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Warning on following Key's Irish economic model

Wednesday, 20 July 2005

Advance New Zealand sounds warning on following Key's Irish economic model

The NZ Heralds commentator, Fran O’Sullivan (C2 - 20 July) has revealed National’s John Keys approach to growing the economy lies in making our country a haven for off-shore financial speculators. He cites the moving to Ireland of various aspects of business to take advantage of a 10% tax rate for foreign investors. Those included aircraft leasing, interest rates derivatives, the ‘back office’ of a global foreign exchange unit and a ‘large chunk’ of private client business.

He displays a distinct lack of appreciation for the plight of those who are unable, for whatever reasons, to be a part of his vision of rich mans bluff. He behaves like the Generals of WW 1 who had a grand plan for battle with a desirable outcome in mind but a total disregard for the casualties the plan creates.

The Irish economic miracle has indeed resulted in a mega boost to the performance of the economy in terms of the wealth it has brought to some of the Irish people. Those who have been the significant beneficiaries are those who provided the investment capital and the technology needed to expand productivity. However, most of those are not Irish nor do they live in the Emerald Isle. The gap between the haves and have-nots in Ireland continues to widen.

Is it as good in Ireland as John Keys claims in the Herald commentary?

Apparently not, indeed 3 prominent university academics are reported, on 4 July 2005, to have released a book outlining the need for a new approach to tackle poverty in Ireland. The authors’ state research reveals Irish society has become more exclusive and less inclusive. Inequality in income, wealth and health has grown and ‘significant’ sections of the populace on the whole island live in poverty.

On 18 July 2005 Mr. John – Mark McCafferty, Head of social Justice and Policy with Ireland's St Vincent de Paul Society, warned that a number of fundamental deficits continue to sustain poverty (in the state). Poverty levels impact most on the ‘working poor’ who are low income earners but bear the full impact of rising costs in healthcare, rent, childcare, utility bills and education.

He says that over 148000 children under 14 years of age are living in constant poverty and experiencing regular deprivation of basic items. Mr. McCafferty said that change can only be achieved by improving income support for low earning families and increasing access to free services like health and education.
Unfortunately, Mr. Keys only sees the short term up-side of the Irish experience and ignores the impact of intergenerational poverty and exclusion the policies have apparently wrought in Ireland and the likelihood, if similar policies were introduced, the same effect would be seen here, again.

Economist Brian Easton has already stated the only way National can fund tax cuts is by selling off the remaining family silver, borrowing or cutting back on public services such as health, welfare, education, justice etc. He also states that any gain from tax cuts would be short term.

Mr Keys has indicated a priority for a National led Government post the 2005 election would be an intensive review of all government expenditure – that historically has always been a political code for belt tightening and pain for those without good health, appropriate skill sets or adequate income.
There has to be a better way!


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