Eamon Gilmore (Dún Laoghaire, Labour)

The then Minister for Finance said:

The new levy will be at a rate of 1%, but with an income exemption in order to protect the lower paid. In the case of the self-employed, the exemption will apply where income for the year is not greater than £9,000. In the case of employees, the levy will not be payable in any week where the income is not greater than £173. In setting the income threshold at this level, rather than at the general tax exemption limits, the potential full-year yield for the levy is diminished by some £20 million. However, in doing so, I have ensured that a further 217,000 taxpayers will not be affected by the levy, over and above the 290,000 who are exempted from income tax.

If that same principle was applied today, it would mean that somebody on an income of approximately €30,000 a year would be exempt from the levy that was introduced here yesterday, which is of course a new form of taxation.

Once again, however, the big tax breaks and tax avoidance measures have been left untouched. Tax relief on mortgage interest for landlords remains at a cost of €572 million. Tax relief for super-private clinics, so favoured by the Minister for Health and Children, remains at a cost of €1 billion. The loophole that allows developers to avoid stamp duty on commercial property is not touched. The great tax–break for the rich in small, self-administered pension schemes remains in place.

We still have the bank bail-out, including, without any explanation, dated subordinated debt. Who holds that debt and why are they covered by the bank bail-out scheme and guarantee when no other European country has covered it? Last weekend, the Paris communiqué explicitly referred only to the coverage and protection of senior debt.

We still do not know what the great bail-out will bring to the Exchequer or what conditionality will apply. On Monday, four of the most senior bankers in the United Kingdom went to Downing street with jobs and left sacked. The only person who was sacked here last Monday was the unfortunate manager of the Galway hurling team.

It is not just Ireland's poor who will suffer. Once again, as a country, we are reneging on our commitment to the world's poor by cutting overseas development aid. When the economy is growing, we are told that ODA cannot keep up. When the economy is not growing, we are told we cannot afford to keep our promise. If that is patriotism, then it is a pretty sad form of it.

Government Ministers are saying that cuts will not affect health, education or social welfare, but that is patently untrue. Hospital budgets are being squeezed, there is a long list of miserable cuts in education and there are severe restrictions in entitlement to social insurance. Making the poor pay is not just unfair, it is also unwise.

If one wants to take a lesson from the history of Irish social partnership, it is this: we have done best as a nation when we combined a strategy for economic growth with a determination to protect the vulnerable and share gains. However imperfect, social partnership was based on that formula. It did not go as far as many of us would have wished, but it was a powerful dynamic nonetheless.

If one looked across Europe after the oil shocks of the 1970s, it was the countries which were able to share the cost of economic downturn fairly that emerged most strongly. This budget has no strategy for growth, and contains no ethic of social solidarity. It contains a series of spending cuts, some stupid and some just simply cruel.

This is a budget from an era that is past. In recent weeks, the failings of neo-liberalism and the Washington consensus have been shown up in glorious technicolour. For years, those who have argued for equality and solidarity in our society have been confronted by a rigid right-wing orthodoxy. The simple and simplistic view of history was that there was no more left and right, there was only right; that regulation should be light, or better avoided altogether; that the market was the only system that could efficiently deliver any economic or social need; that financial markets were the ultimate expression of market efficiency; that greed was good; that a small, and ever shrinking state was the only road map for future prosperity; that European civilisation, with its regulated market and strong social spending was a fossil from another era; and that global capitalism was incompatible with social solidarity and inequality.

It turns out that the conservative, monetarist orthodoxy is spectacularly wrong. Those assumptions have been turned on their head. Deregulation, it turns out, can be a recipe for risky, and sometimes down-right dishonest practices which can put jobs, business and homes at risk. Markets, particularly financial markets, are often irrational, and unregulated financial markets can bring the world to the brink of economic meltdown. Greed, in the form of a hedge fund, can bring down a bank and destroy jobs in the real economy. Government, it turns out, has a role to play after all. If the neo-liberals had their way, there would not have been enough Government left to organise the bailout. The European social model, though requiring reform, provides a basis for stable sustainable growth, coupled with equality.

For years, when the left argued that executive pay was grossly out of control, we were scoffed at. One could not possibly restrict the pay of these masters of the Universe or the world would come crashing down around our ears. Guess what, the world very nearly came crashing down around our ears, and it may not be over yet.

Where now are all those people who told us that inequality was a good thing, that it provided the right incentives in the economy? Inequality is at the heart of the sub-prime crisis that gave rise to the economic difficulties in the first place. When the investment bankers ran out of developing countries to which to lend money, they found a Third World country in the heart of the world's greatest economic power, in the United States. Working-class America had seen its income stagnate since the 1980s of Reagan, and they were the ideal target for sub-prime lending. The international economic crisis had its roots in income inequality.

Political economy is back. Equality is not an optional extra or a drain on growth. It is a basic requirement of a civilised society and of economic progress. The decisions made in this budget matter to real people in the here and now. In the run-up to this budget, there has been a clamour for hair-shirts, so long as someone else wears them. The Government, it is argued, must manage its affairs like a family or a business, and balance its budget. That, too, was the philosophy that informed Government responses to the Great Depression of the 1930s. It was that same conservative view that pushed the world into depression — bail out the bankers, and hammer those who pay their taxes and play by the rules.

On Sunday last, the Minister for Finance quoted President Franklin Delano Roosevelt, when he said that the only thing we have to fear is fear itself. Like all quotations used out of context, it can be used to justify anything but what the author had originally intended. It is worth me finishing by reminding the House of some of the rest of that same speech, FDR's inaugural. It is worth remembering because it shows how the struggle for decency is always with us. President Roosevelt stated:

. . . let me assert my firm belief that the only thing we have to fear, is fear itself — nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance.

. . . Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence,

. . . Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected in the hearts and minds of men.

. . . They know only the rules of a generation of self-seekers. They have no vision, and where there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilisation. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Let me repeat:

The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

I repeat that sentence because it underlines the approach the Labour Party in Ireland is taking to our present economic circumstances, just as it underlines the approach being taken by FDR's successor, Senator Obama across the Atlantic.

President Roosevelt further stated:

Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. . . .

There was no New Deal in this budget. There was no attempt to create jobs. Instead, there was an attack on old people, on poor people, and a vicious assault on working and middle income families.

I challenge the Government to put this budget to the test of the people. There is a vacancy in this House. There is a by-election due in the constituency of Dublin South. I challenge the Government to move the writ for that by-election to hold it now so that at least the people of that constituency can give their verdict on what the Government is doing and on the lies the Government told the people just over 12 months ago when they were re-elected to office.

See this speech in context