Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I thank the delegates for their presentation and for the research and analysis that went into their latest report. It is very useful to have the information collated in this manner from the various sources. This is the council's third report since it was established, albeit not on a statutory footing. It is not often I have cause to welcome any decision by the Government, given its current direction, but I did welcome its decision to ignore the report's recommendation in regard to additional fiscal adjustments. While the council has in fact rowed back in this latest report on the scale of additional adjustments it recommends, it continues to argue for some €1.9 billion in further cuts.

The report bases its projections on a hybrid model which shows debt to GDP peaking at higher than the 123% in 2013 which was envisaged at the time of the bailout. It was also predicted at that time that we would see growth levels approaching 3% very soon, a rise in GNP and an unemployment peak of 14.7%. Those expectations have not been met. The CSO figures released today show that 86,000 people have left the State in the past year, which is mirroring the unemployment challenge we face. Is it the case that we are effectively on a train that is out of control and going too fast for us to jump off, or is there a point where we must accept that the bailout has not worked and seek a different approach? I realise that the council reiterates in its report its resistance to a stimulus programme and encourages the Government to persist in its current fiscal stance. Did it, however, engage in any modelling or dialogue in respect of an alternative strategy which would include a stimulus programme for the domestic economy?

The council's remit is primarily concerned with debt sustainability, fiscal adjustments and projections, and we are all agreed on the importance of debt sustainability and the need for fiscal adjustments. The message from ordinary people, however, whether in Donegal, Dublin or elsewhere, is that they have nothing more to give. However, the council, in a recommendation which touches on matters of Government policy, proposes that welfare rates should be kept under review. How would a reduction in welfare rates assist in any way in growing the domestic economy? Given that such a reduction would take more money out of people's pockets, surely it would merely contribute further to the spiral of unemployment and the reduced working hours and staff numbers in shops and businesses throughout the State?

The section of the report dealing with projections was very interesting, and I understand the council's difficulties in this regard. In the context of its first report and the level of fiscal adjustments it proposed at that time, is the council still of the view that it would have been more prudent to take that direction, given what it now knows not only about the Irish economy but also the impact of developments in the European and world economy? Alternatively, is it of the view that the Government decision to stand firm on its own adjustment targets, albeit marginally increased, was the correct one? Has the Government issued a formal response to indicate why it has not taken on board the council's recommendations? Should we expect it to be a trend that the council will release its reports and the Government will either ignore or accept them? I am not arguing that the Government should not ignore them, but will there be a formal response mechanism that will allow us to understand why the Government is ignoring the council's recommendations?

I share the delegates' concerns in regard to debt sustainability. As I mentioned, it is due to peak at a higher level than anybody previously suggested. I recall the Minister for Finance, Deputy Michael Noonan, observing at one of the conferences with the troika representatives that he could not envisage Greece returning to the bond markets given that its debt-to-GDP ratio had passed 120%. Ireland itself is now at those levels although, fortunately, the spreads have come down. I am arguing that we should go much further than what is proposed in regard to debt sustainability because, as it stands, our debt is already unsustainable. Professor McHale's view, as reflected in the report, seems to be that an agreement on the banking portion of Ireland's debt will prove to be some type of panacea which will increase the chances of a successful adjustment as measured by a robust return to market creditworthiness.

The difficulty is that the June statement was utterly over-egged by the Government as a ground-breaking achievement of negotiating skill. I was at the ploughing championship yesterday when I heard the Taoiseach's claim that what was agreed in the June summit is as clear as day. On the contrary, it seems as clear to me as the mud I was stepping through down in Wexford. If there is to be a separation of sovereign and banking debt and if it is to be retrospective, then we must have a proper separation of these two types of debt. In other words, the sovereign debt, which is approximately one third of our banking debt, should be taken on board by the European Stability Mechanism. That, however, was never on the table and it is not what has been negotiated. It was disappointing but not unexpected to hear the comments by Ministers on this point yesterday. Has the council done any modelling in regard to the different possible impacts on our financial situation of having a deal in regard to the banking debt, whether by way of a restructuring of the promissory note or by the ESM taking over the full liabilities arising from the State's recapitalisation of the banks other than Anglo Irish Bank?

Will the delegates comment on the council's terms of reference? It is clearly focused on debt sustainability, the fiscal adjustment and projections made in the past, but does it believe there is a role for a committee such as this to examine the social impact arising from some of the policy decisions the council is advocating?

I do not agree with the headline figure of €1.9 billion, on which everybody will focus. The report contains a great many statistics and I do not doubt that our guests have done much work in respect of modelling, etc. It is easy to state that social welfare rates should be reviewed or that the adjustment should be increased by €1.9 billion but what does that mean for ordinary people? I accept this might not be the council's role at present but given that it has a particular standing and is going to be placed on a statutory footing, it has a responsibility to go that much further and deal with some of the issues to which I refer.