Michael D Higgins (Galway West, Labour)

I welcome the opportunity of speaking in support of the amendment tabled by my colleague, the Labour Party spokesperson on finance, Deputy Burton. I agree with the request from Fine Gael and the Labour Party for a more substantial debate on the economy. As I have only a short period of time available to me, I wish to concentrate on three aspects of the matter.

The debate on the economy is totally inadequate. It is flimsy and it does not deal with the fundamental issues. I say this for two basic reasons. The first is because the Minister for Finance is describing the external conditions, such as what he calls "the credit crunch" as a kind of international flu. I wish to state immediately that those who want to look at the different models of international finance must conclude that a debate is taking place at present in Washington about how one should respond to the failure and collapse of the neoliberal model of non-regulation. It is also interesting that the media, the members of which are not in the Press Gallery at present, came to accept a single model of the economy as the only model. Like others, I have had the privilege of working in a university where different versions of the economy were in fashion at different times. After the Second World War, for example, this moved through Fordism and Keynesianism to the arrival of the Washington consensus.

I challenge the Government to state where it stands on the Washington consensus, which was created through collusion with the media and the control of universities. That is why, for example, it is proposed to create the Friedman tower at the University of Chicago and the reason discrimination exists against academics within the United States system who hold different views. Lest people say I am simply being anti-American, there is an absence internationally of any analysis of the different forms of capitalist structure. There are differences between Asian capitalism, the kind of rentier capitalism practised in oil producing countries and the hegemonic capitalism which was driven by the Washington consensus.

I have great respect for the Minister of State at the Department of Finance but I ask him not to mount a defence of the kind of illiterate economics and anti-intellectualism that would describe the international situation in which we find ourselves as some kind of flu or say that things have gotten very bad abroad.

There are matters for which the Government has explicit responsibility. One cannot blame the relationship between the Fianna Fáil-led Government and the speculative component of the building industry on the Washington consensus. From 2006 there has been a crisis of management in the Irish economy which is not connected with waste but with economic structures, the fundamentals of which are available even to first-year students of economics. In 2006 we imported more than we exported. Between 1995 and 2000 the Irish growth rate was sustained by an export performance but exports flattened and in 2006 imports exceeded exports and there was a change in our balance of payments. Nevertheless the growth rate stayed high. That was because of little less than a property revaluation. As property prices peaked in January 2007 there was a mad, wild speculative capitalism in the housing market, for which the Government has responsibility in the form of its endless sustenance and expansion of property-driven tax breaks for those who are not interested in housing but in speculative investment. The insatiable demand for that expansion led to €8.5 billion being invested by Irish people in property abroad.

At the macro-economic level there is an international crisis of regulation. There is a contradiction in the debate between Republicans and Democrats in the United States. The Republican Party, in paper after paper from its research institutes such as the Cato Institute, with which the Minister of State will be familiar, set its face against even the Bretton Woods institutions, arguing that market competition between bad and good money, involving the yen, the dollar and the euro, would save us. I challenge the Fianna Fáil-led Government to say where it stands. Does it stand with the right-wing enterprise institutes in the United States on the international side of the crisis? Is that crisis engendering an inchoate slash-and-burn response in this country, which sanctions cutbacks in public services, irrespective of whom they might affect? What floor is being established whereby the most basic minimal rights in health, education, the environment and housing will be protected? Having irresponsibly created a bubble the suggestion is that the Government can now contract that bubble without considering the impact of its public expenditure proposals in each of the categories that are responsible.

I find it particularly depressing to witness the way the public is being softened up for some hard medicine. It is as if there is an international flu and we have caught it. The Government will have to dish out tough medicine and we will all have to put up with it. If we live for two or three years we might survive but that is not good enough. It is not good enough from the media, the Government or any political party.

Let us ask tough questions and let the Minister reply. Is he happy with the role of the Central Bank, which I explicitly contend is responsible for the disastrous abuse that took place in the area of housing? Where were the warnings from the Central Bank? In which particular quarterly report were they made? When the Central Bank expressed concern did it seek legislative power from Government? Did the Government read the quarterly report in question and decide it needed more accountability?

We in Parliament are often criticised for the level of our wages and our expenses but what about those at the top of the Irish banks who awarded themselves hundreds of thousands of euro for creating a crisis by firing money indiscriminately at borrowers and increasing the mortgage ratio from between 3.5% and 4% of income, as it was for most of our lives, to between 15% and 20%? That is a scandal and there is a dead silence on the matter as if this is an international virus which cannot be understood. It can be understood. The banking sector, in seeking to contract the false bubble it created in housing sustained by a larger artificial structure of credit, now says it wants all its money back in a hurry.

How did this come to be? What is the role of the Government and what should be done now? Who should be protected during the disastrous policy of responding in the knee-jerk way I describe as "slash and burn"? That would destroy more jobs, of which 73,000 have been lost since the beginning of this year. The response must be economically literate, it must be principled and it must defend, internationally, the right of different models encompassing the economy, politics and society. It must be truthful and must protect the weakest. It must not be general in its ill-effect and one cannot use scapegoats. Below the level of principal officer in the public services tens of thousands of civil and public servants draw family income supplement. That amounts to a whole army of public servants.

When the Minister of State at the Department of Enterprise, Trade and Employment, Deputy McGuinness, looks around for a scapegoat I suggest he look to the advisers who gave him not just illiterate economics but bad economics. He should have the courage to change course. He may look to the international situation for what must happen in the area of regulation. At home, however, he should encourage people to understand how important it is in a Republic that citizens who are most vulnerable should be insulated against the outrageous mistakes of those who gave themselves hundreds of thousands of euro.

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