The Progressive Democrats have won. The cultural change in Irish politics they sought and inspired has happened. Ireland has become a mean, ungenerous, uncaring society, massively divided between rich and the poor, writes Vincent Browne
More than that, no political party nowadays is proposing to do anything meaningful about it. They are all Progressive Democrats now. In that Mary Harney phrase that extolled the virtues of low taxes and low public expenditure, we are all now closer to Boston than to Berlin.
That change in Irish society has been portrayed in a recent Combat Poverty Agency publication, Irish Social Expenditure in a Comparative International Context. And although the presentation of the change is conveyed at times in confusing terms, the message is powerfully conveyed.
Social welfare expenditure in Ireland increased as a proportion of GDP from the 1960s to the mid-1980s. Then a rapid decrease occurred. In 1986 it was 17.2 per cent of GDP, in 1999 it was 9.6 per cent. Welfare expenditure (or "social security transfers", as it is called in the report) in Ireland is a lower proportion of GDP than in any OECD country (i.e. developed country). The EU average in 1999 was 16.8 per cent, the OECD average 14.2 per cent. The report comments: "During this period Ireland was converging with the US and diverging from the EU average."
Of course, the Irish performance reflects lower expenditure on benefits as unemployment has fallen, and the diminishing proportion of GDP is influenced by the high rate of GDP growth in the 1990s. But that is not the whole story, for what has happened reflects a lower priority for welfare generally.
As we are repeatedly reminded by Government Ministers, social expenditure has risen considerably in the 1990s but, as is repeatedly ignored, social expenditure's share of national income has fallen. The report notes: "The level of public and social expenditure in Ireland is closer to the US than to EU levels".
Social protection expenditure includes pensions, unemployment benefits and disability benefits. In 1998 the EU average was almost 28 per cent of GDP, in Ireland it was 18.1 (which is the more realistic basis for assessment in Ireland). In Sweden, for instance, it was 33.3 per cent.
At the same time, we are giving large tax breaks for the funding of private pensions. The "tax expenditure" (i.e. tax forgone) on private pensions was 10 per cent of the cost of social welfare pensions in the 1980s. By 1997 it was up to 66 per cent, a massive benefit for the wealthier.
Health expenditure in Ireland has increased very substantially. But as a proportion of GDP public expenditure on health in Ireland has declined from 6.8 per cent in 1980 to 5.2 per cent in 1998. This compares with 7.8 per cent in Germany. Even the US devotes a higher proportion of its GDP to public health expenditure, 5.8 per cent in 1998.
However, private health insurance has blossomed here. Of the country's total expenditure on health, 8.3 per cent is in private insurance cover.
The cost to the Exchequer of this private health insurance cover (i.e. the tax forgone) was €75 million in the 1998-99 tax year, another huge benefit for the wealthy, giving them priority of access to available health resources. (The Irish 8.3 per cent compares with Denmark's 1.5 per cent.)
There is much guff in our political culture about the importance of families and children. Yet our expenditure on this sector is also below the European average; 1.9 per cent in 1998, as compared with 2.2 per cent in the EU on average. Net total social expenditure in Ireland is the fourth-lowest among OECD countries - only Japan, New Zealand and Korea have lower levels of expenditure.
Our tax system has also veered closer to Boston than to Berlin. Total tax revenue in 1999 was just below 32 per cent, well below the EU average of 42 per cent, and roughly in line with the US level. Furthermore, nearly 40 per cent of Irish tax revenues are taxes on goods and services, which impact similarly on rich and poor (the EU average is just over 30 per cent).
The choice between a society that is fair, with reasonable levels of social expenditure (i.e. around the EU average) to finance health, education and housing, as well as social welfare benefits, and a society that opts instead for low expenditure and low taxes with all the attendant inequalities and poverty is one which has never been put to the Irish people.
Yes, we remember the "payback time" election of 1997, when Fianna Fáil and the Progressive Democrats promised more tax reductions (this was at a time when the economy was already booming and job creation was unprecedented, so the usual economic case for tax reductions was irrelevant). However, the electorate was not told then of the consequences to the health and education systems, or the huge inequalities this would give rise to, of how a large section of the population would be left behind.
And that is now a done deal.
For although parties such as Labour may bemoan the widening inequalities and acknowledge the need for more funding of welfare, health and education, there is a great fuzziness about paying for this through tax.