Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)

I suspect that the Minister would agree that unemployment, particularly at the levels we are now witnessing, is unacceptable and that it must be everyone's priority to do something about it. It is demoralising for people who were working and who want to work to find themselves dependent on social welfare and with no prospects of getting back to work. They face the difficulty of meeting mortgage repayments, paying bills and trying to live a dignified existence, but they also face the demoralisation of not working. Unemployment will create a social cost if we do not deal with the problem quickly. We are all familiar with what mass unemployment over a long period led to in the 1980s, when serious damage was done to communities across this city and the entire country. We all understand that and how urgent it is to deal with it. Any talk of success, improvement, recovery or being on the right track means very little if we do not address that problem quickly.

I am sure the Minister would also agree that getting people back to work has to be central to any sustainable economic strategy. One cannot grow an economy with this number of people unemployed and dependent on social welfare, considering its cost to the Exchequer.

The strategy employed by the Government, the European Union and the International Monetary Fund, if I understand it correctly, is the following. We nurse the banks back to health. We need them because, no matter how awful they were or how badly they misbehaved, without them we cannot get credit back into the economy. We must accept this necessary evil of nursing them back to health. We must cut costs in order to make ourselves competitive, grow exports and get ourselves out of the mess we are in. That seems to be the strategy being articulated by the Government for dealing with the current economic crisis, but there is a major flaw in the logic of this strategy.

It is apparent if one looks at the effect of the austerity strategy over the last couple of years. Things have not got better. They have got worse on all those fronts. The focus on nursing the banks back to health has not produced a release of credit into the economy. We can all see this. No money is going from the banks into small businesses, despite our huge efforts to recapitalise the banks and nurse them back to health and the enormous austerity people have had to suffer to do this.

Unemployment has not got better. It has got worse. There is no sign of significant economic growth. There has been a small improvement in the export situation but, given the contraction in the rest of the economy, exports are too small a proportion of our economy to drag the country out of recession or to make up the ground necessary to get all those people back to work.

The view that the current strategy is not working is not coming only from the Technical Group or from the left, or even the extreme left or whatever term is used to ridicule us. The UN Conference on Trade and Development produced a report in the last couple of weeks. It states:

A shift from fiscal stimulus towards fiscal tightening is self-defeating, especially in the most developed economies which were severely hit by the financial crisis. In such a situation a restricted fiscal policy may reduce GDP growth and fiscal revenues and is, therefore, counterproductive in terms of fiscal consolidation.

It goes on to say that the fiscal imbalances were not a driving factor of the current crisis rather, they were a result of the crisis. Getting the books balanced is not the issue because the books are unbalanced because of the financial crisis. It further states that public bail-outs of financial institutions accounted for a large portion of the deficit, reflecting a conversion from private into public debt.

The UN is saying that it was not profligacy in public spending that created the deficit rather, it was the taking on of the private debts of the bankers. It states public opinion and policy makers should not trust again those institutions, including rating agencies, to judge what constitutes sound macro-economic policies and management of public finances. The reduction in growth promoting fiscal expenditure may lead to a decline in future Government revenues that would be larger than the fiscal savings obtained by retrenchment, with negative consequences for long term fiscal and debt sustainability.

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