Mary Lou McDonald (Dublin Central, Sinn Fein) | Oireachtas source

As other speakers noted, this week the IMF admitted it had been wrong about the impact austerity would have on the Irish economy. It told us it had not foreseen the massively damaging impact tax hikes and cuts to expenditure would have on jobs and spending. It is very hard to believe that the IMF, or indeed any economist or commentator worth her or his salt, could have believed that taking tens of billions of euro out of an economy over a short number of years was a good idea. Certainly the citizens to whom Deputy McHugh referred knew that from the absolute get-go. A contractionary approach was never going to work or bring about growth; it will never bring us to recovery.

The Government's decision to continue socialising private debt is not only deeply unjust but is deepening the crisis and condemning in particular a generation of young Irish people to joblessness and emigration. Government failure to secure a real and substantive deal on the Anglo Irish Bank promissory note and its refusal to end the obscene payments by State-owned banks to unguaranteed bondholders makes this Bill almost laughable.

The Stability and Growth Pact rules, as amended by the austerity treaty, or the fiscal responsibility treaty, are neither achievable nor prudent in an economy that is experiencing a protracted recession. The question to which the debate on this legislation gives rise for all of us, particularly those in government, is why should we legislate for a fiscal strategy that has already failed. That is the nub of the issue.

When the comments of Joseph Stiglitz on the failure of austerity were put to him last week, the Taoiseach corrected the speaker and stated Professor Stiglitz had not said austerity never worked but rather that it rarely worked. Whoopee. It is reassuring that the Taoiseach is pursuing a strategy which, in his words, rarely works. While austerity is failing in economic terms, it is also causing untold hardship for the very citizens who rely on Members elected to this House, particularly those in government, to serve their best interests. It would be in the best interests of the economy and society if there was real, hard-cash investment in the people. We need this to happen now.

There is a need for real reform throughout the public service, rather than a slash and burn policy which leads to the haemorrhaging of numbers. There is a need for a real vision for society and real political bravery in order that the economy will be brought to recovery and sustainability. Difficult choices must be made. However, it must also be recognised that there are choices. The choices pursued by this Administration to date have disproportionately harmed low and middle-income workers and their families, left the domestic economy as flat as a pancake and do not encourage growth. In fact, they hamper and damage growth.

Among the provisions included in the Bill is one - this is arguably the centrepiece of the legislation - to establish the Irish Fiscal Advisory Council on a statutory footing. It is worth remembering that those who serve on the council have suggested an additional €1.9 billion be taken out of the economy during the next three years. This would be on top of the almost €9 billion the Government will be seeking in cutbacks. The council has no remit - nor has it sought one - for the domestic, economic or very real human and social impact of the policies it proposes. There is no jeopardy for its members in proposing additional cutbacks to the tune of €1.9 billion. Of course, there would be a great deal of jeopardy for those on the receiving end of these cutbacks.

Those appointed to the council come from organisations which do not have a great record in getting economic forecasts right. Rather than providing the Minister with figures from the recession, I will rewind the clock to 2007. In that year the ESRI projected a budget deficit of 2.7% in 2008. At the same time the IMF predicted that there would be a surplus of 0.04%, while the OECD stated there would be a deficit of 1%. What happened in 2008? The budget deficit was 7.3%. If we could not rely on these organisations and individuals for sound fiscal projections and advice in the good times, as they were known, I do not understand why we are now relying on them in the very bad times. When the council was originally established, there was an opportunity to bring on board progressive economists from outside the cosy circle who would challenge the status quoin fiscal planning and budgetary oversight. It is no surprise, however, that Fine Gael and the Labour Party sought out the usual suspects, namely, those who view society through the prism of fiscal data and economic modelling and whose mindsets reflect that which, in large measure, created the crisis in the first instance. The Department of Finance intends to provide the council with an annual budget of up to €650,000. To be honest, I can think of at least a dozen better ways to spend that money in the public interest.

It must be noted that the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, has hired a number of economists for his Department and the Department of Finance and the Office of the Taoiseach. According to the Secretary General of the Department of Public Expenditure and Reform, Mr. Robert Watt, the Government's new economic and evaluation service which is overseeing these recruitments will change the culture within senior levels of the Civil Service which contributed to the crisis. There is no evidence of such change in perspective or practice to date. In real terms, things remain unchanged within the upper echelons to which I refer.

The Bill will do real damage to the economy. There is no doubt that the strictures it will impose will undermine the delivery of front-line services which will push more families into debt. The overall impact of the legislation will be felt for many years to come. We do not need lip service; what we need are public services. They must be first class and First World in nature and adequately resourced. There is no question that reform is required. However, I do not see the Bill as being part of a reform agenda. It will instead facilitate the institutionalisation of poverty traps.

The economic crisis is deepening. Long-term unemployment has risen to 8.8%. This means that 184,000 people are going to find it extremely difficult to obtain employment, even when job opportunities arise. The current employment prospects for citizens under the age of 25 years are 50:50. When he addressed the House last week, the President of the European Parliament, Mr. Martin Schulz, correctly stated the biggest problem was the level of unemployment among young people. He placed a very heavy emphasis on this fact and why would he not do so, particularly when one considers the data available not just in the State but across the European Union? His assessment is correct, but what he said is difficult to tally with his support for the austerity treaty and the policies being pursued by the European Union and the IMF. In that regard, he is very much singing from the same hymn sheet as the Government which talks about growth and jobs but which delivers austerity and cutbacks.

Young people and the long-term unemployed require fully resourced access to education, training and reskilling. They will then require real jobs with decent wages. This is not a radical proposition, rather it is the stuff that makes an economy and a society work. If the Government continues to pursue policies that attack low and middle-income families, that cut away the most basic social provisions and supports for carers, the disabled and children, that make lessen any chance of growth and recovery possible, for many the human cost will be real and long-lasting. The real reform we need is to place equality at the heart of our legislative and decision-making processes. We need to start putting the people first.

It has been stated recessions provide opportunities for change. This is true. Some of the rnost progressive social policies were put in place by governments throughout Europe both during and after the Second World War. The response at the time was to put the people first. Universal public health care provision in Britain and massive investment in adult education and job creation in the United States built the middle classes. The result was that standards of living improved across classes and economies recovered. Make no mistake: we will not recover without real and radical reform based on equality and justice, yet the Bill and the policies it embodies fly in the face of this approach.

That is the reason Sinn Féin will not support the Bill. It makes no sense whatsoever to enshrine austerity in law. It makes no sense to set targets that cannot be met except by inflicting very great pressure and damage on the domestic economy and on the citizens who rely on services within it.

The enshrining of austerity in legislation is wrong and it is stupid. It makes no sense to continuously proceed with a policy that is not working. The talk about export figures or any talk about a minimal amount of growth which is job-free growth, does not take from the fact that the big challenge for this economy is to revive the domestic economy, get people back to work and secure a debt on that toxic banking burden which was not the people's to begin with.

I regret very much that this Government, rather than carving out a policy space and a set of demands that would act in the real interests of this State and her people, has instead gone along, almost sleep-walking, with a failed agenda championed by the IMF and the EU institutions. The people will give the Government no thanks, not just in the short term as they bear the brunt of the cutbacks and austerity, but also in the long term.

See this speech in context