Arthur Morgan (Louth, Sinn Fein)

I welcome the opportunity to respond to the Minister for Finance. The former US president Mr. Harry Truman kept a plaque on his desk that read, "The buck stops here". For the last year, as we witnessed the turn in the tide of our economy, the Government has run itself along the lines of, "The buck stops nowhere". I wish to make it clear to this Government that the buck stops with it. It is in charge and was quick to take credit for the boom. It must, therefore, take responsibility for the bust. Sinn Féin approached the budget prepared to support any measures that would stabilise and reinvigorate the economy, prioritise job creation, address the significant shortfall in public finances, deal with cost-of-living pressures, and provide solutions for those who have become unemployed or who face unemployment.

We argued for the Government to see this budget as an opportunity to turn around the economy. We wanted a budget that was about more than balancing the books, an approach we believe has the potential to drive us further into recession, rather than lift us out of it. We wanted it to provide a vision for a new economic model, based on sound industries such as research and development, exports and a thriving indigenous small and medium enterprise sector, capable of delivering the revenue needed next year to revive the public finances.

Today, people wanted to see the beginning of a three year plan to get the economy back on track. Central to that wish is the creation and retention of jobs and addressing the shortfall in public finances. The Government fell far short on both counts today. It failed the leadership test. It promised to look after the most vulnerable but it did not. It said it would ensure top earners paid their fair share, but it did not. It promised frontline services in health and education would be protected but that did not happen either.

We can rebuild the economy, but that means taking bold decisions. It means investing in infrastructure that will create jobs and build competitiveness. It means helping those who have lost their jobs return to the workforce as quickly as possible and ensure such people are supported properly while that happens. It means ending the era of tax breaks for the rich, while PAYE workers struggle to survive. It means truly advancing the all-Ireland economy. Change is possible and it should have started this afternoon. It did not and the State will be poorer next year because of that.

We have witnessed an extraordinary economic period. Gross domestic product and gross national product increased exponentially in the past decade. Ireland turned from an emigrant country to a destination for economic migrants. We saw an explosion in purchasing power as evidenced by the growth in home ownership, high-end cars and in quality brand names on our shopping streets. Simultaneously, Government policy ensured that massive private debt accumulated. As the gap widened, the void between the rich and poor became more obvious and precarious. The Government spent wildly during this period, mostly on tax breaks for those who least needed them, keeping the consultant industry in business and on wasteful pet projects. It did not use the budget surpluses to turn Ireland into a first world model. It used them to buy elections.

Anyone believing the Opposition spokespeople who preceded me would have implemented different economic policies which would have led the State down an alternative path need only cast their memories back to these parties' pre-election manifestos in 2007. Both promised tax cuts alongside increased public spending. They criticise Fianna Fáil now, but shared the same economic outlook then. Of course, it was the Government that did the real damage. It presided over many investment failures, especially with regard to value for money. There was no strategic investment in broadband, revitalising rural Ireland, renewable energy, ports, or public transport, despite some small exceptions like the Luas. Of the infrastructural projects undertaken, few came in on time or on budget. We need only consider the example of the Dublin Port tunnel. The original cost was €457 million, but it eventually cost €752 million, representing poor value for money.

The Government's property-based tax relief left us with many hotels, car parks and shopping centres, instead of social housing, rail lines and wind farms. Now we face a period of virtually no infrastructure development. How is the State supposed to develop its competitiveness when it does not have something as necessary as universal, high speed and quality broadband provision?

As well as failing to invest, the Government took reckless decision after reckless decision relating to the tax system. Measures were introduced to the tax base which resulted in a dangerous over-dependence on construction and consumption-related revenue. Stable sources of tax were cut. Its failure to grapple with the mistakes it made in the tax system was reflected in abysmal fashion throughout this year and last year, and in its inability to project from month to month what was coming into the Exchequer's funds. As a result, the Government in the budget had to take into consideration a projected tax receipt shortfall of €6.5 billion for 2008 and now an Exchequer deficit of 11.5% projected to be some €14.7 billion next year. To put this in perspective, I recall the then Minister for Finance, Deputy Brian Cowen, assuring us in this month last year that gross domestic product growth in 2008 would be approximately 3%, more modest than we were used to but growth nonetheless. Instead, we have seen an unprecedented negative turnaround in growth. Unemployment has reached its highest level in a decade, resulting in lower income tax returns and a growing demand on the social insurance fund. Inflation measured 4.3% in September and this has impacted on consumer spending. Consequently, consumption revenue with VAT returns are €1.1 billion behind target to date.

The Government has pointed to international forces for the downturn and tried to deny that the policies it pursued lacked foresight, encouraged instability and indulged speculative greed. The global downturn has impacted on international trade and the banks' liquidity issue poses its own problems. However, the Government could have left the State in a much better position to cope with the crisis. Instead of building the State's competitiveness, Fianna Fáil and its construction partners left us economically dependent on the construction industry, with stamp duty rising from 3% of the Government's total tax take in 1997 to 8% in 2006, accompanied by huge VAT returns from house build costs. The growth of this sector allowed the Government, the heads of the industry and, of course, the good old banks to profit from those who got into debt when trying to own a home. In the interim, the Government abandoned real economic development. Our exports market was ignored. The banks took the Government's lead.

At a recent ISME conference, business people pointed out that over the past ten years, the banks did not want to know them unless they had property. They were told they could not borrow to support start-up companies unless properties were included in their business plans. The owners of small and medium-sized enterprises are being denied overdraft facilities by banks which are burdened with properties while simultaneously nursing developers' loans. The Government's unconditional support of property developers has harmed this State's competitiveness. Property tax reliefs ate into money that could and should have funded necessary infrastructure. High property prices had a further detrimental effect on business as rents spiralled. However, the Government continued to claim, right up to its lengthy summer break, that the fundamentals of the economy were sound. It is still repeating this.

Some deeply misleading claims have been made over recent times. A recent report, Catching the Wave, made such claims in respect of our export market. In 2006, foreign-owned firms which are based in Ireland were responsible for 90.2% of all exports from this country. The indigenous export sector is crying out for Government intervention. The domestic market is equally badly-off. The Government has failed to tackle the flooding of the Irish market with cheap imports. It has not dealt with contentious issues such as sell-by dates and the incorrect labelling of products as "guaranteed Irish". These two issues were mentioned by the owners of Cappoquin Chickens before the company went into liquidation and had to be sold to foreign owners, who are only willing to pay the staff the minimum wage to keep the operation going.

Sinn Féin was attacked by all parties in this House when it said the Government's economic policy was not sustainable and would come crashing down. Now that the crash has happened, we firmly believe the most important role the Government can play in the current crisis is to ensure there is employment for the many people who are being made redundant. I refer to those who were working in the construction sector, for example. Equally, the Government should ensure that people are not made homeless as a result of negative equity and repossessions.

In the run-up to this budget, the debate in the Houses of the Oireachtas, the media and the street has centred around how little money the Government will have to run the State next year. Many people asked how much it would need to borrow and where cuts would need to be made. Throughout this debate, Sinn Féin argued that there should be a focus on how to create jobs over the next year. We need to turn the economy around and build a revenue stream that will make cuts in future budgets unnecessary. Vested interest lobby groups have suggested that overspending by the Government has caused problems for the Exchequer. They have called for cuts to be made. However, our level of public spending is the third lowest in Europe. Lithuania and Estonia are the only countries that spend less than we do. We are coming from a low base. Far more spending was required over the last decade to construct the physical and social infrastructure needed to develop the State's competitiveness and eradicate poverty. Unfortunately, what was spent was spent badly, in the main.

Other groups have launched attacks on public sector personnel. I do not doubt that efficiency savings can be made in the public service. In this time of financial turmoil, value for money is essential. However, the last thing the State needs is a reduction in the number of nurses, gardaí or teachers. We need reviews of bodies like the HSE. We need leadership from the Members of this House. How many elected representatives are maintaining their jobs in the public sector, thereby holding onto pensions and other entitlements which accompany such jobs? We need to bring an end to the giving of disproportionate bonuses regardless of performance. I refer to the bonuses which were reported in the media last weekend, for example. We do not need cuts that will harm frontline services and prolong the recession.

Sinn Féin has highlighted the spending that is needed to help the most vulnerable people in society. Their lot has not improved over the past decade. Many people will tune in to the "Six One News" tonight to learn if anything has been done to help them pay their exorbitant mortgages, to keep them in employment, to provide books, uniforms and school meals for their children, to provide child care places so they do not have to fork out thousands of euro each month for private facilities, to alleviate their health costs and to reduce the impact of inflation on their diminishing wages. I am conscious of the plight of people in more desperate situations. I refer to those who have become unemployed, who are struggling to get by on inadequate welfare payments, who are at risk of fuel and food poverty this winter, who fear for their children's health and their own health, who face eviction from unscrupulous landlords or whose homes may be repossessed by the banks.

In its pre-budget submission, Sinn Féin called for supports to be given to the most vulnerable people in society. We believe the Government has a responsibility to protect the weakest first. It should take care of children, the elderly, the sick, the poor and people with disabilities before it worries about anyone else. The Government could have shown more foresight. It could have put in place a three-year plan to get the economy back on track. Instead, it is engaging in a book-keeping exercise. A former US President, Franklin D. Roosevelt, turned the tide of his country's economic fortunes when he established what was known as the time as the "New Deal". Under that programme, widespread government borrowing took place to fund major public works, employ millions of people and slowly bring the economy back to life. The "New Deal" showed initiative and courage.

Sinn Féin argued in the run-up to the budget that immediate economic stabilisation measures should be taken. We said that the Government should prioritise job creation, for example, by initiating an immediate retraining programme for construction workers to direct them into the renewable energy sector and other industries. We proposed that the commitments under the national development plan in the areas of social and affordable housing and school building be frontloaded to provide necessary infrastructure and secure jobs and tax revenue. Under this budget, however, investment in social housing is to decrease by 2% and investment in affordable housing is to decrease by a whopping 30%, which is totally unacceptable.

At the end of 2007, the National Pensions Reserve Fund contained €21.2 billion. In March of this year, it was estimated that the size of the fund had dropped to €19.4 billion. It is clear that money is being lost on the stock markets, although much of the losses are only on paper until the moneys are withdrawn and any gains realised. It would be more responsible for the Government to use a proportion of the National Pensions Reserve Fund for infrastructural investment.

Sinn Féin has called on the Government to reduce the cost of living pressures on the low-paid and those who depend on social welfare by establishing an anti-inflation package and delivering social welfare increases. It has asked the Government to bring forward a set of proposals to reduce cost pressures on small businesses and to put in place specific programmes to support indigenous businesses which are seeking to boost their export capacity. It has proposed that the tax system be overhauled to assist those on low incomes. Those at the higher end of the scale should pay their fair share of taxes if we are to generate sufficient revenue to meet medium-term investment and current spending demands.

In the wake of the decision earlier this month to guarantee the banking system, we called for the Government to use the guarantee as a further way of contributing to the Exchequer and stabilising the economy. We want the banks to make a windfall payment to the State, as a proper payback for the taxpayers' insurance. A levy should be introduced on the banks' profits as part of the new regulatory regime. We want the State to have shares in the banks and take positions on their boards so it can monitor the interests of the taxpayer. Measures should be introduced as part of the guarantee to protect those who are facing home repossessions. The banks have a duty to take the steps needed to reschedule the mortgage payments of low-income families. The Money Advice and Budgeting Service should be put on a statutory footing to ensure it has the authority to negotiate with the banks.

This budget, as well as stabilising the economy next year, should have aimed to stimulate it in the medium to longer term. Sinn Féin wants investment under the national development plan to prioritise public transport, communication, health, education, renewable energy and child care.

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