Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

The economy has been experiencing significant growth. Its medium and long-term growth prospects are good, especially when compared with many other countries. However, this recovery was not delivered by Fine Gael and the Labour Party. It was delivered by the Irish people. It was delivered by the skills, expertise, resilience and commitment which they developed over many years. If the Government were in any way sincere about the claim to want a mature economic debate, it would start by acknowledging this. Instead of claim to have delivered the extra jobs created in the economy, the Government would acknowledge that these jobs have been created because of the basic resource of a highly trained workforce and improved international conditions. Instead of the facts of a country with long-term strengths, it sells its own short-term myth. A Government which cannot bring itself to be honest about the underlying foundations of economic growth is clearly incapable of shaping that growth for the long-term benefit of all our people.

There is no reason to accept that any of the specific figures in the statement will still be relevant later this year. The gaps between forecasts and outturns have grown steadily in recent years. No mention has been made of areas where significant overruns will be experienced. It remains highly likely that the huge Supplementary Estimate required last year for the Department of Health will be repeated again. Ministers will remember that they were denying the need for any Supplementary Estimates almost up to the moment they announced them last year.

More important is the fact that the Department of Finance itself has no confidence in its own projections. In spite of four years of changes to the staffing and structures of the Department and the budget process, the documents published yesterday reveal that the Government does not understand its own revenue projections. In the Spring Economic Statement it is confirmed that the Government has no idea why it has been getting its tax projections wrong. I refer the Taoiseach to page 29 of the report which states that tax and VAT are growing at rates far in excess of what was suggested by growth and macroeconomic variables and established elasticity. Officials accept that their forecasting models are wrong and that there are dynamics which they cannot capture or do not even understand. Yet at a political level we have Ministers demanding credit for something they cannot explain.

The one area where the coming to power of Fine Gael and the Labour Party did mark a decisive shift in budgetary policy is in the move to a consistently regressive approach. The budgets under the previous Government involved the majority of all reductions in the overall deficit. Yet they were progressive. The wealthiest bore the greatest burden. Core measures of inequality fell. Since this Government came to power, under Fine Gael and the Labour Party the exact opposite has been the case. In four budgets out of four the biggest hit has been against poorer sections of society and the biggest relief has been given to the wealthiest.  It is not just us saying this. It has been confirmed by independent analysts and bodies. This did not happen by chance; it was the Government’s deliberate choice. At one stage Fine Gael was so obsessed with its regressive and increasingly right wing ideology that it demanded that any hit on high income earners be matched by social welfare cuts.  In fact, it threatened its junior partner with serious consequences unless it agreed to implement cuts to child benefit which the Minister for Finance, Deputy Noonan, had angrily dismissed out of hand before the election.

When the Minister for Public Expenditure and Reform, Deputy Howlin, said yesterday that his Government had always recognised the need to protect our society’s most vulnerable, not even his own backbenchers believed him. Of course, the rhetoric of each budget claimed to be delivering fairness, while the exact opposite was being implemented. Nothing said yesterday suggests that this will change in the coming budget.  Ministers do not accept the evidence of rising child poverty.  They do not accept the fact of growing inequality.  The report published in January this year that shows one in eight of Ireland’s children live in consistent poverty was ignored. The Government just wanted to restate it is happy with everything it is doing and is committed to delivering more of the same.

The Labour Party has changed its leader but its capitulation to Fine Gael on tax policy is even stronger than before.  It has accepted that planned tax cuts for the highest income earners will have exactly the same priority as supporting vital public services.  It has failed to get agreement to reverse the many cuts in the Tánaiste’s Department which have hit women, in particular, and children the most. The only thing that the Labour Party has succeeded in is getting the distributional impact of Government decisions hidden. There is not one mention in the documents published yesterday of the impact of changes on different sections of society.  I asked the Taoiseach during Question Time yesterday if he would provide such data and information in the Spring Economic Statement and he failed to do so. There is no mention of reducing poverty levels or reversing growing inequalities. 

Information which was in the past a basic part of budgets and economic statements and documents has been removed. The Government has removed it. The Government is obliged to make regular formal reports on poverty levels. Why have we not been treated to a set-piece debate on these reports?

The announcements yesterday and the daily stories planted on the media front pages suggest that the Government still does not accept the fact that it is delivering an unfair recovery.  In a week where it was revealed that the very richest fraction of our society has recovered fully from the crisis, Fine Gael and the Labour Party want to keep going with a policy which favours the wealthiest. It is at best shameless for the Ministers to have pointed to the progressive nature of Irish tax in their defence given that they voted against all of the measures which made it progressive and that their record is one of favouring the wealthiest.

In our pre-budget statement last year and in the various policies we have announced since, Fianna Fáil has shown that it is possible to end the regressive policies of this Government, to implement tax reductions that give the greatest benefit to those feeling the most pressure and to do all of this with lower borrowing limits than the Government set for this year.

For anyone who ever doubted the "spin first, policy later" strategy of the Government, yesterday will have been a final awakening. Not one of the dozen and ever growing list of giveaways announced in front page leaks was confirmed. These included paid paternity leave, tax relief for landlords who agreed not to increase rents, a free second year of child care, tax relief subsidies for child care, abolishing the public sector pension levy, a rates holiday for small start-up businesses, giving the self-employer the same dole as PAYE staff, a reduction in the USC rate for the self-employed, bonus pay for couples if they split parental leave, removal of the banks' veto on personal insolvency arrangements, the return of first-time buyer grants and an increased bank levy to force banks to cut variable rates. These were front-page headlines in particular newspapers, leaked by Ministers as measures that were going to be taken. Some were actually contained in Ministers' statements. When I asked the Taoiseach about them in the Chamber, he feigned ignorance about any Minister promising any of that.

To be fair, perhaps these are being saved for another round of fake exclusives in the run-up to the election. I have no doubt of that. However, something is now sure - what we will get later this year is a doubling down on a failed, divisive and damaging tax policy. The "carry on regardless" approach to tax changes of Labour and Fine Gael was reinforced yesterday by the failure to mention the regressive models of property tax and water charges they had implemented. Taking account of the ability to pay is not even on the agenda. The fiasco of the water charges is to continue. After 13 U-turns and in even the most optimistic compliance forecast, they will deliver a negligible net income. We will probably get net €25 million in revenue because of the grants and so on that the Government is providing. The charges will not deliver extra investment for water services.

As the figures revealed yesterday confirmed and as we have stated repeatedly, investing in water infrastructure can be achieved without adopting accounting tricks. We were told that there could be no investment unless the money was off the books and that it could only be off the books if Irish Water was created, yet now the figures show that the investment would have been possible without going off the books, thereby destroying the last remaining threadbare excuse for the creation of Irish Water. This company is a long-standing policy of Fine Gael dating back to 2009. Fine Gael in government did not allow a fair examination of whether the company was needed or who should run it. It rushed through the legislation without proper debate and against its advice from PricewaterhouseCoopers. The company has been allowed to waste millions of euro in taxpayers' money on its establishment and bonuses and on the installation of water meters that now serve no purpose. The only significant impact of the Government's water policy so far has been to divert money from improving services. The obstinate, almost bloody minded commitment of Fine Gael to maintaining Irish Water, the meter installation programme and regressive water charges remains a mystery. The willingness of the Labour Party to guarantee the continuation of Irish Water and prop up the failed and opaque initiative of its senior partner becomes more extraordinary every day.

The creation of secure, well-paid jobs remains an essential part of building a lasting and secure economic recovery that delivers social benefits for all. This issue is absent from the Government's complacent jobs agenda. A review by the OECD of the Government's Action Plan for Jobs stated that it was not possible to credit the plan with any specific level of job creation. However, this has not stopped the Government from claiming to have created tens of thousands of jobs. In reality, the only major change in employment policy in recent years has been an iron rule handed down to agencies that no announcement may be made without a Minister or the Taoiseach being present. Announcements that were viewed as routine in that Department are now not allowed to happen without a political presence and a press release claiming credit for the Government. Employment offices and research centres have been renamed in order to provide ribbon cutting events. It is happening all over the place.

Apart from the spin, there has been a deeply worrying development-----

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