Tommy Broughan (Dublin North East, Independent)

The starting point for the current debate on the economic crisis is centred on the 2014 target for cutting the budget deficit to 3%. I do not believe that the Government has yet made any kind of economically persuasive case in respect of the 2014 deadline. As Deputy Gilmore stated, we simply do not possess enough information to frame a one-year budget not to mention a four-year fiscal programme. Why has the Government not presented a proper cost-benefit analysis for the 2014 deadline, as well as alternative growth scenarios including a longer time period for the achievement of this massive proposed adjustment to the national economy? I am glad that ESRI and ICTU economists, among others, are now also questioning the reality of a 2014 target.

Everybody agrees that there is clearly a structural budgetary gap that must be bridged. However, we must not forget the devastation that has already been wreaked on our economy and society by senior bankers and their friends in Fianna Fáil. The September 2008 blanket bank guarantee given by Fianna Fáil and the Green Party has resulted in the absolute ruination of our national accounts for the better part of a decade. We will be obliged to spend billions, year on year, to pay just the interest bill for the zombie banks that acted in such a criminally dangerous manner during the past ten years.

Almost 450,000 of our citizens are unemployed and thousands of our younger citizens are once again emigrating. Canada, Australia, the US and the UK, among other countries, are again benefiting from the skills and talents of our educated young people. Core education, health and transport services have been under sustained attack for the past two years. As the Taoiseach stated, the Government has already taken an astonishing €14.5 billion out of the economy in that time. There is a very real danger that the its new €15 billion cutbacks plan could have a further devastating deflationary impact. It is not possible to just slash a further €15 billion out of the economy - on top of the previous €14.5 billion - and expect to see economic growth and jobs to magically appear. There is always the grave danger that a total of almost €30 billion in cuts will fatally injure and enfeeble the Irish economy for half a generation.

This discredited Government is extremely keen to encourage everyone to sign up to a four-year budgetary plan. However, it continues to hide the true total cost of its shocking mistakes from the people. The interest bill alone for the national debt repayments over the next decade will be an incredible financial burden. The Minister for Finance, Deputy Brian Lenihan, recently informed me that the forecast for the 2011 interest repayment on the national debt is €5.7 billion - that is, of course, if we are lucky in the international markets after Christmas. Let us consider the current position in the context of the fact that debt servicing interest cost in 2007 was just €1.6 billion and only €1.5 billion in 2008.

My colleague, Deputy Burton, has repeatedly raised the long-term cost to the State of the use of promissory notes, particularly in respect of the recapitalisation of Anglo Irish Bank, Irish Nationwide and the EBS. I understand that a total of €30 billion will be injected into these three financial institutions. As Deputy Burton has noted, the annual promissory note payments of perhaps €3 billion, plus the interest payments of at least 5%, will turn the ten-year payment plan into a financial noose around the necks of the people for the next 15 years at least. To listen to the Minister for Finance, Deputy Brian Lenihan, last week, it is as if the cost of these promissory notes are some sort of a virtual accountancy exercise. The Fianna Fáil and Green Party Government seems determined to make ordinary low and middle income households pay for the disastrous approach to bailing out the banks.

There are credible alternative ways to address the economic crisis. I commend the many groups in civil society, the many academic economists, constituents and citizens who contact me regularly with their valuable ideas on how to address the crisis. The think-tank TASC, for example, has submitted a pre-budget document that sets out a path for recovery through job creation, an economic recovery fund and a fundamental rebalancing of the taxation system grounded in fairness and equality for all citizens. The recovery fund echoes our consistent Labour Party plans for investment, jobs and a strategic investment bank, which this Government has ignored since early 2009.

Analysts like Michael Taft and Fr. Seán Healy have produced proposals that envisage bringing as many as 100,000 new jobs on stream to assist citizens leaving the live register, modelled on Labour's part-time job opportunities programme from our last time in Government in the middle 1990s. Economist Dr. Tom O'Connor of the Cork Institute of Technology has provided a very valuable analysis of the current economic disaster as well as a comprehensive range of suggestions for stimulating the economy and getting people back to work. It is clear that our core focus should be on employment, infrastructural development and rebalancing taxes rather than swingeing cuts.

We repeatedly hear the mantra from Fianna Fáil, the Greens and their supporters in the media asking what would we do. Ministers talk of there being no sacred cows in budget 2011 in terms of front-line health, education and transport services, social welfare benefits and infrastructural investment. Let me once again state my bitter opposition to further cuts to social welfare benefits, public sector pay and pensions given the sacrifices that have already been made and the likely pay freezes well into the future. There should be no untouchables or sacred cows on the taxation side either.

For example, if necessary we should at least have a cost-benefit review of the corporation tax rate. Economist Dan O'Brien of TheIrish Times and formerly of The Economist has suggested that an increase of 2% or 2.5% would generate up to €650 million in tax revenue per annum without harming inward investment. TASC has also estimated that we could raise €1.5 billion on an annual basis by reducing the current exorbitant number of property and pensions-based tax reliefs. We know that the standardised rating of pension tax relief would yield perhaps at least €1.3 billion.

A constant mantra of would-be economist journalists, the modern equivalent of Noel Browne's public house dialecticians, is the demand for a site value tax or for a residential property tax. Such a tax, as always in Ireland, would in real terms impose most heavily on families in modest urban homes like those in the constituencies of the Acting Chairman and myself. Yet that commentariat will never consider an assets tax levied on the most wealthy or a simple wealth tax, which Dr. O'Connor estimates would raise at least €1 billion and which I believe should be part of the solution.

Most tax experts agree that by closing ongoing loopholes in the taxation system to reduce the numbers of tax fugitives we could raise at least a further €300 million. I note that the UK Chancellor of the Exchequer, Mr. George Osborne, has reached a new and tighter agreement to access funds of UK tax fugitives in Switzerland, following a similar deal with Liechtenstein. On a comparable basis to the UK, is there perhaps another €1 billion of Irish tax fugitive funds escaping our Irish tax system? Have we made a similar agreement with Switzerland? There is an EU agreement but is there a specific agreement between Ireland and Switzerland dealing with tax fugitives? There is also a clear argument for a new third rate of tax for the highest earners, perhaps at 50%, and we know from the response of the Minister today to Deputy Eamon Gilmore that Labour's proposed new 48% rate will raise a very valuable €410 million.

The current crisis must be used to thoroughly reform the market economy. One of the more significant areas in need of reform is that of excessive pay in both the public and private sectors. The new leader of the UK Labour Party, Mr. Ed Miliband, has put a high pay commission at the heart of his agenda for reforming the dysfunctional compensation system. It is obscene that senior management in any organisation can earn a salary that is a multiple of a couple of hundred of the lowest paid worker in that organisation. As the great Polly Toynbee long ago noted, the cancer of outrageous pay and bonuses comes directly from the private sector and especially from financial services.

There should be a cap on public sector and semi-State salaries at a maximum of perhaps €150,000. Clearly we want effective, dynamic people leading our commercial semi-State and public sector organisations but a high pay commission that invigilates and regulates pay in the public and private sectors could be a mechanism for curbing excessive salaries that may discourage dynamic people from considering leading public sector positions.

At the opposite end of the public pay spectrum are many low and middle income public and civil servants who signed up to the Croke Park agreement because they believed it would protect them from any further devastating pay cuts and new income levies. As a past member of the Committee of Public Accounts for eight years I am aware of major savings which can be made in enhancing efficiencies in the delivery of public services, which the Government has been incredibly lethargic in addressing. The Croke Park agreement should be adhered to and the pay of hard-pressed low and middle income public servants should not be targeted for a further savage attack in the 2011 budget. It is true there remains an astonishing level of inefficiencies and waste throughout the system of governance and administration. The Parliament and Government could clearly work just as effectively with the Dáil as a single Chamber, with 12 Ministers and five junior Ministers.

To get out of this recession and to create jobs there simply has to be continued investment in key infrastructure, including our critical communications and transport networks. I therefore welcome the Minister's comment this morning that he expects Exchequer capital investment to remain at a significant level in the budget on 7 December, and that PPP investment would continue. There is a clear case for using the metropolitan area networks project to develop a publicly-owned national fibre optic backbone to be fleshed out by Eircom and other providers. I have had debates with the Acting Chairman on the area in the past. We should ensure that small, medium and big enterprises in every part of the country have access to the highest quality broadband services. The construction of major transport projects, in themselves, provides a massive economic stimulus and jobs boost to the economy. As a long-time northside supporter of metro north, I note that €140 million has been spent on the project so far; that the enabling works for metro north will cost just €80 million in 2011; that CPO costs have been wildly exaggerated by vested interests; that the first implementation payment will not be incurred until late 2012 or early 2013 at the earliest; that the detailed cost-benefit analysis is massively positive and that both final bidders have strong Irish-connected companies. The Government would probably be sued by the bidders, as was the case in Slovakia recently, if the metro is axed or badly delayed.

I strongly believe in terms of the ratio of tax adjustments to cutbacks, it is fairer to aim for a balance which is strongly loaded towards tax adjustments given the €14.5 billion already taken from the economy. I reiterate my total opposition to the Government's policy of making low and middle income households take the biggest brunt of the economic pain it is currently doling out. The balance must be tilted towards those who can afford to pay and also the senior banking and developer interests who got us into this mess in the first place. Economic recovery must be centred on a stimulus package that includes an economic recovery fund, as well as the major infrastructural projects that include broadband and transport.

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