that was the case, then 95% would be voting No. But this referendum is about fiscal discipline, something this country badly needs. Opting out of access to funds from the ESM seems like a strange choice when we know we need another bailout. Our government has put the Irish people in a terrible predicament. They have failed us by reneging on their promises to burn the bondholders. They have refused to delay the referendum despite the recent changes and uncertainty in the EU and Eurozone.They have stood by agreements such as Croke Park to keep the wealthier public servants on side, while the ordinary working people suffer. As such, I can understand why people want to show their anger at the government by voting no but I think a lot of people don’t want to take the risk of biting off the hand that feeds us just to prove a point. The consequences might be too much to take for the poorest in our society. And Zappone knows that.
I stopped reading after this gem of yours: “” politicians advocating a No vote are the very same people that claimed Ireland didn’t need a bailout in the first place. “”
Cowen, Lenihan, Fianna Fail et all said we didn’t need a bailout and that the bailout was the cheapest bank bailout in history and that we’d turned the corner.
@ Senator Katherine Zappone At least you’re honest in the Tags you chose for this article:
#ESM #EU #euref #Eurozone #fiscal compact
No Tags for equality or poverty or austerity yet you waffle on using those words in the article. They’re just buzz words to you – indeed it could be argued that you’re denying that there is any austerity in Ireland at the moment:: “” Fiscal discipline is fiscal discipline. It is not the equivalent of ‘austerity.’ “”. You’ve illustrated perfectly the disconnect between the politicians and the people in this country.
Andrew, just to be clear: It was Journal staff who chose the tags (and the headline and all other editorial pieces accompanying this article), not the Senator.
@Christine. The Journal is then to be thanked for recognising that the good senator’s main thrust – indeed only thrust – in her article, is the continuation and further embedding of poverty within society.
We have clever rulers that masquerade as fools.
How could FG/Labor possibly unwind the social welfare system, the Crow Park agreement, top heavy management structure of the HSE etc etc etc without a non negotiable fiscal mandate effectively scratched into our constitution by our soon to be European masters. It is apparent that 60% of the Irish population are naive, childish and stupid as 60% of the population have swallowed what is undoubtedly the single greatest confidence trick in the history of the state. The Irish government could never accomplish the roll back of those above mentioned structures on their own. They need a patsy, a virus for the constitution and Brussels has volunteered to provide both. We just need to agree on Thursday our government then will sit back and Europe will do the rest.
Why else would the supposed leader of our country do all he can to date to avoid a debate? That man is sitting tight and has orders from Brussels to hold fast. What else could explain the fact that he will not as leader enter into a public debate with his adversaries over what he himself proclaims to be the single most important decision to have faced the people in the history of the state. Instead it’s photo opportunities and soundbites at 50 paces. Nothing more. That in itself is breathtaking.
And to ease us in Enda & Co pull Senator Zappone out of a hat , a self proclaimed champion of the poor and direct her to Journal.ie with a message of condescension for the state masquerading as a modicum of concern for the common man. It would be hilarious if it wasn’t so very very sad
You couldn’t make this shit up.
http://theirishbull.com/2012/05/28/aib-pay-e2-25-billion-bond-today-media-silent/ im voting no because of things like this you traitor.
They dont live in the real world they do trivial things for the working class go back to there big houses and give themselves a big path on the back ahhh ive done my bit ..They have’nt a clue another pawn on the chessboard..
Unfortunately, we need foreign ‘rulers’ once morw to show us how to live within our means. and not to behave like some backward, post-colonial peasantry.
Tomorrow they shall ask us
And we shall scream “NEIN!”
And when they ask us again
We shall scream “NEIN!”
NINE times out of NINE
We shall scream “NEIN!”
Until the Germans learn
That “NEIN!” means NEIN!”.
Senator Zappone writes:
“…I believe that if all members of the European community, including Ireland, had maintained fiscal discipline the euro would not be in the crisis that it is today…”
With the exception of Greece, a mere 2% of EZ GDP, this is COMPLETELY UNTRUE. NOT EVEN CLOSE.
(But note that Greece already had quite high gov debt when it was accepted into the Eurozone.)
It is absolutely outragious that a Senator can write such nonsense.
With the exception of Greece, before the reckless casino financial sector & banks crashed the EU & US economies, government debt & deficits (some actually in surplus) were small & completely sustainable.
It is the costs of the deep recession & bailing out the losses of (supposedly) ‘too big to fail’ banks (& bondholders) that is the sole reason for increases in debt that have occured these last four years.
Well, that, subsequent mismanagement, and the flawed design of the Euro which, in contrast to ‘sovereign’ currency countries, have been forced to pay several TIMES greater cost of borrowing, at the very time – during recession – when countries need to borrow more to act counter cyclically against the downward spiral of aggregate demand & job losses.
Whatever her intentions, Senator Zappone demonstrates her complete ignorance of economics & should not be taken any notice of regarding this treaty or the future of the Euro.
Good piece on the whole treaty issue to be found at http://economistmeg.com/2012/05/22/ireland-should-vote-yes-on-the-fiscal-compact/#more-1857
Can’t wait until Thursday when all of this is over!!!
have your say