Mary Upton (Dublin South Central, Labour)

I welcome the opportunity to speak on this motion. The Government's measure makes no social or economic sense. There is no social argument, based on fairness or anything else, that justifies cutting the incomes of the lowest earners in society. Instead, it has been framed as an argument about competitiveness that is influenced by a certain ideology, which believes that those on the lowest pay in our economy are making it uncompetitive.

This move will not create jobs or reduce our deficit or debt burden. It will increase inequality and trap more working people in poverty for the sake of an ideology. That ideology ignores the enormous social costs associated with poverty and inequality, which cannot be measured on a competitiveness index. The argument about competitiveness implies that we all benefited from the economic boom and consequently we must all share the pain. It also implies a belief that lowering the pay of the lowest earners in our society will remedy a decade of spiralling prices for everything from utilities to household essentials. It is noteworthy that competitiveness was not of much concern to the Government when it inflated a housing boom that drove up prices to such unsustainable levels.

Competitiveness has only recently become a concern for this Government but it has long been a concern for the minimum wage earner. The people on the lowest incomes understand competition better than anybody and they certainly know how uncompetitive our economy is. They know that the relative prices of essentials such as the contents of the weekly shopping, health care, transport, electricity and housing are all vastly more expensive here than in comparative countries. These people are also the most sensitive to price increases. When prices were rising faster than their wages, their living standards declined. Now their pay is to be cut ahead of the decline in prices, causing a similar decline in living standards.

They know how competitive the labour market is too, because if they have a job, they are told how lucky they are to have it. If they are unfortunate enough to lose their job, the social safety net of the dole is also being cut to "make work pay". Where are all the jobs going to come from to make work pay for the hundreds of thousands on the dole? How will work pay when one's basic wage is cut, yet the prices one pays in the shops stay the same or barely fall?

Consider something as fundamental as health care. Unlike Britain, with whose pay and welfare rates ours are commonly compared, we do not have a national health service. We have a two tier system, encouraged by this Government's policies of tax breaks on facilities and free transfers of State land for building, that reinforces a system of haves and have nots. In Britain one is not required to pay between €40 and €70 for a general practitioner visit, fees for a repeat prescription or €100 accident and emergency fees. Without an acknowledgement of this context, it is simply disingenuous to suggest one is comparing like with like.

If the Government was serious about competitiveness, it would do something worthwhile about the real costs facing business. In the past ten years there have been runaway increases in electricity, gas and waste costs, yet nothing of substance was done to tackle them adequately. There is still nothing of substance being done. Instead of making the difficult decisions in these areas, pay cuts are being imposed from the bottom up.

This decision has been described as another hard decision that had to be taken in the national interest. This Government appears to revel in its self-imposed role of hard decision-maker. It seems to believe that if a decision is hard, it is fair. It speaks constantly about hard decisions in the national interest, as if cutting the wages of the lowest earners will help those same low earners. There is no social justification for this move and the economic argument is hollow. A race to the bottom on wages serves nobody. We cannot compete on cost in a range of globalised industries, and the Government knows this. Indeed, it has framed its economic policies around this fact. How many times have we heard the Government state that our economic future lies in the smart economy, where we will compete in the fields of innovation and ideas, rather than a race to the bottom that we cannot win?

Finally, can a smart economy be based on inequality? Is reinforcing inequality smart? Is trapping the working poor in poverty smart? The answers are clearly "No", yet the Government is determined to make another decision that makes no sense and cannot be justified.

See this speech in context