Dr. Peter Rigney:

A Chathaoirligh, Senators and Deputies, I thank the committee for this opportunity to address it in respect of budget 2014 and the measures put forward by the Irish Congress of Trade Unions in its pre-budget submission. In drawing up our submission Congress drew heavily on research conducted by the Nevin Economic Research Institute, particularly with regard to income tax, a wealth tax and a programme of investment to create jobs and stimulate demand. Dr. Tom Healy, director of the Nevin Economic Research Institute, is here with me.

Ireland is now in the sixth year of recession and stagnation and it is clear that a change of course is required if we are to have any hope of a sustainable recovery.

Current policy has taken a heavy toll and has left us with one in four people out of work, unemployed or emigrated, collapsed retail sales, flatlining domestic demand and public finances that are constrained by the cost of servicing the enormous private banking debt. We are in danger of a lost decade similar to that experienced by Japan in the 1990s after its property bubble burst. Congress believes that, as a matter of urgency, policy must now become more job focused and growth friendly. There is no contradiction between adopting this approach and achieving budgetary targets agreed with the troika. We believe it is possible to implement a different fiscal adjustment from that envisaged by the Government. By combining an alternative adjustment with an investment and jobs stimulus, we believe that Ireland actually stands a better chance of reaching the agreed budgetary targets.

There are four key elements to our alternative plan: using the proceeds of the promissory note deal to reduce the size of the budget adjustments planned for 2014 and 2015; an investment stimulus package of €4.5 billion over the next two years financed in a manner that will limit the cost to the taxpayer; targeted tax increases at the richest households, along with an increased contribution from the corporate sector; and no further cuts to non-pay, primary public spending along with greater efficiency in the delivery of public services.

We believe that adopting this alternative approach would have a positive impact on the economy and wider society. We believe it would result in the creation of 40,000 new jobs, while the deficit would be lower by approximately 0.3%. Consistency, seriousness and demonstrable progress are central to rebuilding trust and confidence over time. It is our belief that a key challenge for budget 2014 is to address the very real danger of prolonged economic stagnation and high, socially unsustainable levels of unemployment.