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Every family paying price for years of FF incompetence, Gilmore tells Dail

Issued : Thursday 10 December, 2009

This budget is a disgrace It is a budget built on bad economics and bad politics, by a broken Government.
It will divide the country, not unite it
It will destroy jobs, not create them
And it will push hundreds of thousands of families deeper into poverty

Every family in Ireland is today paying the price for twelve years of incompetent, reckless, dishonest Government by Fianna Fáil, and the wealthy interests that back them.

But some families are paying a lot more than others.

The people who pay for everything must pay again. The wealthy, the greedy and the feckless have again been protected – the feathers in their nests have barely been ruffled.

The macro-economics of this budget was never in doubt. There was support for an adjustment of €4billion. But there were still choices to be made. And what were those choices?

A Minister takes a smaller pay cut than an executive officer.

The public servant on €50,000 loses at least 4% of after tax income. The banker on €500,000 none at all.

The meagre payments for widows, the blind, carers, people on disability are hammered.

A family with two children under 6 could loose €1380

Widows of working age will take a cut of €641, including the Christmas payment.

A couple on invalidity pension suffers a cut of €1100

Carer’s Benefit is cut by €648 per annum

Blind pensioner couples could loose up to €1455

The cost of drugs for families will go up €240 per year

But a mere 1% of the adjustment comes from the highest earners in the land, if and when, we ever see it.

Children are hit three times in this budget. Child benefit is cut. The Early Childhood supplement is abolished, and for children whose families are on social welfare, the Christmas payment is gone.

Earnest lectures on price statistics, won’t feed a hungry child, or cloth them for school.

This budget was written by the silver spoon wing of a cabinet that hasn’t got the first notion of what it is to grow up on a widow’s pension, or to live in a house where your father has no work.

And there are cuts here that break new ground in political stupidity.

When you cut payments for Youthreach and similar schemes, you cut off some of the most troubled young people in our society. Sadly, the price you will pay will be measured in units of €107,000 - the cost of a place in St Patricks Institution.

And why has this been done? It has been done because Fianna Fáil has brought the Irish economy to its knees.

They were handed a fast-growing competitive economy, driven by exports, creating jobs, with a budget surplus. They turned it into a property bubble, which has come crashing down on all our heads.

In the past two years, a quarter of a million people have been put onto the dole queues.

Fianna Fáil have created one of the longest and deepest recessions in the developed world since the second world war.

Fianna Fáil have created a structural deficit in the economy which, on their own figures, require total corrections of 19.5 billion to put right.

They have mortgaged our children’s future through their gross incompetence in handling of the banking crisis - a crisis that was of their own making.

A blanket guarantee wider than any other, exposing the taxpayer to €440 billion in liabilities.

NAMA, a millstone round the necks of a generation, a debt of 12000 euro for every man woman and child living in Ireland today

They have sparked a new wave of emigration.

Once again this Christmas, we will witness the scenes of heartbreak and loss at airports and ferry ports, as the crème of a generation depart these shores, and their families are left behind to live with the void. Some 40,000 people are expected to leave Ireland next year.

This is what the silver spoon wing of the cabinet, have brought on the heads of the sons and daughters of honest people, who pay for everything and qualify for nothing.

That was the Ireland that we should have left behind. That is the Ireland that does that not have to be. But always, always, always, when you put Fianna Fáil in charge, they will buy votes until there is no money left.

Twice in a generation, they have brought this country to ruin. And it is never the wealthy or the greedy who are forced to carry the can.

For Fianna Fáil now to describe itself as a Republican Party, is grotesque.

This is a budget based, not on national unity or common purpose or social solidarity but on division, on conflict and on greed.

Fianna Fáil has turned its back on the Irish people and on its own traditions.

Sean Lemass believed in public service, and believed in a strong state sector in the Irish economy.
Fianna Fáil are no longer the party of Lemass.

Fianna Fáil are the Celtic Tories.

This budget is a Tory dream come to life. Hammer public services, attack public servants, kick the poor, and let the wealthy and the influential off scott-free.

The ideology that got us into this mess, run riot again.

It could and should have been very different. The Government had the opportunity to secure a national agreement to deal with the economic disaster that they created.

The Labour Party has proposed and would have supported a national agreement to deal with the fiscal crisis and the jobs crisis in a coherent and comprehensive way.

We proposed a set of five principles on which such An Agreement for National Recovery could be based:

A coherent jobs strategy;
Protection for the family home;
A negotiated reduction in the public sector pay bill of €1.3billion;
A Fair Budget; and
A Guarantee of Industrial peace

Just as we supported the Government on Lisbon, because it was right for the country, so too we supported a reduction in the deficit of €4billion in this Budget.

We did so, because we put the national interest first – because it is important that as a country we demonstrate a collective commitment to dealing with this disaster – even if it was of Fianna Fáil’s making.

And as is clear NOW, there would also have been support from the trade unions for a national agreement of this kind. We know NOW that there was an opportunity for major public sector reforms. Measures I have been calling for since the spring of this year.

Measures I have called for directly, in addressing trade union conferences. Fundamental shifts in the terms and conditions of employment that would have given the Government the tools they need to re-build our public services.

But, they spurned all that. Whether it was a heave, or a coup, or a split – all of this was thrown away for short-term political purposes. The system of national pay agreements which Fianna Fáil have lauded for so long is dead.

The Taoiseach saying that he will re-engage on the transformational agenda is wishful thinking, because he has dismissed from the negotiating room, those with whom he needs to engage.

An unprecedented opportunity for reform has been lost.

A signal has been sent to the outside world that Ireland is a house divided against itself

And a system of industrial relations that worked well for 22 years has been discarded.

By this time next year, inflation will have returned to the European and Irish economies. That will trigger a round of private and public sector pay claims, that there is now no machinery to address.

There are many who will cheer that development. Some who believe that national agreements were beyond repair.

Others who believe that leadership is measured by a willingness to impose pain on others, and that real leadership is measured by a willingness to impose it on the weak.

But those voices, the pain brigade, know little of history and care less for the future.

Because the people who are sent away from the bargaining table now, will return only on their own terms.

Because beggar-my-neighbour economics will get you good headlines in the short-term, but it will store up trouble in the medium-term. And it will undermine confidence in our capacity as a country to manage our way through this crisis.

There is a broader agenda here, and it is a low pay agenda. People on low pay in the public sector have taken a severe hit. Young unemployed people have had their benefits cut in half. The next target will be the national minimum wage.

These moves are intended to drive down wages at the lower end of the Labour market.

Rather than train people, and support them in finding new skills, Fianna Fáil are creating a new cohort of working poor. A young graduate will jump at a job that pays the minimum wage, and a person on 40,000 could find themselves replaced by two people with Master’s degrees, who will cost their employer less.

You had the opportunity of national unity, and you blew it. The Labour Party set out how this budget could have been balanced and fair.

Instead of cutting child benefit to save 123 million, you could have made modest changes to capital taxes.

Instead of cutting welfare payments to people of working age, you could have abolished all of the property schemes.

Instead of cutting maternity benefit for new mothers to save 11million, you could have abolished any one of several minor reliefs.

Instead, Fianna Fáil reverted to the beggar-my-neighbour strategy. The idea that if you isolate one or two groups in society, if you target them and blackguard them, if you denigrate them day after day, then you can load the problem onto them, and others can avoid carrying their share of the load.

So, for the past twelve months there has been an unparalleled campaign of abuse and denigration targeted at nurses, and teachers, at council workers and at ambulance drivers.

For more than a year, it has been as though it was these people, servants of the people, who caused the economic crisis. Not Fianna Fáil. Not the property developers that this budget didn’t touch. Not the bankers. Certainly not the bankers.

There is a certain irony in the measures announced to cut the long-term costs of public pensions, when you consider that the pension fund has already been handed over to the banks.

The rich and privileged of Irish society have circled the wagons, and Fianna Fail has ridden to the rescue. They got NAMA, and in return the voices of privilege have been out in force. The stock-broker economists who don’t mention the bank that owns them, the tax consultants who don’t mention who their rich clients are.

In the run up to this budget we have had a queue at the national microphone - bankers lackeys, most of them telling us that you can’t tax the rich –sure they haven’t a bob. Its all the fault of the teacher, the Garda, the council road sweeper ‘

There was an alternative. The alternative was to bring forward a budget that contained a fair balance between expenditure cuts and revenue-enhancing measures. A budget based on the principle that those who have the most, must contribute the most.
But you refused to do that.

The Government constantly tell us that they are basing their budget strategy on international evidence to the effect that successful fiscal adjustments are expenditure based.

Well, lets look at that international evidence to which Fianna Fáil are wedded. Dr Garret FitzGerald has said, and I tend to agree, that the conclusions to which the Government are wedded are generalisations that do not apply to Ireland’s case.

Indeed, a paper published by the European Commission last year tends to agree. Yes, it says, the Government’s line is the conventional wisdom, but,

“More recent studies, focusing on country cases, provide evidence that both expenditure and revenue-based consolidation can be successful’

In other words, international evidence is fine, if you leaven it with a dose of reality and some basic common sense.

Such as the common sense set out by Jens Henriksonn, a key figure in solving Sweden’s budget crisis in the 1990s. In an essay for the Bruegal Institute he writes

“If a consolidation package consists of both tax increases and expenditure cuts the distributional effect can be fair.”

Fairness is not a luxury, or an optional extra. Fairness is the glue that keeps a society together in a crisis. And this budget is manifestly unfair. It targets the poor, public servants and children. It lets the bankers, the property speculators and the Fianna Fáil backers off the hook.

This is a financial emergency. Yet even during THE Emergency – the second world war - it was possible to introduce child benefit, to promote social solidarity.

Child benefit is the only payment through which the state recognises the cost of bringing up child in our society. It is a payment that does not produce poverty traps, because it is paid irrespective of a person’s employment status.

It is the closest this country has ever come to treating all the children of the nation equally.

But the biggest gap in this budget is a absence of a coherent jobs strategy.

Again and again, I have made the point, that the banking crisis, the budgetary crisis and the jobs crisis are interlinked. You have to deal with them all in a coherent manner. Yet, Fianna Fáil has been so fixated with the banks and the budget, that they have utterly neglected the jobs crisis.

The measures introduced yesterday are nothing more than a laughable fig-leaf. They are a series of ad-hoc concessions to the pleading of special interests. There is no strategy here to promote the knowledge economy, nor even the smart economy, only the smart alec economy.

It is necessary to make a major budgetary adjustment, to deal with the Fianna Fáil deficit. But we will never get out of this crisis, until we start to create more jobs.

You can’t cut your way out of a deficit – we have to grow the revenue line as well. We must lower the cost of this Government’s failures – the cost of unemployment.

The cost benefit analysis here is easy –every person you get off the dole, is one fewer person being supported by social welfare and one more person paying into the exchequer.

In our pre-budget statement, Labour identified adjustments totally €5.8billion Euro, which would allow for the €4billion adjustment in the budget deficit, while at the same time creating a Jobs Fund of at least €1150 million.

Labour’s jobs fund would be a key component in a broader strategy to deal with the jobs crisis. Labour’s objective is to re-tool the Irish economy, to wean it off its dependence on property, and return to export-led growth.
This country can be a leader in the global knowledge economy. If we take the necessary steps now to support that change.

There are four things that we need to do immediately to make this change a reality

Firstly, we need to create a structure of enterprise supports that are both wide and deep. As the world economy begins to recover, new opportunities will open up for Irish business.

There is a new and deep pool of entrepreneurial talent in Ireland that we have to support. Whether it is a new start-up, an expansion programme, a university research spin-off. We have to strengthen the framework of supports that are available to Irish companies.

Secondly, we have to do the same for people. It is simply economically and socially unsupportable to have more 423000 people on the live register, with more to come next year. We must find the means and resources to give these people opportunities to train, to learn, to gain work experience. The sums of money involved are not great, and Labour has shown how it can be done.

Thirdly, we need a strategy for investment – in infrastructure and in companies. We need a new National development Plan, to match more limited resources to strategic priorities. The Government says it has done a review. We need more than that.

We need a new, costed, rigorously evaluated plan. We need to ensure that we are meeting the needs of the knowledge economy. Labour has proposed the establishment of a State Investment Bank to assist in the financing of public investment. And we have to ensure that there is adequate growth capital for firms with ideas that need financial support to grow.

Fourthly, we need sectoral strategies to deliver jobs. Not everyone can or will be employed in a software firm or a high-tech start-up. We need to ensure that job opportunities are opened up across a range of skills, and across the regions. I welcome the initiatives on tourism, and I will keep an open mind on what is being proposed for the food sector.

We need strategies that will build comparative advantage on the back of our natural strengths – in sectors such as Clean-tech, food and the creative industries. The native creativity and genius of the Irish people is not just a cultural asset, it is an economic asset. In the UK, creative industries employ as many people as financial services.

But above all, we must re-build confidence in this economy. The Minister has spoken a lot about confidence, and well he might, because he destroyed it. He and the other three horsemen of economic collapse, Professor Ahern, Commissioner McCreevy and Taoiseach Cowen.

The collapse in confidence in the Irish economy is both domestic and international. Following the disastrous handling of the banking crisis, Irish Government debt now costs 140 basis points more than the equivalent debt in Germany. While at home, the savings ratio has rocketed.

The ERSI estimate that the savings ratio, which in 2007 was 2.3%, will exceed 11% in 2009 and 2010, That is the equivalent of taking some €9 billion Euro out of the economy.

If you want to restore confidence, you have to do more than just attack the poor. We need to reassure families that their home will be safe.
Greater protection for home owners. Real action to clear out the banks. A firm determination to ensure a flow of credit to business.

Of course, the real confidence building measure that we need is the one the Taoiseach will not grant us – a change of Government

This Government is broken. Broken beyond repair. Led by a Taoiseach who has been fatally undermined by his Finance Minister.

It will limp on and on, and will inflict more and more damage as it does so.

What the Irish economy, and the Irish people need now, is a fresh start, and a new direction. A Government that will put jobs and people at the heart of economic policy. A Government that will make the hard decisions on spending, but make the right decisions on jobs. Fianna Fáil cannot do that. They do not have the moral authority, the imagination or the wit.

This budget is a disgrace, and so is this Government.