Dr. Tom Healy:

In previous years the Irish Congress of Trade Unions adopted the idea of there being an alternative to austerity, saying that there is a better, fairer way and this is it, in our submission. It is based on research and working papers, all of which are, or will be, available on the NERI website. I invite anyone, members of the general public and the Oireachtas and other researchers and colleagues in the economics community to pull it apart and tell us what is wrong. They can engage the debate with the analysis because until now the message has been “I agree with you but there is no alternative." We are told either that the troika is making us do this or that ours is a small open economy and we have such high levels of debt that there is no alternative. That is very much the point being contested here.

We should bear in mind that social welfare has been and will be cut in real terms. A point that is very often forgotten here is that we have price inflation, running at 2% a year, a bit more for energy, which means that the real value of nominal social welfare payments, even when they are not cut in nominal terms, is declining and when that accumulates over four to five years it has a significant impact on households. It is little wonder that poverty and deprivation measures are increasing, according to the EU-SILC data, and real wages are either stagnant or declining in many occupations and sectors. That also weighs on the economy. Let me answer the question about bank recapitalisation this way, if we do not kick-start the economy, if the domestic economy in particular remains stagnant through continuing unemployment and high levels of personal debt, we will for sure need further bank recapitalisation. To some extent the key to resolving the mortgage crisis is to put the brakes on fiscal austerity and give some breathing space for the domestic economy. It is ironic that many commentators, agencies, respected research colleagues in the ESRI and the fiscal council, have taken the view that we should have a "no regrets" policy and go for the full fiscal consolidation this year just in case growth might flag next year or beyond. The irony of this is that each time the Government takes €2 billion, €3 billion or more out of the economy it depresses domestic demand and probably increases the long-term likelihood of further assistance or further adjustments and programmes of assistance. Even if we are out of the current troika programme there will be continuing oversight and vigilance for the indefinite future, as the committee is aware. In that context the best "no regrets" policy is to ease off on the pedal and give the Irish economy a chance. Finally, that puts us into the same territory on this question as IBEC, which is calling for easier fiscal consolidation.