Paul Murphy (Dublin South West, Anti-Austerity Alliance) | Oireachtas source

I congratulate the Government on what is an effective act of misdirection. This is a trick of magicians and worthy of Houdini. The Government points to the fiscal space and seeks to have a debate on the crumbs while ignoring the debate about who owns and how to distribute the big massive cake.

It is remarkable. The term "fiscal space," which was not used 12 months ago, is now dominant in the discourse and has limited the whole debate to an extreme degree, but that is part of the purpose of it. It is a neoliberal straitjacket which says that public expenditure cannot be increased to deal with crises, including housing, even though we have the money. The term also plays a very useful ideological role of limiting the debate to extremely narrow parameters which were effectively accepted by all of the big four parties in the course of the general election campaign. The reality is that the fiscal space is a tiny prison cell of neoliberalism and we have to break out of it. The figure of €1 billion is an arbitrary amount of money which is fixed by Thatcherite rules and is, precisely, crumbs when compared to the big cake we should be talking about - a GDP of €231 billion, €51 billion in corporate profits, and nearly €9 billion paid each year in interest and principal payments to bondholders. Our starting point is to fundamentally reject the neoliberal, economic and ideological straitjacket represented by the fiscal rules and fiscal space. We do not accept that the problems faced by ordinary people can be dealt with by operating within those rules. The rules have to be broken.

The second point is to challenge the other premise referred to in the first line of both the foreword to the Government's summer economic statement and the press statement from the Minister for Finance, Deputy Noonan, which says, "Economic recovery is now firmly established". I suggest that the Fine Gael investigation into the election result should get its work done quickly, because it does not look as though they have learned very much. The lesson is that one cannot just say there is an economic recovery and expect people to believe it. For people to believe it they have to experience it in their daily lives, but they are not experiencing it in their daily lives.

The question must be asked: what does the Government mean by economic recovery? If it means GDP figures, massive increases in corporate profits of 45% since 2009, a wealth increase of over 60% for the richest 300 people in the last five years, and bondholders getting paid - then, yes, there is a recovery for them. However, if it means an improvement in living standards or income for ordinary people then there is not a real, substantial recovery for the majority. Gross income will not recover to pre-crisis levels until 2017 and disposable income will not recover to pre-crisis levels until 2018. Ireland was found to have the second highest level of wage inequality among the 15 pre-2004 member states of the EU, and we have 80,000 people still on job activation schemes, 180,000 people unemployed and 29% of the population living in deprivation. These people are not experiencing a recovery. How does the Government explain the gulf between the impressive GDP headline growth rates and people's lived experience, which does not reflect that growth?

There are two core reasons for this. One reason is that a significant part of the exceptional GDP growth rate is fictitious. It is driven by US multinational corporations that use Ireland as a tax haven. There is useful report by The Irish Times about the top 1,000 companies in Ireland. Three of the top ten companies are the top three corporation tax payers and the top three in terms of receipts in corporate profits in Ireland, but they are tax inversions: Medtronic, Ingersoll Rand and the Eaton Corporation. Between them they made €6 billion in profits, one sixth of the total profits of €36 billion reported by the top 1,000 companies combined. While these companies have some operations in the State, they remain headquartered in the US and in reality that is where their top management is. Therefore, the GDP figure is fictitious and is overstated.

A more realistic reflection of the real economy are the figures for domestic demand, which have just recovered to pre-crisis levels. However, to the extent that a recovery does exist, it is about distribution. Where are the fruits of that recovery going? The top 10% of people took 47% of the benefit of the increase in direct income between 2012 and 2014. That is not accidental. I argue that this is the result of a conscious policy of the 1% in this State and right across the world to use the crisis to unleash a significant assault by the corporations and the rich against the 99% and to effect a significant transfer of wealth. To illustrate the point, I refer to European Commission figures which show that the percentage of the adjusted wage share as a total of GDP has fallen from 53% in 2008 to 41.2% last year. It is projected to fall to 40% next year and to 39% the following year. That is a concrete view of a shift in wealth from work and labour to capital. The most striking expression of this, with regard to the inability of this growth to resolve the crisis, is the housing crisis. Consider the stark figure of 2,000 children who are homeless right now. The Minister for Finance's proposals for a rainy day fund have to be seen in the context of that housing crisis.

The statement refers to saving extra money for when it is needed to cover the expenditure requirements for a fairer society even when times are tough. Does the Minister for Finance not believe that times are tough now for the 2,000 children who are homeless? If it is not a rainy day now, with the crisis we face, then what would rainy day look like? The reality is that we actually have a rainy day fund already. It is the Ireland Strategic Investment Fund - the money that was left in there after the bailout. There is still €5.4 billion that has not been allocated. That money should be used right now and it would go a long way towards building the 100,000 homes we need. However, we cannot do this within the framework of the fiscal rules because Government spending cannot increase beyond the medium-term potential economic growth rate. There we have a concrete illustration of how the rules are a block to dealing with the crisis. If that is true of this rainy day fund today, it is also likely true of the Minister's rainy day fund in the future, because the moments we would like to use it are the moments of significant economic crisis. So what is the fund actually for? I believe its purpose was contained in the Minister's statement, when he said it was "to ensure that liquid assets are available to be deployed in a timely and counter cyclical manner to help smooth the business cycle." We saw that with our last big rainy day fund, the National Pensions Reserve Fund, when €20.7 billion of that fund was used to bail out AIB and Bank of Ireland. The question must be asked: is this what the rainy day fund will be used for again? Is it for future bailouts for bankers and developers the next time they crash the economy and need rescuing from their own bad gambling debts?

This whole debate, in reality, is about the contrasts between impressive growth rates and massive increases in profit and the wealth held by the top 1% and the top 10% of the population versus the reality of daily misery, poverty, deprivation and creaking public services. The contrast speaks to and is an indictment of the neoliberal policy that the Government pursues and the capitalist economic system that the Government stands over and defends. It is reminiscent of Marx's definition of a capitalist crisis as unemployed capital at one pole and an unemployed worker population at the other. If the Government's policies and this capitalist profit-driven system remain in place then that is not going to fundamentally change. If any more recovery occurs, the vast bulk of it will flood upwards towards the top 1% and 10%, as opposed to supposedly trickling downwards. To deliver a real recovery in living standards for the 99% majority we need a left-wing government and socialist policies, a government that would set about an economic recovery from the point of view of improving people's living standards and public services with environmental and economic sustainability. This means breaking with the entire model of capitalist development of this State, which is held by all the establishment and political parties and which, effectively, is about hawking Ireland as the place for multinationals to come and pay very little tax, where there is little data protection and labour regulation. That model of economic development has failed. It is fundamentally flawed and is incapable of delivering sustainable recovery.

We need a socialist model of development that would be economically and environmentally sustainable and based on democratic public ownership, public investment and planning. That would mean payments to the bondholders would stop and we would impose an immediate moratorium on all payments of principal and interest and establish a debt audit commission to pursue a strategy of debt repudiation - that we would not pay debt that is not our debt. It would mean a massive increase in public investment. What the Government proposes in this statement is pathetic relative to the fact that we are approximately half of the EU average and are significantly below the historical norm in terms of public investment in Ireland, which is below the EU historical norm average. An extra €250 million next year would build another 1,400 council homes. That is how completely inadequate it is. There is a need for massive public investment to resolve the housing crisis and to invest in our infrastructure, including our water and transport infrastructure.

It is not enough to invest only in those sectors. Investment is needed in wealth producing sectors in the economy. We need to develop a manufacturing base. As a percentage of employment in the economy, the manufacturing base accounts for approximately half what it is in the rest of the European Union. The capitalist class, the private sector, shows no indication that it is going to resolve that and create a more sustainable base for the economy. This points to the need for public investment in these areas - for example, in green energy, which the private sector has proved extremely unwilling to consider or to take the risk of investing in.

Fundamentally, there has to be a different model of ownership and control of our economy - for example, we own the core group of the banking sector in this economy but we do not control it or use it as a lever in the interests of the economy as a whole and in the interests of ordinary people, by providing credit. Instead, in effect, we have been running society in the interest of the banks. We need public democratic ownership of the banks but we should not stop there.

The core levers and core sectors of the economy as a whole - construction, natural resources, the big multiples, logistics, distribution, transport, telecommunications - should be in public ownership. Then we can plan to meet the needs of ordinary people and develop our economy on a sustainable basis. The model the Government pursues, one backed up by Fianna Fáil and the ideologists of the 1% in this country, has absolutely failed and we need to take a very different direction. All of those choices and policies, or most of them, require breaking the EU fiscal rules. They require breaking out of this tiny prison cell that is the fiscal space but so be it. It is a choice between obeying the diktats of neoliberalism, the fiscal rules or the rules of capitalism, or meeting the needs of ordinary people, using the vast wealth that exists to resolve the crises we face. Let us break those rules and join with others across Europe in fighting for a very different sort of Europe, which would be needed to make any of these changes sustainable, for a rupture with the Europe of the 1% and a Europe of authoritarian neoliberalism and with the capitalist system and for democratic and socialist change across Europe.

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