Derek Nolan (Galway West, Labour) | Oireachtas source

We need to make sure workers are put at the centre of policy making, not short-term, speculative ventures and so on.

The second issue about which we need to have a discussion and a meaningful understanding of is the social contract. The country has never got to grips with it. As a social democrat who believes in the power of the State to be a leveller and give everyone a leg up and the opportunity to succeed, I firmly believe in the social contract. It states a citizen who goes to work and participates in society is not paying taxes as dead money that disappears into a black hole. He or she pays taxes as a contribution to something he or she gets back and, therefore, his or her taxes are not wasted. He or she pays for an excellent education system for children and an excellent transport system to take people to work. They are part of a worker's wage, the social wage. However, we have never accepted this in this country. We have always begrudged and knocked taxation and, to some extent, people were right to do so. In recent years we have been capable of producing much more with much less and if pay cuts are excluded, that inherently shows we had ineffective and wasteful public services. That, therefore, gives credence to people's belief that their money was not being well spent. I believe in the social contract and the social wage. Those who believe in the new economic model we want to set up have to put efficient and effective public services at the centre of public provision. That is why the reform unit in the Department of Public Expenditure and Reform must have a strengthened role in the time ahead. Perhaps it should link with the Committee of Public Accounts or a similar committee and have a public forum for the work it is doing in making sure service provision is excellent and efficient. If we do not do so and go back to a model where we take people's tax and public services for granted, the electorate will reward those who seek to tear down the social contract and that system.

The third reform of the economy relates to making decisions about the State's role in the market. According to the outlook of economists, the cause of our financial crisis was the housing bubble which was a speculative bubble that created a huge construction boom based on easy credit and then collapsed, but behind that bubble a policy decision had been taken which was accepted by the political elite that it was okay for workers to pay ten times their income to buy a three bedroom semi-detached house an hour and a half from where they worked. That idea was propagated as something that was right. In other words, it was okay for somebody who happened to live on the edge of a city to, for example, sell a few acres of land for €16 million and then pass the cost on people who were doing their best to provide for a family and pay for a home. The then Government did not interfere with the market, which was a problem. We need to have a debate about which market injustices we tolerate and whether it is morally right for somebody to inherit land and hoard it before speculating on it and making millions of euro in profit, while hundreds of people pay exorbitant mortgages to meet the cost to the developer. We need to get real and begin a discussion about the market and when the State should interfere in those issues that are inherent to people's existence such as education, health and so on.

Owing to globalisation in the past 20 years, Ireland can no longer believe it is an independent country when it comes to the business and the economic model it pursues. We are part of the European Union but also part of an international system in which capital can flow from one country to another at the push of a button. Businesses no longer decide where they want to locate simply based on which markets they can access from a location but rather where they can get the best workers, lowest corporation tax rates and so on. Irrespective of whether we like it, we are in a race to the bottom with other markets across the globe.

Those of us who want to see a social contract in which the wealth of a nation provides for people to fulfil themselves and participate fully in society must realise we need a tax base to sustain that. Having a global corporate market which incentivises countries to reduce the amounts of money businesses contribute to the state contradicts this and will underfund it if it continues. The European Union, the bastion of the social economic model across the world, based on the French and German models and the one to which we aspire, needs to work together. The Union must ensure businesses pay their fair share.

What is driving the economic model we follow? Over the past several years, even during the boom, we have used narrow clinical terms such as GDP, GNP and inflation growth. However, if average incomes are increasing, we still do not know whether everyone is better off. For example, one person earning several million euro will skew the average income rate while others may be left behind. We need a better way of measuring and monitoring our economic model. In 2008, the French Government established the Commission on the Measurement of Economic Performance and Social Progress which was chaired by the Nobel economist, Joseph Stiglitz. It expanded measuring average incomes to include time spent with family, commute times and the broader well-being of society. We need to stop looking at narrow economic targets. Instead, we need an economic model which targets, measures and follows a state of well-being for our people which is much broader than the narrow measurements such as GDP and average income.

This is a good time for the country. We are exiting the troika bailout and regaining our economic independence. However, this independence must be used to ensure what happened before does not happen again, that workers are at the centre of decision-making, that we get real about the idea of a social contract, the taxes we pay and the services we receive in return. We need to have a good discussion as to what market injustices we accept, how we measure economic progress, how we value that which our economy achieves and those policies which we put towards their production.

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