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File photo Chris Ison/PA Archive/Press Association Images

Column Irish labour costs making us uncompetitive? Hardly.

We’re told that wages need to be cut for Ireland to compete internationally – but the figures don’t bear this out, writes Jimmy Kelly of Unite.

THE CENTRAL BANK recently claimed that Irish labour costs are too high. They implied we needed wage cuts of up to 10 per cent to ‘restore competitiveness’.

They did not put forward any evidence or data to justify their claim. This is understandable. Because they are wrong.

UNITE has put together the true picture of Irish labour costs by using data from the EU Commission’s data agency, Eurostat. We examined the private sector (or what’s called the ‘Business Economy’). What does this picture look like?

Ireland ranks 10th out of the EU-15 countries, right at the average. Nine other countries have higher labour costs. However, this graph doesn’t tell the full story.

  • When Irish labour costs are compared to those of EU-Core countries (excluding the poorer peripheral countries), Ireland falls 11 percent below average, ranking second to last.
  • And when compared to economies with a similar structure as our own (small and open, heavily reliant on exports), Irish Ireland falls 18 percent below average, ranking last.

This hardly justifies the Central Bank claim that we are somehow ‘overpaid’.

The EU Commission data only goes up to 2010. However, they provide provisional data for labour costs growth between 2010 and mid-2012. This shows Irish labour costs falling even further behind EU averages.

With the exception of Greece, where wages are in free-fall in many domestic sectors, Ireland is the only country where labour costs are actually falling. In other countries wages are rising.

UNITE also compiled data on each of the economic sectors. I would like to draw special attention to the main low-paid sectors. Low-paid workers’ wages and conditions have been under attack from employers and the Government (in their recent ‘reform’ of the Joint Labour Committees). You’d think, listening from the propaganda, that Irish labour costs in the low-paid sectors are exorbitant in comparison with the EU-15. Here is the real information.

In the hospitality (hotels and restaurants) and wholesale & retail sector, Irish labour costs are seven to eight percent below the average of other EU-15 countries. When compared with EU-core countries this falls 16 to 18 percent below average. And when compared to similar small, open economies this falls a staggering 26 to 27 percent below average. That puts the propaganda in context.

Deformed economy

There’s this idea that driving down wages will somehow restore our competitiveness. Never mind that other small open economies in the EU have much higher labour costs – and are ranked as some of the most competitive; the fact is that the Irish economy has always been highly productive. Forfas looked into this issue recently and found that, even when adjusting for the accounting practices of multinational companies, Irish productivity was high by EU-15 standards.

In pre-recession 2007, Irish workers were still producing more per hour than their counterparts in the EU-15 – and that’s with a sizeable proportion of the economy involved in construction, a relatively low productivity sector. It is certainly true that Government policies deformed the economy through pump-priming the property boom – but Irish workers still went on working and producing at very high levels.

The situation has improved since 2007 – especially as we have become less reliant on construction activity. The gap between Irish and EU-15 productivity has grown. According to Forfas:

Irish productivity growth rates have averaged 2 percent per annum between 2007 and 2011 (with particularly strong growth recorded in 2009 and 2010). This compares with 1.3 percent in the US, 1 percent in the OECD and 0.4 percent in the Euro area.

In fact, labour costs are not even an important consideration in our major export sectors. Again, according to Forfas, labour costs make up less than 14 percent of overall operating costs in our exporting sectors. In the Chemical/Pharmaceuticals and Computer Services sector – which makes up 60 percent of all our exports – labour costs make up eight percent of operating costs. We could slash and slash wages and it would make almost no difference to the competitive bottom line.

So we have average to below-average labour costs and high productivity (with labour costs playing little role in in our export sector) – why has the Central Bank ignored these important facts?

Maybe for the same reason that they didn’t estimate the damage that their cut-wages policy would have on workers and the economy. For a low-paid worker (let’s assume a single person on €25,000) a policy of cutting wages by 10 percent would mean a loss of over €33 per week. For a worker on €50,000, the loss would come to €46 per week.

This is bad enough – driving down people’s living standards, forcing more into arrears and debt. But the Government is a big loser as well. For the low-paid worker, the loss in tax/PRSI revenue would be €20 per week, while for the person on €50,000 the loss to the Government would be €60 per week – even greater than the loss to the employee. And none of this counts the losses in VAT and Excise due to lower consumer spending.

In short, the Central Bank’s proposal would drive down people’s living standards, increase the deficit and collapse domestic demand with all the impact that would have on unemployment and business closures. The Central Bank’s proposals would make a wasteland of the Irish economy.

The Central Bank should clarify their comments. And this clarity should be based on evidence, not on an ideology that is costing us jobs, prosperity and our next generation’s ability to live in Ireland.

Jimmy Kelly is Regional Secretary of Unite Ireland. Byline photo by Mark Stedman/Photocall Ireland.

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    Mute CeannairBlue
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    Jun 14th 2017, 10:00 AM

    Australia have every right not to land anyone on their shores that they do not want.

    If only we had the balls – we send the bloody Navy halfway round the world to pick them up!

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    Mute Kal Ipers
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    Jun 14th 2017, 10:07 AM

    @CeannairBlue: Actually they don’t hence the lawsuit and them losing. They broke international and their own national laws

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    Mute CeannairBlue
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    Jun 14th 2017, 10:08 AM

    @Kal Ipers: Then I’ll rephrase. THEY BLOODY WELL SHOULD DO!

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    Mute Kal Ipers
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    Jun 14th 2017, 10:15 AM

    @CeannairBlue: So you are fine with when countries refused to allow a ship with refugees fleeing the holocaust during WWII? They eventually returned to the Nazis and were killed in concentration camps. You think the agreements and laws brought in to never allow that to happen again should be scrapped?

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    Mute CeannairBlue
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    Jun 14th 2017, 10:26 AM

    @Kal Ipers: Ah the old Godwin’s Law, where would the intellectually challenged be without it.

    No, I wouldn’t have been okay with that. But I’m okay with this and the knobheads legging from Syria and leaving their wives and kids behind because “THEY’RE NOT FLEEING A HOLOCAUST”.

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    Mute Dave O Keeffe
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    Jun 14th 2017, 10:30 AM

    @CeannairBlue: quoting the relevant laws is not Godwins Law.

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    Mute Kal Ipers
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    Jun 14th 2017, 10:34 AM

    @CeannairBlue: Hard not to mention the Nazis when they are the reason for the laws. Many of these people were fleeing certain death if they stayed.
    Do you know anything about the people and how they were treated? The suicide rate in Naru camps is shocking. Do you think these people killed themselves for a laugh?

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    Mute Marie Agnew
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    Jun 14th 2017, 10:52 AM

    @CeannairBlue: so the millions that left Ireland because of the famine should have been abandoned as well huh!! Short memories eh!

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    Mute Dave O Keeffe
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    Jun 14th 2017, 10:53 AM

    @Marie Agnew: abandoned? Abandoned would be preferable to internment

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    Mute CeannairBlue
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    Jun 14th 2017, 10:56 AM

    @Dave O Keeffe: Did I say it was ? Invoking the Holocaust is.

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    Mute CeannairBlue
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    Jun 14th 2017, 10:58 AM

    @Marie Agnew: We also weren’t leaving the country to sponge off the nearest country – we went there because a third of the country were dying of starvation.
    One in those places, we bloody well went to work.

    Honestly I used to be a left wing socialist but ffs the “left” nowadays want a slap.

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    Mute CeannairBlue
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    Jun 14th 2017, 10:59 AM

    @Clever Jake: The Pope is a better man than I am. Thank God.

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    Mute Suzie Sunshine
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    Jun 14th 2017, 11:00 AM

    So how does this effect their refugee status ??

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    Mute Ben Gunn
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    Jun 14th 2017, 11:12 AM

    @CeannairBlue: I think this issue was dealt with at Nuremberg. All people have human rights which should not be subject to artificial borders arbitrarily drawn for political reasons.

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    Mute Robert Preston
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    Jun 14th 2017, 11:15 AM

    @Marie Agnew: Read a history book and educate yourself how can you compare the irish leaving to go to america and the rest of the world with whats going on now .

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    Mute Suzie Sunshine
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    Jun 14th 2017, 11:24 AM

    @Kal Ipers: I doubt they even care about that . . They protected their borders and sent a message out and it stopped the boats arriving illegally. .

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    Mute Dave O Keeffe
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    Jun 14th 2017, 11:52 AM

    @CeannairBlue: The law around this issue was created because of the legal grey area that existed on people fleeing the threat of concentration camps. To call mentioning where the law originated Godwin’s Law shows your absolute lack of understanding of the issue and human rights laws.

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    Mute CeannairBlue
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    Jun 14th 2017, 12:06 PM

    @Dave O Keeffe: No, you would like it to. Nice try.

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    Mute Gordon McCabe
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    Jun 14th 2017, 12:08 PM

    @CeannairBlue: I think you seriously need to look into what’s actually happening in countries like Syria.

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    Mute Peter donnelly
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    Jun 14th 2017, 3:10 PM

    @Kal Ipers:if they were fleeing certain death why did they go so far ? im sure there were nearer countrys they could go to, but hold on they probably wouldnt have been allowed in and would not of got any support or special treatment, would it not make more sence to stay at home and fight for your country….

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    Mute SteveW
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    Jun 14th 2017, 10:10 AM

    Even sovereign countries have no control over their own borders and rules.

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    Mute Kal Ipers
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    Jun 14th 2017, 10:26 AM

    @SteveW: Not when they sign agreements saying they will take in refugees and then don’t. They actually broke their own rules. Their own courts and laws are what is being enforced.

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    Mute Siouxsie Dumbtime
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    Jun 14th 2017, 11:46 AM

    @SteveW: History will look harshly upon Australia’s treatment of asylum seekers, a continent pillaged by Europeans.

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    Mute CeannairBlue
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    Jun 14th 2017, 12:06 PM

    @Siouxsie Dumbtime: Such an appropriate screen name with a comment like that.

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    Mute Larissa Caroline Nikolaus
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    Jun 14th 2017, 12:16 PM

    @CeannairBlue: In how far is it incorrect that she mentioned that Australia was pillaged by Europeans?

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    Mute Siouxsie Dumbtime
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    Jun 14th 2017, 1:06 PM

    @CeannairBlue: It’s an historically accurate statement so bully you!

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    Mute billy Dorney
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    Jun 14th 2017, 4:30 PM

    @Siouxsie Dumbtime: sure the Aussies are worried

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    Mute Carl Ingalls
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    Jun 14th 2017, 10:15 AM

    Irish Right’s groups will be licking their lips as we speak.

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    Mute Coles
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    Jun 14th 2017, 11:14 AM

    @Clever Jake: Best to ignore them. Everybody else does.

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    Mute Polly Dolan
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    Jun 14th 2017, 11:21 AM

    @Clever Jake: block them!!

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    Mute Deborah Behan
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    Jun 14th 2017, 2:14 PM

    @Carl Ingalls: the horror of not helping people who weren’t lucky enough to be born in a free society. If you had your way we’d be back in far-right paradise with human rights very restricted. No thanks.

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    Mute Alex
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    Jun 14th 2017, 10:02 AM

    Go home

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    Mute Siouxsie Dumbtime
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    Jun 14th 2017, 11:47 AM

    @Alex: The colonists?

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    Mute Trevor W
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    Jun 14th 2017, 12:41 PM

    @Siouxsie Dumbtime: it’s a pity the originals didn’t send them packing centuries ago.

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    Mute Siouxsie Dumbtime
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    Jun 14th 2017, 1:08 PM

    @Trevor W: So true, they have treated the aboriginals disgracefully and now asylum seekers, one set of rules for the white man and another for anyone of colour.

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    Mute Peter donnelly
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    Jun 14th 2017, 12:41 PM

    simple answer send them back from whever they came from, no asylum….

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    Mute Siouxsie Dumbtime
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    Jun 14th 2017, 1:10 PM

    @Peter donnelly: The Europeans? We’d have no room for all those descendants of Irish convicts.

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    Mute Peter donnelly
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    Jun 14th 2017, 2:56 PM

    @Siouxsie Dumbtime: slight problem there the irish who were forced onto death ships god knows how long age were forced to go they diddnt chose to go, and when they finished their sentance they worked for a living not expecting any one to feed and house them any irish who emmigrated went to work and try to better themselves but unfortunatly not all of them made it….

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    Mute Ben McArthur
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    Jun 14th 2017, 10:35 AM

    I’d say a lot of Australians will consider that money well spent.

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    Mute Kal Ipers
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    Jun 14th 2017, 10:10 AM

    As there will be a flood of people saying how this is riddiculious I suggest you read up on what they did to these people. Also read what Australia did to Naru and to the captain of a boat who rescued people from a sinking boat.

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    Mute Dave O Keeffe
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    Jun 14th 2017, 10:34 AM

    @CeannairBlue: *can’t

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    Mute Larissa Caroline Nikolaus
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    Jun 14th 2017, 10:43 AM

    @CeannairBlue: You can’t be bothered reading, yet comment here, venting your faux outrage about refugees having a right to be treated humanely, the sure sign of a hypocrite and troll

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    Mute CeannairBlue
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    Jun 14th 2017, 11:00 AM

    @Dave O Keeffe: Difference between hitting the wrong key and the inability to spell. Troll.

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    Mute Dave O Keeffe
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    Jun 14th 2017, 11:57 AM

    @CeannairBlue: best not to make a mistake when correcting others, makes you look ridiculous. Ha, troll. Says the moron that has no idea why most laws around concentration camps and many about refugees seem to have been agreed upon in the 40′s.

    9
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    Mute Mumpsimus
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    Jun 14th 2017, 2:05 PM

    Why don’t all the lefties move to all their countries and make it better for them so they don’t have to leave. Problem solved

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    Mute Deborah Behan
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    Jun 14th 2017, 2:22 PM

    @Mumpsimus: why don’t all righties F off to their own country? Oh yeah they still want to get a woman!!!

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    Mute billy Dorney
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    Jun 14th 2017, 4:31 PM

    @Mumpsimus: keyboard warriors

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    Mute Tony Daly
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    Jun 14th 2017, 11:19 AM

    Who let all of the white Caucasian Christian immigrants into Australia? The place is overrun with them.

    The Aboriginal people should not have let all of the white foreigners in.

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    Mute Suzie Sunshine
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    Jun 14th 2017, 11:21 AM

    Who all entered legally into the country ….

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    Mute Tony Daly
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    Jun 14th 2017, 11:57 AM

    @Suzie Sunshine: no, they did not.

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    Mute Greg Cavey
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    Jun 14th 2017, 12:20 PM

    @Tony Daly: and look how prosperous the country is all these decades later. Germany decided to let in 500,000+ migrants into their country and they stab 5 year old boys, assault and women and plough through innocent people shopping at a Christmas market. Infact lets compare east Europe to west europe. West lets in migrants = dramatic increase in terror attacks. East stands firmly against letting in migrants = virtually no terror attacks to my knowledge. Coincidence?

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    Mute Siouxsie Dumbtime
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    Jun 14th 2017, 1:09 PM

    @Suzie Sunshine: Time to revisit your primary school history books.

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    Mute Suzie Sunshine
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    Jun 14th 2017, 1:19 PM

    @Siouxsie Dumbtime: they weren’t the migrants I was referring to

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    Mute Dave O Keeffe
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    Jun 14th 2017, 1:48 PM

    @Suzie Sunshine: who were you referring to then?

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    Mute Dave O Keeffe
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    Jun 14th 2017, 10:33 AM

    You can’t put refugees in a concentration camp? Who knew!

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    Mute just readin
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    Jun 14th 2017, 12:33 PM

    Australians should stop messing about and deport all immigrants and their families who arrived since 1606

    16
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    Mute Rodney Monaghan
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    Jun 14th 2017, 5:41 PM

    I hope they have the decency now to repay the Australian taxpayers, for the cost incurred by them, for the provision of their refugee accommodation…
    Regardless of the level of accommodation, the burden of its cost shouldn’t now be borne by Australia, given these people’s new found wealth!

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    Mute Trevor W
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    Jun 14th 2017, 12:48 PM

    It’s a small justice. As multi-cultural as it is in Oz it is seriously racist in many ways.

    Read up on the Tampa affair. Will explain a lot for the keyboard warriors on here.

    10
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