Joan Burton (Dublin West, Labour) | Oireachtas source

-----and as the Government charts our course towards a post-recovery Ireland, full employment must be the overarching goal of economic policy. Achieving full employment will be how we will leave austerity in the distant past, increase tax revenue, build a viable social insurance system, reduce welfare expenditure and create room for new investment in essential services. As we recover, we will also create the space for additional investment in public services such as, for example, those relating to education. This will bring clear benefits to Ireland, as an economy, and to Irish society in the long term. Full employment will assist us in creating a more productive economy and a more caring society.

Just as full employment is the right target for Ireland and will be central to the country's economic planning in the future, it must be also the goal for the EU. A fundamental shift in thinking on the wider EU level would help enormously in that respect. As I have stated on previous occasions, the EU needs to shift from austerity towards a policy based on investment, growth and job creation, with full employment the central target. It is noteworthy to examine the respective approaches of the incoming chair of the US Federal Reserve, Ms Janet Yellen – the first woman set to lead America's central bank – and the new governor of the Bank of England, Mr. Mark Carney. Both acknowledge the need for unemployment to fall further before interest rates are increased. It is a matter of deep regret that the primary mandate of the ECB, when it was formed, was to maintain price stability and that full employment comes a lot further down its list of priorities. In contrast, the Federal Reserve has a clear dual mandate to pursue both price stability and full employment and has shown itself to be the more effective for it. The Federal Reserve has overseen a massive programme of quantitative easing – essentially pumping money into the US economy to act as a stimulus – which has been crucial to America riding out the global crisis. I remain of the view that in the long term the ECB should, like the Federal Reserve, pursue a dual strategy of price stability and growth.

It is no surprise that the OECD has suggested that the ECB could do more in this regard. In its most recent economic outlook, OECD says the ECB should "consider further policy measures if deflationary risks become more serious ... price adjustment alone will not work given the impossibility of reconciling deflation, needed to regain competitiveness, and achieving nominal growth to achieve debt sustainability". What the OECD is stating is that as the economy expands, the significance of the totality of debt diminishes and that it, therefore, becomes more feasible to deal with it. In other words, the interest rate cut by the ECB, though welcome, is not enough. The ECB should also consider unconventional measures including the type of quantitative easing used successfully in both the US and the UK, which have shown stronger growth than Europe. The euro area as a whole has a debt ratio similar to areas such as the UK and the US, where central banks are actively willing to purchase sovereign debt. A eurobond-financed stimulus programme would, for example, be economically feasible and effective but would require a shift in thinking on the issues to which I refer. No more than Ireland, the EU needs a new approach, based on investment, growth and job creation, with full employment the overarching goal. A decisive shift of this sort at EU level would rapidly speed up the progress already being made in Ireland in terms of getting people back to work.

I take great heart at the very basic rethink of economic philosophy that President Obama is leading in the US. This back-to-basics re-evaluation in which he is engaged recognises the failure of the trickle-down approach that has been dominant since the 1970s. The latter was the notion very often promoted by the super-rich that if we protected them, their wealth would trickle down and this would help everyone else prosper. The entire western world bought that line. The results were great for the super-rich but very often disastrous for almost everyone else. Inequality thrived as a result of the philosophy in question. In 2008 the economy collapsed largely as a result of the reckless activities that stemmed from that philosophy. Now, out of that ruin, President Obama is forcefully reminding the world of an older truth, namely, that lasting growth and shared prosperity come from the middle out and not from the top down. Now that battle of ideas in economics is under way, it is obvious that we in Europe will be taking part in the debate. This all boils down to a single question: what is the best strategy for long-term prosperity for the majority of our people - an ever-increasing concentration of wealth at the top or a thriving middle class?

As a Government, we will continue to push for a further shift in the position on Ireland's bank debt. When I was finance spokesperson for the Labour Party in opposition I warned of the perils of the bank guarantee and the massive burden it would potentially inflict on every citizen. It was one occasion when I would have been glad to be proved wrong. Sadly, however, the bank guarantee proved as catastrophic as the Labour Party had feared.

The most important promise my party made during the general election campaign was that we would focus on unravelling and reducing the level of toxic debt. We could not and did not promise to simply default on the debt as to do so would have been the road to disaster for the country. Instead, we undertook to unravel and reduce it, an undertaking on which we have made significant progress. Agreement has been secured on reducing the interest rate and extending the maturity on EU loans and a deal has been done on the promissory note. All these measures reduce by tens of billions of euro the debt burden and the State's funding requirement in the next decade.

The Government will continue to negotiate for further agreements on our debt, specifically on the potential use of the European Stability Mechanism for bank recapitalisation. As Citigroup chief economist, Willem Buiter, noted recently, Ireland has an exceptional claim for the ESM to be used for this purpose given the massive levels of debt that were placed on the shoulders of Irish taxpayers to prevent wider banking contagion in the eurozone. The Government will continue to make Ireland's case on this critical issue.

I referred to the abyss into which the country was plunged in 2010. Through the sacrifices made by members of the public and the patience they have shown, Ireland is climbing out of this abyss. The key issue, as I noted, is the dividend for ordinary people in terms of better services and social welfare provision. Above all, more of our people will return to work and will, with our businesses, generate economic prosperity. I hope this will make that which people have endured in recent years a memory from which we will learn. We must also avoid any repetition of it in the future as we build a better Ireland.

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