8 May 2003 Edition

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Two Ireland's set for collision course

BY ROBBIE SMYTH


Welcome to the land of two economies, two realities, two separate Irelands. There is one Ireland that the majority of us live and work in. Then there's that other Ireland, inhabited by the Dublin government and the business class, they pamper with tax breaks and soothing promises of more grants, more aid and more pressure on ordinary workers to deliver more and more concessions to the mantra of productivity and competitiveness.

THE ECONOMY STUPID



Meanwhile, back in the real Ireland, things are getting worse and figures released last week shows just how bad things really are. Unemployment rose for the sixth straight month and reached its highest level since 1999. Job losses for 2002 in the economy were at their highest level since 1987.

Exchequer returns published by Charlie McCreevy's Finance Department show that tax revenue is falling, leaving even less money to pay for the already cut back vital public services.

However, in that other Ireland, things are not so bad. Nowhere is this more starkly obvious than in the figures for economic growth published by the Central Statistics Office last week.

The measures showed that the domestic economy was standing still while the international parts of the Irish economy are forging ahead. There are two measures of economic growth. The first measure, Gross Domestic Product (GDP), includes the profits made by multinationals in Ireland. This figure grew by 6.3% in 2002.

The second measure, Gross National Product (GNP), subtracts all the wealth taken out of the economy by not just the transnational businesses but also Irish businesses and individuals who are able to money out of the domestic economy. So, once this money was sucked out of the state, we are left with an economy standing still with less than 1% growth in the year.

Agricultural output was nearly 5% down on 2001 and the economy as whole contracted in the last three months of 2002.

20% HEALTH CUT



Perhaps the most obvious sign of these two Irelands is clear from the health issue over the last week. Dublin's five largest hospitals are closing hospital beds. There will be a 20% cutback in non accident and emergency services by these hospitals who provide healthcare not just to the Dublin region but who are also required to provide specialist treatments in cancers, coronary care, bowel and urinary disorders etc, to patients across the 26 Counties.

Speaking in Leinster House this week, Health minister Mícheál Martin denied there was a major problem and decried those who believed we have a crisis in the 26-County healthcare system. Martin said: "I have heard the word crisis used about the health service for the last five or six years - used with gay abandon."

Instead, Martin highlighted the increased funding he had got during his term of office for healthcare. Here again are the two Irelands in contrast. He didn't mention that, in a policy begun by Fianna Fáil, the health service was starved of funding for over a decade. He seems to have forgotten too the massively increased population or that much of the funding is soaked up into the private healthcare system and the pockets of pharmaceutical companies and millionaire double-jobbing consultants. Martin has not been prepared to take on any of these vested interests. Another score for that other Ireland, then.

THE REAL ENEMY?



So we have a problem, and we have a government whose job it is to deal with the problems, don't we? In between Tony Blair jetting in and out of Ireland on Tuesday there was an all day cabinet meeting on the economy.

Did you know that each cabinet minister was asked to come to the meeting with a ten-minute presentation on their achievements in office over the last 11 months? The ministers also had to make specific proposals for improving the government's performance.

Such was the importance given to the day that the meetings continued through dinner. Are you impressed with the sacrifices our public representatives make on our behalf?

Don't be. Their response was sadly predictable.

The cabinet decided that the "real enemy" is inflation. For example, inflation not unscrupulous property developers and a complaint government is responsible for rising house prices. Transport Minister Seamus Brennan said: "We talked about how to push down prices and generally how to get on top of inflation, because it is a great enemy and it does eat into wages. It makes house prices rise and so on."

Incredibly, Seamus also went on to talk about how fast our economy is growing. He seems not to read the CSO reports. Brennan said: "It is still the fastest growing economy in the EU. We are still outstripping virtually all of our competitors. We are not doing as well as we were, but we are doing well."

You see, here are the two Irelands in collision again. Who is doing well Seamus?

REAL WAGE INFLATION



Some examples sprang into the public domain during the week. For example, take the directors of the Kerry Group, who shared €4 million last year in wages and bonuses. This was a 9.5% increase on 2001 and well above what will be paid in this year's partnership agreement in a sector where the actual farmers were facing actual falling incomes.

What about those trying to buy houses? Well, the bosses of Sherry FitzGerald, Ireland's leading auctioneers, had a good year. Chief Executive Mark FitzGerald received a bonus of €350,000 and a 43% increase in basic salary, giving him nearly €600,000 in wages, a 300% wage increase on 2001.

Independent News and Media directors received a 41% increase in payments last year, even though profits at the company fell by 64%.

I wonder did any of these directors read a survey by Deloitte and Touche of company managers. 80% of the 303 managers surveyed said wages are the biggest drain on resources and 42% believe that wage increases will cause job losses this year. Who could they have been talking about?

With short-sightedness in both the business community and government, how long will it be before the two Irelands collide?

An Phoblacht
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