Campaign Against the Austerity Treaty

Vote No to the Fiscal Compact Treaty, Referendum in Ireland, May 31 2012

EU Austerity Treaty = More Taxes and Cuts: Vote No! – Statement Signed by Elected Representatives, Trade Unionists, Community Activists, and Academics

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Opponents of Austerity Treaty say:

Treaty would make elections a sham!

Show us the cuts.

Campaign Against the Austerity Treaty

EU Austerity Treaty = More Taxes and Cuts: Vote No!

Cuts in services and extra taxes on ordinary people have brought nothing but unemployment and poverty – austerity has made the crisis worse.Now we face the EU Austerity Treaty, supposedly to stop governments spending more than they raise in tax.

But the deficit in Ireland is not due to public spending. It is due to the collapse of tax income, caused by closures and unemployment resulting from the collapse of construction and the bank crisis. Private investment has dried up, so the only way out is for the state to finance public works such as hospitals and schools – as well as funding our public services. This gets people back to work and can promote sustainable development.

Instead, this Treaty would force governments across Europe to cut services and increase taxes – like the household tax. This would make things even worse: more out of work, less spending, more closures, long term poverty and deepening debt. That’s what’s happening in Greece.

What happens if we say NO?

The scaremongers who say that Ireland will be pushed out of the euro if we vote no are lying. Ireland will remain in the EU and the eurozone, but will not be in the Austerity Club. Ireland will not be isolated. An Irish ‘No’ will challenge the EU’s austerity policies. It would be a vote to link up with ordinary people across Europe – putting the needs of people and the environment before the super-rich and the banks.

Blackmail

The government’s only argument to support the Treaty is the Blackmail Clause. This says that Ireland won’t get money for a second ‘bailout’ from the ESM fund if we don’t approve the Austerity Treaty. Fine Gael and Labour agreed to put this Blackmail Clause into the ESM Treaty and the Austerity Treaty. But they also have the power to get it out, because Ireland has a veto over the amendment to the Treaty on the Functioning of the European Union needed to set up the ESM Treaty. The government has said that the votes on the ESM Treaty will happen after the referendum. If they want a free and honest debate on the Austerity Treaty, the government could declare that if the Austerity Treaty is rejected they will veto the ESM Treaty unless the Blackmail Clause is removed.

What happens if we say yes? Cuts and tax increases

The rules of the Austerity Treaty would bring more cuts and tax rises: up to €5.7 billion more from 2015 to 2017 – on top of current proposals of €8.6 billion in cuts and tax up to 2015. The Treaty would also effectively deny governments the right to engage in significant public spending, such as major public works, to get people back to work. Given the collapse of private investment, strangling public investment would bring more unemployment, poverty and stagnation – especially as it would be done in Ireland and across Europe at the same time.

Article 3 of the Treaty imposes a harsh target of a structural deficit of 0.5%. In 2013, the European Commission estimates that 18 out of the 25 countries affected will be in breach of this target. Meeting the target across Europe will mean cuts and austerity of over €160 billion. This will be devastating. In Ireland, the Department of Finance estimates we will have a structural deficit of 3.7% in 2015. Closing this gap would mean extra cuts and taxes of up to €5.7 billion – yet more health cuts, education cuts and unjust taxes like the household tax.

Article 4 strengthens the existing Stability and Growth Pact requirement for states to maintain a debt-to-GDP ratio of 60%. Under this rule a state in breach of the 60% limit will have to reduce the excess portion of their debt ratio by 1/20th a year. In Ireland’s case this will strictly apply from 2018, when we are expected to have a debt-to-GDP ratio of about 120%. But from 2015 – when Ireland leaves the current austerity/bailout program – and 2018, Ireland will nevertheless have to make “progress towards compliance” with the debt-to-GDP rule. If GDP is growing in 2018, Article 4 will not necessarily require an actual reduction in the debt. However if the economy remains in recession or growth is marginal, which is the likely outcome of the cuts required by Article 3 of the treaty, then Article 4 would require additional austerity in order to reduce the debt. All this would be on top of the €9 billion a year interest payments on the national debt from 2015.

Democracy – RIP

The Austerity Treaty would turn elections into a total sham. No matter what government was elected, or however big a protest movement, austerity policies would be permanently in place. This Treaty would put the decisions on budgetary policy into the hands of the European Commission and the European Court of Justice. Merkel and Sarkozy want this Treaty because it would make the EU an enforcer for the speculation debts of their banks – no matter what policies other governments were elected upon.

Where would we get money?

The government will have a deficit of about €15.8 billion this year – €2 billion of which is going to the Anglo and IL&P bailout. Ireland also has an increasing debt because the state has taken on the gambling debts of the banks – including Anglo – at the insistence of the EU. So the first step to reducing the deficit is to stop paying bank-related debt – it’s not our debt – and write off billions in debt and interest payments. The next step is to tax wealth. There are net financial assets of €107 billion in Ireland, mostly in the hands of the richest 5%. Wealth taxes, increased capital taxes and eliminating loopholes could reduce the deficit significantly.

Life before debt

These first steps, along with major public works, are vital to stop the impoverishment of our people. Money is available: the ECB recently loaned €1000 billion at 1% interest to European banks. This could have gone to governments as low interest loans for public works – which would get hundreds of thousands back to work and slash the deficit. The Austerity Treaty would enforce the opposite: cuts and poverty – to protect bankers.

Call for a ‘NO’ vote

Stopping the Austerity Treaty is vital for stopping more cuts and taxes on ordinary people, and retaining the democratic right of governments to implement the policies on which they were elected. We call for a ‘No’ vote on the Austerity Treaty in the referendum on May 31st.

Signed:

Gerry Adams TD, Padraig MacLochlainn TD, Mary Lou McDonald TD, Peadar Toibín TD, Pearse Doherty TD, Senator Kathryn Reilly, Aengus O’Snodaigh TD, Brian Stanley TD, Caoimhghín Ó Caoláin TD, Dessie Ellis TD, Jonathan O’Brien TD, Martin Ferris TD, Michael Colreavy TD, Sandra McLellan TD, Sean Crowe TD, Senator David Cullinane, Senator Trevor O’Clocartaigh, Catherine Murphy TD, Luke ‘Ming’ Flanagan TD, Finian McGrath TD, John Halligan TD, Thomas Pringle TD, Mick Wallace TD, Joan Collins TD, Clare Daly TD, Seamus Healy TD, Richard Boyd Barrett TD, Joe Higgins TD.

Jimmy Kelly, Regional secretary, UNITE, Dr. Michael Cronin, NUI Maynooth. Dr. Sinéad Kennedy, NUI Maynooth. Professor Joe Cleary, NUI Maynooth. Professor Luke Gibbons, NUI Maynooth. Marnie Holborow, DCU. Ailbhe Smyth, Feminist Open Forum. Eddie Conlon, DIT and Executive Committee Member TUI Dr. Kieran Allen, UCD. Dr. Andy Storey, UCD. Dr. Gavin Titley, NUIM. Dr. Colin Coulter, NUIM. Andy Storey, School of Politics and International relations, UCD; Theresa Urbainczyk, School of Classics, UCD; Professor Kathleen Lynch, Centre for Equality Studies, UCD; Helena Sheehan, Professor Emerita, DCU; Cathleen O’Neill, Kilbarrack Community Development Programme; Eithne Murphy, Economics Department, NUIG; Councillor Louise Minihan (Éirigí), Dublin City Council; North Cork Anti-Austerity Campaign. Cllr Ted Tynan (WP) Cork City Council, and Cllr Davy Walsh (WP) Waterford City Council.

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