Joan Burton (Dublin West, Labour) | Oireachtas source

The spring economic statement contains a lot of important data and statistics, but they translate into one thing which is opportunity - the opportunity to secure the economic and social recovery, spread the benefits of growth and relentlessly raise living standards. They will ensure that everyone who wants a job gets a job, and that work pays a living wage so that families can get on rather than just get by.

They will also ensure that we can invest additional money to build new schools and health care facilities, as well as ensuring that we have more gardaí on our streets so that our communities are safe and secure for our loved ones.

The statistical data also ensure that we maintain a strong welfare State to protect our vulnerable and older citizens, in addition to ensuring that a generation can come home to a rebuilt, better Ireland of new hopes, dreams and possibilities. That is the potential underpinned by the data and statistics.

Today, I can inform the House of more welcome statistics. The latest live register figures, released this morning, show that the number of people on the register has fallen to 343,551. This is a reduction of 45,008 or 11.6% since April 2014.

Unemployment is at 10% and continues to fall. By contrast, when this Government took office, unemployment was soaring towards a crisis peak of 15.1%. Through determined policy implementation we have turned that around, but we have a lot more work to do because a 10% unemployment rate remains far too high.

However, the progress made by this Government on the employment front underlines a crucial point. To secure the recovery, deliver on our economic potential and realise the opportunities for our people, it is essential that we stay on a proper course. That is the path laid out by Labour and Fine Gael in Government.

The spring economic statement is a snapshot of the Irish economy at this point in time, spring 2015. It is a description of the policies that have brought us to this point and it paints a picture of where we are now. It lays out the Government’s strategy for managing the economy to 2020, and making the most of the opportunities for all our people.

The statement is also the first step in a reformed budget process, providing a framework for debate. We want a meaningful discussion as to how the Government might use the limited flexibility available to ensure the recovery is sustained and the benefits are fairly spread.

We are starting that debate in this House this week, but it will continue in full public view in the national economic dialogue in Dublin Castle in early summer. I welcome this new process and thank the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, for the significant reforms he has introduced in this and other areas.

In terms of the debate, it is undeniable that we are moving rapidly in a good direction. There are more people at work, while businesses are opening up again and beginning to prosper. We can even see it in the streets with tourists visiting and local people shopping. The feeling that things are turning is palpably there.

The Department of Finance is now predicting 4% growth in the economy this year. If this prediction is met, Ireland will once again rate as the fastest-growing economy in the European Union. All the other economic indicators are also moving in the right direction. Consumer spending is up, business investment is up and our national debt as a percentage of GDP is falling fast. Our budget targets have been exceeded once again.

Most important of all, as previously mentioned, employment is continuing to rise. There are more and more people in full-time work and today's statistics from the CSO show that unemployment continues to fall. The Government has set an ambitious target to reach full employment by 2018. Today’s figures confirm that we are well on the way to meeting that target.

When we compare this with the experience of other crisis-hit countries, it would be a major historical achievement. Finland and Sweden, for example, experienced their own financial and economic crises during the 1990s and it took them close on two decades to get employment back to pre-crisis levels. We want 2.1 million people working by 2018. Through Pathways to Work and the Action Plan for Jobs, we have the strategies to achieve it.

We will continue to pursue foreign direct investment, and will continue to encourage indigenous industry and local businesses, particularly in the SME sector. Small businesses are the beating heart of communities up and down the country and it is a priority of mine to provide them with every possible support.

I visited a small business centre yesterday and saw the level of activity and variety of ventures being undertaken there. They ranged from catering to small IT-based start-ups. This is what will get us to full employment.

My Department will continue to play its part under the Pathways to Work strategy. Since the first day I became Minister for Social Protection, I have been determined that the Department should do much more than simply hand out welfare payments to jobseekers. The Department now actively helps individuals to identify the best way to get back into the workforce, whether it be through education, training or work experience. In my experience, education, upskilling and investing in people are the most important parts of this. When we came into Government, I met many people who had great educational qualifications but had never worked in a job. Therefore, they could not land an interview to get a job because they had no experience. Thankfully that situation is changing. One of the best features of recent times is that in all our third-level institutions employers are back recruiting people in fourth year to train and work on graduation. It is fantastic to experience it happening in law, accounting, engineering and consulting firms. They are all back recruiting our young, bright, well educated graduates. Employers tell me that they need more of these people. We have therefore had a turn-around in employment which is little short of a miracle, considering the template we were offered some years ago. Ireland is now below the eurozone unemployment average.

We were so far above it we were the outliers.

In terms of the Department, we do not just help jobseekers. We help employers as well, and bringing together the jobseekers and the employers is the next important achievement we seek. JobsPlus, for example, is a simple scheme that pays monthly cash grants to employers who hire persons who have been long-term unemployed. JobsPlus is particularly advantageous to small businesses, and more than 4,000 people have returned to work under that scheme alone.

In terms of larger employers, the Department will very shortly appoint new key account managers in its employer engagement unit. We are knocking on employers' doors and, through the Labour Market Council, telling them that when they have vacancies we want them to give people who have lost their jobs, mostly through no fault of their own, an opportunity to go for some of those job vacancies. These key account managers will work closely with some of the 460 largest employers in the State.

I commend organisations like the ESB, Irish Rail, Eircom and Aer Lingus which have begun to recruit apprentices and trainees because for many young people, particularly young men, apprenticeship is where they would like to begin their working experience. Through all of this work they will identify and plan recruitment requirements and actively promote candidates from the live register for available positions.

I will keep all of these schemes, supports and interventions under constant review to ensure that we are meeting the needs of jobseekers and employers alike. That in turn will help to increase the momentum we are making on the jobs front. I am determined to ensure that unemployment will fall below 9% this year and that tens of thousands of people benefit from new jobs, new opportunities and share in the recovery.

The tangible evidence of the recovery is what our friends in the economic trade call fiscal space. That simply means the scope we have to increase public spending and reduce the universal social charge, USC, and taxes in terms of what we know about how this year is going to date and how we expect it to go for the rest of the year. It is very simple. If I was sitting down at my kitchen table looking forward to later this year and next year I would be asking what I can do in terms of putting money into health and education while, on the other side, reducing taxes and reforming the USC. It is as simple as that, although it goes by a fairly fancy name.

It is important to appreciate that this scope is not determined just by the level of the budget deficit, which we want to target, and everybody here know what that is. It is also determined by the application of the technical rules we agreed to when approving the EU fiscal treaty. The purpose of these rules is to smooth out increases and reductions in public spending over the economic cycle to avoid the boom and bust cycle we have seen so often under previous Governments.

It was John Maynard Keynes who famously said that when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. That was Fianna Fail’s way – throw all the chips on unsustainable land speculation, a construction boom, "spend it when you have it" and hope, like Mr. Micawber, that something comes along if harder times hit. That is the casino model, and in Fianna Fail’s case, who came along? The troika.

This Government waved good-bye to the troika, and we have waved good-bye to Fianna Fail’s destructive economic model too. We will abide by the fiscal rules to ensure spending increases are kept at sustainable levels and that we build up something in reserve for the famous rainy day. That means being prudent and planning for the future. The statement, therefore, identifies the room we have sitting around the table as we discuss what we will do next as being between €1.2 billion and €1.5 billion. That is a sensible and sustainable level of investment given how strongly our economy is now performing. The exact figures will be decided closer to budget day when we have more information available to us but when we look at the tax returns month on month, particularly the PSRI returns, we see the flow-through of revenue into the Government as a result of more people, and businesses, being at work and those who are at work having more activity.

The Government has decided that 50% of the available space will be used to reform USC and taxation, and the other half will be used in respect of spending. In doing that, we are looking to strike a balance between putting more money in people’s pockets and investing in the services on which we all depend. Obviously, the details of the budget package for 2016 have not yet been decided. The Government is anxious that we should have a thorough debate on the options that are available. We will be convening the national economic dialogue for that purpose in a few weeks’ time.

It might be useful if I set out some of my priorities for the budget in general terms. The Taoiseach is fairly familiar with them at this stage because we had long discussions immediately after I became the leader of the Labour Party when I agreed a statement of Government priorities with him acting on behalf of Fine Gael. In that statement, the two parties confirmed that we would look to reduce the burden of overall taxation for people on low and middle incomes in work in the two remaining budgets of this term. We began this process in October when we reduced for this year the two lower rates of USC and took large numbers of people on low income out of the USC net. We also reduced the marginal rate of tax for people earning less than €70,000 and raised the level of income at which the marginal rate is payable, which is one of the most difficult aspects of our tax system compared to other countries. I expect that the Government will continue the broad thrust of this approach when we come to agree the tax package for 2016.

Low and middle income earners will continue to be our priority, continuing to remove the low paid out of the USC net and progressively lowering taxes for those on middle incomes. In doing so, we will continue to rebalance the tax system, work which is already under way. That means reducing tax on labour so as to boost employment and ensure the recovery is sustained. It is a classical stimulus model of social democracy around the world, and it works.

We also need to ensure that Ireland will be a welcoming place for the many emigrants who want to return home. In particular, we need to ensure that taxes on labour do not act as a disincentive for those who want to return.

I recall the remarks made by my colleague, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, when he presented the Haddington Road agreement to this House in 2013. At that time he said he fully expected that on the next occasion Government sat down with the public sector unions it would be to discuss pay improvements and not pay reductions. That is exactly what I expect to happen when the Minister meets those unions in a few weeks’ time. Public servants have made a huge contribution to getting this country out of the fiscal crisis brought about by the disastrous management of the Fianna Fail-Green Party Government. The pension levy of 2009, the pay reductions of 2010 and the adjustments of Haddington Road have resulted in a very significant loss of pay for all public and civil servants.

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The Government is also very much aware of that fact and of the very significant reforms to which public servants have signed up. Public services are being delivered with many fewer staff than were employed at the start of the recession and I express publicly my appreciation to public servants for the forbearance and commitment they have demonstrated at a time of national crisis. I know that many individual families have struggled to make ends meet and this has been a very difficult time for them. It would be foolish and irresponsible for me to give the impression that the cuts of the last few years can be undone in one fell swoop, but I hope we will be able to make a start in the near future. That is about improving living standards and helping families, particularly those with children, and pensioners. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his officials are committed to sitting down with our colleagues in the trade union movement in a few weeks with a view to agreeing a way forward.

I am aware that 80% of Irish workers work in the private sector and not in the public sector. I have said already that the Government will look to improve the circumstances of those on low and middle incomes by reducing income tax. We will also implement an increase in the national minimum wage if that is recommended by the low pay commission. However, I also expect that private sector employers will play their part in improving wages, as many are already doing. IBEC has already stated that it expects a majority of its members to increase the pay of their workers this year, and I welcome that. I appreciate that not all businesses have come through the recession unscathed, but we also know that many more business are now profitable. It is entirely appropriate that employers who can afford to do so should agree wage increases with their workers. It is in the interests of both employers and employees and in the interests of the economy as a whole.

Since I became Minister for Social Protection, I have been determined to protect core social welfare rates and I am pleased that I have been able to so. Now that the recession is over, we are able to consider targeted improvements in supports. We began that process in the most recent budget, with the introduction of the back-to-work family dividend, increases in child benefit and the living alone allowance and the partial restoration of the Christmas bonus. The Government has already announced its intention to further increase child benefit in the forthcoming budget and I am looking at other targeted improvements which can be made in 2016, including further improvements to the Christmas bonus. In this year's budget, we made provision for more nurses, more teachers, and more special needs assistants. We are also recruiting new gardaí for the first time since the collapse of the economy. As the leader of the Labour Party, I am an enthusiastic proponent of quality, well-financed public services that deliver high quality to citizens. The crisis greatly reduced the scope to improve services. It was a case of protecting them as best we could while fighting to regain our economic sovereignty. We are in a different and much more positive space now. As we return to financial good health, I look forward to making greater progress in improving public services in the next few years. One of the main drivers behind this investment is the population change we are experiencing. We have more older people who require care, more young people who require schools and more children who require child care. It is patently clear that €1.2 billion to €1.5 billion will not allow us to do all that we would like next year. Having said that, the forecasts in the Spring Economic Statement make clear that if we continue to manage the economy responsibly, we can look forward to similar improvements in years to come. This will see a gradual but clear improvement in our public services and in our standard of living.

I said at the start of my contribution that our country is in a much better place than it was four years ago when this Government took office. While that is unquestionably true, it is important to note that the recovery is not yet secure. We could be blown off course by international events beyond our control. We could also be set back by domestic events which are within our control. This country needs stable government and responsible management of the economy. It needs parties in government who are willing to face up to the social challenges of our time. We do not need, and cannot afford, the instability and mismanagement that would be inevitable if the parties opposite had any influence on government judging by the promises they have made and the positions they have adopted. This is not a time to take risks. As we acknowledge the progress made over the last few years, it is worth remembering that back in 2011 there were siren voices demanding that we do things a different way.

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