home » media centre » press releases

Labour proposes €5.8bn adjustment and €1.15bn jobs package

Issued : Friday 4 December, 2009

The document we are publishing here today provides for a full year adjustment of €5.8bn and the establishment of a €1.15bn job creation fund.

This document, ‘Jobs and Recovery: Labour’s Proposals for a Fair Budget’ is far more than a simply pre-budget statement: it is a programme for jobs and economic recovery.

Everyone accepts that the next Wednesday’s budget will be one of the most difficult in the history of the state and that decisions taken next week will play a crucial role in determining the speed and the extent of our recovery.

We find ourselves in this crisis of unprecedented seriousness because of the economic decisions taken by Fianna Fail over the past twelve years, and particularly those taken by Charlie McCreevy and Brian Cowen in their periods as Minister for Finance.

There was the general economic mismanagement; there was the reckless stoking of the property market that initially left housing beyond the means of young couples, made tens of billions for property speculators and led to the ultimate bursting of the property bubble; there was the failure to exercise regulatory supervision of the banks and the ignoring of the toxic axis of the financial institutions and property developers that has brought this country to its knees.

The Labour Party will continue to draw attention to the responsibility that Fianna Fail has for our current situation, but from the very beginning of the crisis we have also adopted a constructive approach to getting the country up off its knees and back on its feet.

For several months now, we have accepted that an adjustment of €4bn was needed to begin the process of restoring stability to the public finances. We have also accepted that this must be done in 2010 and cannot be deferred But we have also said that this adjustment must be achieved in a fair and equitable way, through a balanced mix of a reduction in public expenditure, additional revenue enhancing measures and protection for those in need.

But a simple adjustment to our public finances, while necessary, is not sufficient on its own. The biggest economic and social problem facing us remains unemployment. The Live Register figures published during the week showed more than 413,000 remaining on the live register, some 146,000 more than twelve months ago and around a quarter of a million more than at the time this government was elected. The additional cost to the Exchequer, through lost tax revenue and additional social welfare spending, of the increase in the numbers on the Live Register since June 2007 amounts to more than €5bn per year.

For that reason we are proposing a total full year financial adjustment of €5.8bn in order to fund the sort of job creation programme necessary to get people off the dole and back to work. From this we would provide a special fund of €1.150bn. The fund would be allocated by a Ministerial Task Force (outside of the estimates system). Agencies and Departments would be required to submit business plans. Key elements of the plan would include:
•Enterprise supports, including PRSI scheme for new jobs;
•An additional 60,000 training and work experience place;
•The fast-tracking of labour intensive capital projects.

I have been arguing for several months that it is not simply a question of getting the budget arithmetic correct, but also of concluding a new Agreement for National Recovery. A coherent jobs strategy, to get people back to work, to keep people in employment and provide training and re-education for those who have lost their jobs is a key part of this element.

Other elements must include:
•A Home Guarantee, with statutory backing, that people facing difficulties in meeting mortgage repayments will not be put out of their homes for the period of the recession.

•An acceptance that the Budget should be based on the principles of fairness and equity: that those who have the most, must contribute the most

•A negotiated agreement to secure savings in the public sector wage bill, that would be based on securing reforms and savings, and on ensuring a more efficient public service for the future

•Industrial Peace through a commitment from the trade union movement, that if these actions are taken, then there will be no strikes and a guarantee of industrial peace.