Paul Murphy (Dublin South West, Socialist Party) | Oireachtas source

The Government in preparing its spring statement was perhaps reading some of the works of the 19th century English novelist, Samuel Butler, who advised that "the advantage of doing one's praising for oneself is that one can lay it on so thick and exactly in the right places". The Government took full advantage in a full week of Dáil time to do exactly that but it is a little disappointed with the public's response. Those in government do not realise it but the majority of the people do not believe the narrative that a strong recovery is in full flow and that austerity has ended because it is not their daily experience. People do not buy it.

I want to mainly focus on illustrating that people are right not to buy it. They are right to burst the narrative of this strong recovery as a result of the austerity programme implemented by the Government. Before I move on to that I want to raise a few points. The first is an omission on page 18 of the draft stability programme update, which comprises the budgetary projections from 2015 to 2020. In the previous two years of these updates one or two lines were devoted to the primary balance. That is the amount the Government takes in by way of tax revenue minus the amount it spends before it hands over any money to the bondholders. The primary balance in 2013 was a small deficit, in 2014 there was a very small deficit and we were due to have a primary surplus this year. Is it a coincidence that in the year that we are due to have a primary surplus, the primary balance has dropped off the budgetary projections? A line about the primary balance is not included anywhere in the document for the first time in the course of the stability programme updates. Why is it not included? Is it accidental? Were we to have it set out in black and white, and I am speculating here, that the State takes in more in tax revenue than it spends on all public services together, it would highlight very starkly that the Government's argument and rationalisation of austerity is completely false.

When those in government are interviewed on television and radio and say that the Government needs to implement austerity because we are spending more than we are raising and that the money is being spent on public services, nurses, gardaí and so on, the figures would show that is not true. If one were to calculate the figures, they would highlight, in a graphic way, that we have a primary surplus of about €4 billion and that the only reason austerity is continuing is because we are paying the bondholders at a rate of about €7 billion a year and that is ongoing. We should be under no illusion that austerity has ended with this spring statement or with the coming budgets. We have moved, as Michael Taft, the economist of Unite has said, into phase 2 of austerity. Phase 1 comprised actual real cuts in terms of the amount of money spent on our vital public services. Phase 2 comprises cuts when we take inflation into account.

In terms of public spending, the Government's projections for next year will see a decline in public spending once we take inflation into account. The Government has made play of the need for investment, with the Minister for Public Expenditure and Reform, Deputy Howlin, saying in his speech it is now time to invest again to meet our infrastructural needs. However, in real terms, investment by the State will fall 1% next year and there is no end to austerity in sight.

I want to mainly focus on challenging the economic forecasts of the Government and the idea that a substantial recovery is taking place, because I do not believe it is. The attitude of most people correct in that there is a recovery taking place and that austerity has worked for those for whom it is meant to work, which is for the rich. It has worked for the bondholders, who are getting €7 billion this year, and for the corporations, which have increased their profits by more than 20% during the course of the crisis. It has worked above all for the super rich in this society, with the richest 300 people having increased their wealth from 2010 to 2014 by more than 60%, from €50 billion to €84 billion, and with the richest Irish man among them having doubled his wealth in the course of six years, and now holding more than €5 billion.

The people believe there has been no recovery for young people, one in ten of whom has emigrated and with one in five of whom who are still here but unemployed. There has been no recovery for workers who during the course of the crisis have faced declining wages and now face stagnant wages. We have the second highest rate of low pay in the OECD and we have had the spread of zero-hour, low-hour contracts with precarious working conditions. There has been no recovery for the unemployed. The rate of unemployment remains at 10% and if we take under-employment - those who want to work more than they currently are able to work - into account, it is about double that rate. However, even with the rate of decline in unemployment, we are talking about ten years before we reach the levels of employment we had pre-crisis. People are right to think that there is no substantial recovery.

The Government has headline figures that are quite impressive in terms of GDP and GNP but GDP and GNP figures in Ireland are thoroughly distorted. We have to look beyond the figures to see the reality of what is happening in the economy, and the reality is that there is marginal growth at best and that marginal growth is aimed at and taken up by the 1% in our society, as opposed to working class people, small farmers, middle class people, young people, unemployed people and so on. When we look beyond the figures, we see that our GDP is thoroughly distorted. As a result of multinational corporations in Ireland routing profits through this country in order to avoid paying tax elsewhere, it massively distorts the figures. Supposedly, profits in Irish manufacturing are eight times that of the other EU-15 member states. That is not possible. The average Irish worker is not that much better than workers in the other EU-15 member states. It is a sign that the profits are being routed through here from other countries and it is a sign, therefore, that our GDP is over-stated. It is not an accurate reflection of the economy.

GNP figures used to be more accurate but they are no longer accurate because now we have multinational corporations that have their headquarters in Ireland and the reverse process is taking place whereby profits are re-domiciled into Ireland to the tune of €7.5 billion, or 5% of GDP in 2012, which again inflates our GNP figures. We have to go beyond the headline figures to reveal something stark. GDP is made up of consumption, investment, Government spending and net exports. The domestic economy is made up of all those things apart from net exports. Every component part of GDP, with the exception of net exports, is still down on what it was before the crisis. Investment, in particular, is dramatically down, at about 50% of what it was before the crisis. The only element within GDP that is growing is net exports. The other elements all show a sign of the collapse in the domestic economy of 15% to 20%, bouncing along the bottom, with no substantial recovery to pre-crisis levels taking place.

We also have to look further at what is happening in terms of net exports, and again the figures are massively overstated from a number of points of view. First, three quarters of the increase in net exports is down to a decline in imports because people cannot afford to buy goods they previously bought that are imported. Imports are down €14.5 billion while exports are up €7.5 billion, but even within that the growth in exports is highly suspect. If we compare the measurement of exports in the external trade statistics as opposed to those in the national accounts, the more accurate figures for goods exports, for example, are revealed. They illustrate, in terms of actual goods that leave the country, that the growth rate was 1% rather than 18.4%.

A similar distortion is at play in the service sector whereby the likes of Google, Microsoft, Oracle and Facebook are charging more for services as a way of routing profits through this country. The whole thing is significantly overstated. There is export growth taking place but it is significantly and substantially less than what the Government is claiming and what the headline figures would suggest. The consequences of that, when one looks at the actual figures, is summed up by the socialist economist Mr. Michael Burke, who says "Without the fakery of an 'export-led recovery', statistically there is no recovery at all". That chimes with people's real experiences. People's anger about what is happening is not based on nothing but is based on the reality of the economy as opposed to headline figures that do not speak to that reality. The reality is that there is no strong recovery but a stagnation for the majority of people in this economy. If we stick with this Government's model and its neoliberal policies, there will not be any change.

I note that the Minister for Pubic Expenditure and Reform, Deputy Howlin, said in his speech yesterday: "On its own, the State cannot create wealth. Instead, it must do all it can to create the right conditions for prosperity, through progressive taxation, appropriate regulation and targeted investment." What is the point of the Labour Party if it just buys wholesale the neo-liberal ideology and argues that it is the only way? If we do not break from that ideology and initiate a massive programme of public investment, a different model of economic development based on sustainable manufacturing growth, public investment and democratic ownership and if we do not say that we refuse to pay the bondholders and rip up austerity then we are doomed to continue with the same austerity, misery and stagnation for years to come.

See this speech in context