Will a Labour government only prolong the economic ruin?

After 2012 Ireland will almost certainly have a FG/Labour government, with the share and leverage each party holds in the coalition still up for grabs. But it seems to me that a government with a strong Labour component will only deepen the economic troubles we are in. The overall focus of their policies seem to be more taxes and disincentives for the private sector and the continued protection of the public sector and the large welfare programmes.


Last Friday night, the Labour Party Conference pledged the reversal of public sector pay-cuts (not a new stance). Labour are supposedly working for a fair and equal society, but yet here they are fighting to maintain the privileged status of public sector workers (better comparable pay; job for life; secure pension).

Eamon Gilmore has also previously opposed cuts to social welfare. So now we have a grand total of €41 billion (just shy of 70%) of our national budget that Labour are opposed to reducing. All this despite the fact that costs of living in Ireland are still falling. This stance is unfortunate given that the State has tax revenues far below this required €41 billion.


Unsurprisingly, the Labour Party want to shift the burden of responsibility onto the private sector instead through tax increases at a time when businesses are already struggling. In a press release last Friday, Joan Burton said that "the wealthiest sector in Ireland who own a wholly disproportionate share of our nation's wealth can readily stump up a sizeable share". A political way of saying that the creators of employment in this country will have to cough up, cramping the economy and the prospects for future growth.


Rather than debilitating tax increases, the best way to fix the huge budget deficit while still retaining economic potential and prospects of employment would be to haul in the rampant spending increases brought in under Fianna Fail. Given that this is the exact opposite of what the Labour Party want to do, I wonder if a government in which they hold serious swing will only make our economic woes a whole lot worse.