Notes On The Front

Financing a Green New Deal

Just because climate chaos didn’t feature much in in the campaign doesn’t mean that it shouldn’t feature prominently in a Programme for Government.  A Green New Deal is absolutely essential.  And it will cost.  How much?  The National Development Plan (NDP) committed an additional €750 million per year over a 10-year period from the Exchequer.  This was before the crisis became a major political topic – before the Interdepartmental Panel on Climate Change’s warning we have 15 years to turn things around and the international school strikes.

Indeed, the Climate Action Plan made a virtue of not committing resources:

“While the plan sets out a major programme of change, this cannot be approached as a call for a new programme of spending for the Exchequer to meet.”

Instead it relies on the funding envelope contained in the NDP.  We will need considerably more than what is allocated to ‘turn things around’.  So without getting into the specific content, let’s look at how we can finance a transformative Green New Deal.  And let’s estimate the expenditure at €10 billion over a five-year period (the amount and the period is not the key point of this post – merely where we can access the funding).

In showing how we can finance a special investment programme we need to consider the following.

First, any Green New Deal must be additional to what the Government has already proposed to spend in the ten-year NDP.  Any attempt to ‘repackage’ or double-count spending will hopefully be exposed as a manipulative PR exercise. 

Second, is the spending a once-off or does it commit the Government to continuous spending.  Example:  is the €200 million earmarked for a once-off public transport project (once built it doesn’t need to be built again)?  Or is it an ongoing expenditure such as subsidies to public transport to reduce fares?  Ideally, a Green New Deal should be earmarked for capital projects but this needn’t be an iron law.

Third, is the expenditure a commercial investment and, therefore, not a charge on the Exchequer?  For instance, Bord na Mona management once had an expansionary vision of a transition to sustainable business activity such as resources recovery, wind energy, biomass, environmental products, district heating and eco-tourism, encapsulated in its New Contract with Nature.    As these would have been commercial ventures, state investment would be ‘off-the-books’ (recently, however, Bord na Mona management has adopted a downsizing strategy wherein redundancies are described as investment in decarbonisation).  Another example of commercial activity would be a public stake in a consortium to build large-scale offshore wind farms.  Being a commercial activity, the investment would not be a charge on the Exchequer.  Commercial investments would be part of a Green New Deal but would not be a cost.

Fourth, all expenditure creates new revenue streams – either tax revenue or national income.  For instance, providing free retrofit for households would be a significant upfront cost to the state.  However, the state would recoup the expenditure through a number of sources:  repayments based on income or energy savings, the construction activity (income tax, etc.), household savings spent in other non-energy areas, reduction in fossil-fuel imports, reduced EU fines, etc.   Identifying revenue streams is important to costing a Green New Deal because there is a tendency to assume that €10 billion investment means that our national debt would rise by €10 billion.  It doesn’t.  The impact on the national debt would be much less and, in the long term, would save money compared to the scenario where there was no investment.

Taking all this into account, where could we find €10 billion in a fiscally-efficient way.

First, the government is planning an accumulated surplus of €24 billion out to 2025.

This surplus is not required under the fiscal rules.  In fact, those rules would allow us a deficit in each of these years though that is probably not advisable.  However, a slightly lower accumulated surplus to fund a green investment programme is.

Second, we will have considerable cash balances (i.e. savings) out to 2023 and in all likelihood beyond.  These are cash and assets available to the Government.  In the years 2021 to 2023, cash balances will average €24 billion annually.  It is doubtful that a small reduction in our ‘savings’ will have any negative impact on a finances which are firmly in the black.

Third, we could borrow money through Green bonds.  With interest rates at rock-bottom (so rock-bottom that many of the bonds are selling at negative yield), the market is essentially paying us to borrow.  So we can start racking up the finance now at almost no cost over the next 10 years.

Fourth, reduce the tax cuts proposed in manifestos.   Fianna Fail proposed approximately €2 billion in tax cuts; Sinn Fein proposed €2.4 billion while Fine Gael proposed €3 billion. 

From these four sources (and this doesn’t include rainy day funds), we have the ability to finance a Green New Deal.  Indeed, the financing is probably the easy part.  The hard part would be finding the capacity to implement the programme.  It is already questionable whether we have the labour to launch a major housing construction programme.  Launching a major retro-fit programme might run into severe bottle-necks for the simple reason that we don’t have the labour.

However, if any new Government wants to be taken seriously it will have to substantially increase the investment into climate justice over its lifetime – whether they call it a Green New Deal or something else.  If it’s not there in the big or fine print of a new programme then we will know that the status quo has succeeded and references to ‘change’ are just so much green-washing.

Towards the 4th Disruption

It was a three-way race after all.  As of the time of writing there are still a number of seats to be filled but we have the popular vote.

Not only has there been a substantial increase in support for progressive parties;  this bloc is far ahead of the individual conservative parties.  Even when we combine the Fianna Fail and Fine Gael vote, the contest is pretty even. 

If the progressive vote has increased substantially, it is largely due to Sinn Fein’s performance.  They are now the dominant party in the progressive bloc. 

In 2016, Sinn Fein took less than 50 percent of the total progressive vote.  Today, they have nearly 60 percent.  Social democracy has seen its influence diminished, while the radical parties are also falling back.  The Greens are now challenging for second place. 

Many of the seats of the non-Sinn Fein progressive parties are potentially on loan.  Having adopted an understandably cautious candidate policy, in any subsequent election Sinn Fein will field two candidates if their support holds up in the polls.  It won’t be just the high-profile transfer-beneficiary TDs who will be at risk (e.g. Dublin South West, Dublin South Central); thousands of Sinn Fein surplus votes in other constituencies helped progressive candidates.  Sinn Fein could soon have a firmer grasp on the progressive vote.

The Sinn Fein vote has been described as a ‘surge’.  Could we be seeing a ‘what-goes-up-must-come-down’ once-off phenomenon?  We have seen party surges in the past.

In 1948, Clann na Poblachta took 13 percent of the vote two years after being formed.  They fell to 4 percent in the next election and limped along until the 1965 election – the last time they elected a TD.

In similar fashion, the Progressive Democrats took 12 percent in their first outing in 1987 but fell back to 5 percent in the next election and lasted until its dissolution in late 2008 (a little historical note:  that ol’ immigrant-basher, Noel Grealish, was the PDs’ last leader).

Labour experienced two surges – the 1992 ‘Spring Tide’ and the 2011 ‘Gilmore Gale’.  These surges didn’t last.  In 1997, Labour lost half its votes and seats.  In 2016, the party went into meltdown.  Both occurred after being in coalition.

Is this Sinn Fein’s fate?  Doubtful.  Unlike the examples above, where the surge came off a first election, or after a period of stagnation, Sinn Fein grew steadily – from 7 percent in 2007, to 10 percent in 2011, to 14 percent in 2016 and now:  24 percent.  While continuous growth is not guaranteed, they have built a decent foundation.

It is more difficult to predict the evolution of Irish politics.  This is the third disruptive election in a row.  Some will refer to 2020 as a seismic political shift, but it is just the latest twist in a volatile political landscape that started back in 2008/09. 

• First disruption: during the banking crisis Fianna Fail undid its historical broad-class alliance by siding with finance capital against its working class base.   This resulted in their collapse in 2011 and the rise of the Labour Party.  However, instead of becoming the main opposition for the first time since the 1920s, Labour made the fateful decision to enter government and continue implementing Fianna Fail’s austerity programme.

• Second disruption: In 2016 we saw Labour’s meltdown and the fragmentation of the progressive vote.  But most important was the first formal governmental arrangement between a revived Fianna Fail and a chastened Fine Gael.

• Third disruption: now we have the rise of Sinn Fein, aided by an unpopular confidence and supply government where the historically distinct brands of the conservative parties dissolved to the point that people couldn’t detect any difference between the two. 

So will this volatility continue or will we settle into a lengthy period of three party electoral competition? 

Much may depend on what happens next.  Sinn Fein has rightly begun with an attempt to construct a progressive-led government.   Even if the sears are not there (yet), the mere exercise shows that progressive politics has arrived and points to future probabilities.  Before a political force comes to power it must act like it has power.

After that, it gets hazy.  Will Fianna Fail open up to a Sinn Fein coalition?  What compromises will have to be made on both sides – and will such compromises be acceptable to the respective parties’ bases?  Will the two parties agree to rotate the Taoiseach’s office? Or will the two conservative parties patch up another governmental arrangement?  Or even a Fianna Fail-Green government with supply and confidence?   If none of this works, are we looking into a summer election?  And what would happen then?  Speculation time.

But other progressive parties face their own challenges.  The Greens’ highly successful election shouldn’t blind us to the fact that climate chaos did not play a significant role in the campaign.  They may enter government, but without popular demands for climate justice policies they may struggle to convince their coalition partners of the need for significant policy departures, thus undermining their rationale for being in government.   Reducing emissions by 8 percent per year (a minimum according to the Greens) will take a whole lot more than public transport and retrofitting projects, as vital as they are.

With Labour and the Social Democrats on the same number of seats, there will be calls for the two to merge.  However, this avoids the more fundamental question:  what can social democracy offer that Sinn Fein can’t?  For all the talk of ‘radical’ policies from housing, health, education and pensions, to workers’ right and more - Sinn Fein’s manifesto is not a whole lot different from what a robust centre-left party would offer, with the possible exception of tax-base-eroding proposals.  Without addressing that question, you can merge parties, change their names and logos, but the fundamental problem will remain.

The radical parties may be relieved to have escaped a seat-drubbing, especially after poor elections last year.  However, they, too, have challenges.  Yes, people want change – but not necessarily socio-economic regime change.  At 2.6 percent of the vote and, in many constituencies, reliant on Sinn Fein surpluses, how can these parties keep their ideological edge while making themselves relevant to a larger section of the electorate?  

And the biggest question of all is whether the parties that make up the progressive bloc will commit to cooperation and a new alignment which can eventually replace the weakening hold that the conservative parties have over government.  It may well be that answering this question in the affirmative will help the individual parties to meet their individual challenges. 

And lead to the fourth disruption – hopefully sooner or later.

Finding Their Voice, Finding Ours

On Wednesday, February 5^th there will be an unprecedented protest by childcare professionals in Dublin, organised by the Early Years Alliance. With crèches closing down, workers from around the country will descend on the capital to protest not only their working conditions but the very system of childcare that exists today – a system that penalises workers, parents, providers and children. 

Childcare in Ireland is a fragmented, exploited sector made up almost entirely of women.  When other European countries were developing childcare and early years’ provision as a public service in order to promote women’s participation in the labour force, childcare was an afterthought among Irish policy-makers.  Employees were subjected to low pay and poor working conditions – precarious contracts, lack of in-work benefits, etc.   They still are.  

Over the last decade greater official attention has been paid to childcare and the Early Years Sector.  Free early years education was established; programmes to professionalise the sector were rolled out; means-testing provided greater access for low-income households while subsidies to providers were increased.  However, these measures did not address the fundamental flaws in the childcare model.  This has resulted in the highest childcare fees in the EU and some of the worst-paid employees in the economy.  Simply put, the current model of childcare is broken.

Broken and unsustainable:  staff turnover rates in full-time childcare are over 40 percent.  In a SIPTU / Big Start survey of early years’ professionals, two-thirds of employees stated they would not be working in the sector in five years’ time if things don’t change, while over 40 percent are actively seeking other work.  The providers’ organisation - Early Childhood Ireland - reports that over a third of providers are unable to recruit employees, with half unable to retain staff.  If these trends persist, there will be severe labour shortages leading to fewer providers.

These problems are due to treating childcare as a ‘market’.  This model means that providers must raise at least as much revenue as they spend (like any other business).  This places an impossible burden on providers.  If they want to improve wages and working conditions (and, so, attract and retain staff), they will have to raise fees, making childcare even more unaffordable.

If, however, they want to reduce fees they will have to reduce expenditure and, since labour makes up over 70 percent of providers’ expenditure, this means squeezing labour.  This would only exacerbate low pay and poor working conditions.

It is against this backdrop that the protest is taking place – a protest being driven by the childcare professionals themselves.  They have joined the SIPTU trade union in their thousands; they have collectively begun to put forward their own analysis.  The key to unlocking the potential of the sector, to transforming it into a modern public service, is the workers themselves. 

When the protest was first announced, some elements in the media and officialdom attempted to turn the story into how protesting employees were burdening parents by closing down childcare provision for a day.  However, even the most cursory review of what was happing on the ground showed substantial support for the one-day action from across the community. 

The workers have made alliances with many providers – both in the community and private sectors.  And the parents themselves know there is a major problem; they are aware of workers’ poor working conditions, and are asking themselves why fees are so high.  The interests of the childcare professionals, the providers and the parents coincide.

The workers, therefore, are protesting not only their own conditions; they are also mounting a fundamental challenge to the childcare system itself on behalf of all stakeholders.  

Political parties have picked up on this and, for the most part, have made significant resource commitments to the sector.   That is good.  But the modernisation of the sector rests on three principles:

• The state – through whatever mechanism – will have to subsidise the overwhelming proportion of the operating costs of providers.

• This will have to be accompanied by a fees cap – once the subsidies, investment and provider sustainability are put in place

• Wages will have to rise significantly, accompanied by an improvement in working conditions (e.g. permanent contracts, in-work benefits, etc.). Currently, over 60 percent of childcare professionals are paid below the Living Wage

Starting from where we are now, it is a matter of supporting private and not-for-profit providers as deliverers of this public service.  Even in countries where there is a large public sector component to childcare provision, the state still supports private and not-for-profit providers. 

That childcare is now becoming a major issue in this election is due to one development – the entry of childcare professionals themselves into the public debate.  Quite simply, workers have found their voice and now, speaking out on behalf of a new model of childcare, they are helping us to find our own voice. 

We can use that voice, in our hundreds of thousands, when we go to vote next Saturday.

Protest Details:  Wednesday, February 5^th, Parnell Square, Dublin 11:30 am.

Prepare for Government

The latest Red C poll suggests one thing:  progressives should start preparing for Government.  At the beginning of January I suggested that we should view the 2020 general election as a three way contest – between Fianna Fail, Fine Gael and the Progressive bloc.  All the polls taken since the beginning of the election have borne this out.  Indeed, it shows the Progressive bloc winning.

This is an average based on five polls:  two Red C polls, along with one each from B&A, MRBI and Ireland Thinks.  Not only do they show the Progressive Bloc out in the lead, this support has been growing.

The Progressive bloc has seen its support grow over the campaign with the last poll showing a combined support of 40 percent.  Fianna Fail and Fine Gael on the other hand have struggled in the low and mid-twenties.

The idea that progressive parties could, together, form a government that could command a majority in the Dail is now on the agenda.  There are still considerable hurdles.  Without a strong internal transfer between the progressive parties, progressives may fail to maximise the seats.  And there may still be reluctance between some parties dealing with other parties within the bloc.  However, there are two things we should bear in mind:

First, the momentum is with progressives.  The fieldwork for the last Red C poll was conducted between the 25^th and 30^th of January.  This is with more than a week left in the campaign.  If that trend continues into the polling booth, we could see the Progressive bloc break the 40 percent mark.

Second, with Fianna Fail and Fine Gael squabbling over who will not, not, not negotiate with Sinn Fein, the only government option for the two conservative parties is a repeat of the current arrangement – either in a coalition or a repeat of the confidence and supply arrangement.  It would be a missed opportunity if progressive parties baulked at providing a parliamentary alternative to another round of conservative government.

What would the composition of such a progressive government look like?  Based on the average of all the polls, these are the proportions.  This is based on the categories that I used here.

In a progressive government, Sinn Fein would be the largest party.  However, it would only make up approximately half.  The Greens and social democratic parties would constitute significant blocs.  While the radical parties might seem to be a small part, their poll support could be concentrated in a few constituencies resulting in winning seats beyond what the polls show.  And with progressive independents, the Progressive bloc is even bigger.

The key point here is that all parties are needed to construct an alternative, and this means that no particular party is privileged.  However, this should not be seen as a make-up-the-numbers exercise.  To my mind, a progressive government would be at its strongest when all the currents that make up progressive politics are involved, maximising the political and programmatic options. 

With days left, what should progressives do?   As I suggested in a Modest Strategy for Progressives, there are two things:  maximise support for your progressive party of choice, and keep transfers within the progressive bloc.  The parties are not going to do the latter, not formally anyway.  However, as activists – in parties, trade unions, and civil society groups – we can.  Whether it’s on the doorstep, in the workplace, on social media, in our families and neighbourhoods – a bottom-up demand for progressive transfers can help win those seats on the last count without a quota. 

But mentally, we should start preparing for government; be prepared to start that process immediately after the votes are tallied.  As stated previously, the issue isn’t ruling out negotiating with conservative parties.  The issue is ruling in negotiating with each other in the progressive bloc.  We should start considering the main elements of such a programme, the priorities, the concrete targets.

So we should make it clear that the goal is to put together a progressive government.  That could provide a considerable boost to all progressive parties.  And if it falls short (if it does it won’t be by much), then Fianna Fail and Fine Gael will be returned to government in one more turn of the screw.  But this could well be the last turn. 

For the historical trends – both long term and short term – are telling us one thing:  that a progressive government is on its way. 

It could well start next Saturday.