Michael Noonan (Limerick City, Fine Gael)
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I welcome the opportunity to discuss the Irish Fiscal Advisory Council, IFAC's pre-budget 2015 statement. As a result of the actions of this Government and the sacrifices of the Irish people, the fiscal and economic framework underpinning the budget was much more favourable than in previous years. However, like all other EU member states, Ireland is required to take actions to not run excessive deficits and to manage our public finances towards a balanced position. An excessive deficit is defined as a deficit above 3% of GDP. Ireland has made significant progress in recent years in reducing our deficit and, as I outlined to the House last week, our budgetary plans are designed to reduce the deficit to 2.7% in 2015.

The Government took the decision to go further than required under the Stability and Growth Pact to underpin solid, steady economic growth into the medium term. Getting the deficit below 3% is an important step on the way to balancing the budget and I agree with the IFAC's pre-budget statement that compliance with the official targets does not mean that the overriding task of repairing the public finances has been accomplished. The IFAC's advice was an important consideration in our decision to go beyond our requirements under the Stability and Growth Pact. In addition, and as I outlined last week, the 2.7% deficit does not fully reflect the cautious and prudent approach, as an element of the surplus income due from the Central Bank in 2015 is being used to reduce the debt. If the entire surplus income was counted for deficit reduction, the forecast deficit would be 2.5% next year.

The IFAC fulfils a number of key statutory roles in Ireland's compliance with the Stability and Growth Pact and the fiscal compact. It is the independent institution responsible at national level for monitoring our observance of the balanced budgetary rule and assessing the fiscal stance. It is also responsible for endorsing the macroeconomic projections upon which our fiscal planning is based. These functions have been given to the IFAC by the Oireachtas in the Fiscal Responsibility Acts 2012 and 2013.

Let us recall the reason we are all here. Ireland has come through tough times to become the first euro area member state to exit a programme of financial support after the sovereign debt crisis. We made a number of major structural reforms and placed our country on a much sounder footing. One of these major reforms was of our fiscal framework. Ireland was unbalanced economically and fiscally at a time when the crisis in our banks led to a need for exceptional Government intervention. These issues combined to place us under extreme pressure and a resulting necessary fiscal consolidation of almost 20% of GDP has been introduced since 2008.

As part of the fiscal reforms, our fiscal framework was overhauled to ensure greater stability, transparency and prudence. Among other changes, a referendum was placed before the Irish people to ask if they wished to introduce new budgetary and debt rules to embody these characteristics at a constitutional level. They voted overwhelmingly to do so. We legislated accordingly to implement the results of the referendum. These new rules mean that, following the expected exit from the excessive deficit procedure, EDP, post 2015, Ireland will be subject to the preventive arm of the Stability and Growth Pact that applies to all relevant EU member states. These rules mean that, until Ireland has reached its medium-term objective of a balanced budget in structural terms, it must improve its structural balance by more than 0.5% of GDP per annum.

Changes to our fiscal framework also led to the IFAC being placed on a statutory footing, with a mandate to provide an independent view of our overall budgetary decisions and assess our fiscal stance. Since its establishment, the IFAC has published six fiscal assessment reports, all of which can be found on its website. I respond to these reports, typically in the next fiscal policy publication after the IFAC report. When there is a large gap between a fiscal assessment report and a subsequent publication, I respond to the council in writing soon after its report. My responses can be found on the websites of the council and my Department.

With regard to the topic at hand, the IFAC's pre-budget paper set out its opinion of the level of consolidation that might form the basis of the budget package and outlined its opinion of the strategic fiscal direction that the Government should take in budget 2015. This was a new departure for the council. Its report noted the positive economic data that had changed the fiscal outlook since the April update, including the positive Exchequer returns, the benefits flowing from the switch-over to the European system of national and regional accounts, ESA 2010, which is the new internationally compatible EU accounting framework for a systematic and detailed description of an economy, and the improved economic environment. The council suggested that the consolidation package of €2 billion as contemplated in the April fiscal update should take place in budget 2015. The council's paper acknowledged that this level of consolidation was not required to achieve the less than 3% deficit target.

The council's position was that the additional consolidation should take place in order to break the boom and bust pattern and show commitment to a new fiscal policy stance. It also commented that this would put debt on a strong downward path and comfortably secure compliance with the 3% general government deficit target. The council was correct to highlight that the target was not the end-goal. When Ireland emerges from the EDP, we will not permit ourselves to return to poor fiscal habits, but will move towards a balanced budget. I agree wholeheartedly with the council's view that we need to break the pattern of boom and bust economics and have said so on many occasions. This position also fed into the Government's consideration of the budgetary package. I made it clear in my Budget Statement speech that I was targeting a deficit of 2.7% in budget 2015 in order to go beyond our requirements under the Stability and Growth Pact and build upon the progress made to date. I also agree with the IFAC's view that, taking account of demographic and other challenges, maintaining tight expenditure control will be tough. The Minister for Public Expenditure and Reform, Deputy Howlin, discussed this with regard to the ceilings indicated for Departments in the comprehensive expenditure report.

Taking tough decisions is the role of Government, a role it has not shirked over the past three years. The hard decisions of recent years have paid off and I am confident we are best placed to drive forward the recovery into the future.

The budget I introduced to the House last week was designed to secure the recovery, to grow the economy and to create jobs. I believe this budget is the right approach for Ireland at this point in our recovery and builds for a better future. The measures I introduced support sectors of the economy like tourism, small and medium-sized enterprises and agrifood, as well as reforming the tax system to support the recovery. I announced changes in order to enhance the corporation tax regime and to create an income tax system that positively contributes to, and strengthens, the economic recovery and promotes job creation. I also increased the tax on tobacco to contribute to the costs of these tax changes. These changes were structural in nature and part of a package of reforms to increase the productive capacity of the economy and to place it firmly on a positive path. Available resources were carefully targeted. However, the principal reason for increasing the tax on tobacco products pertained to health. At present, 5,200 people die each year from smoking-related illnesses and it has been accepted policy for some time across a number of Governments that increasing prices is the best way to control consumption of tobacco products.

The council is a permanent group of experts, who are highly trained, experienced and very knowledgeable about their area of expertise. They consider the long-term fiscal approach they believe should be taken. Their views formed part of the overall considerations of the Government. The Government's commitment on consolidation was that it will do what is needed to achieve the target and its track record in this regard speaks for itself. Each year, it has set ambitious targets to reduce the deficit and each year, it has gone further. The deficit target and the direction of the budget policies are what is important. The Government has stated many times that it would do whatever is necessary to reach that target and has exceeded the interim targets of the excessive deficit procedure, EDP, each year to date. Budget 2015 is the budget that will lead Ireland out of the EDP and this forecasts that we will exceed the final deficit target of 3%, leading to an underlying general government deficit of 2.7%. This is no small achievement, especially in light of the weak growth in the euro area. Eleven of the EU's 28 member states remain subject to the excessive deficit procedure, which is a reduction from 24 during a 12-month period in 2010-11. The euro area recovery is fragile and downside risks prevail. It is important to recognise the impact the weak economic recovery in the euro area is having on dampening price dynamics. Problems of weak growth in the euro area are more structural in nature. In Ireland, as I am sure is the case in other member states, the focus of political and public attention is on the consolidation measures introduced. From the outset, the Government set out a target and stuck to it and while the attention was firmly internally on the consolidation measures and externally on the headline targets, it is the many structural reforms that were introduced that are making a major contribution to growth and job creation in Ireland. There is no doubt in my mind but that the path the Government has taken for Ireland was the right path and is now paying dividends.

The mistakes of the past have not been forgotten by the Government, which has no intention of ignoring the lessons learned and which knows the pain of austerity. I acknowledged in my budget that there are risks but these all will be monitored closely by my Department. The Government has listened carefully to the council's view and has no intention of putting the painful lessons and decisions out of its members' minds. I appreciate that the council has the same overriding focus as does the Government, namely, on making sure that Ireland's recovery is sustainable and balanced and I welcome this focus. Honest brokers are needed in the system who highlight the risks and concerns that should be taken on board. The council is a key component of our strong fiscal framework. I look forward to its upcoming fiscal assessment report, which will indicate the councils' position on the fiscal stance contained in my budget.

Michael McGrath (Cork South Central, Fianna Fail)
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I am pleased that Members are having this debate for which Fianna Fáil pressed in recent weeks. I believe Members should not be holding it during the graveyard shift of the House, as it warrants much greater attention than it is likely to receive given the hour in which the debate is occurring. However, my overall message for the fiscal council is to continue with and to stick with its work and not to become disillusioned. The fiscal council could not be blamed for believing it is very unloved as an organisation because its advice has been ignored roundly a number of times. However, its contribution to national debate is absolutely vital and it is necessary for the council to continue with that contribution. This is why my party pushed strongly for a debate to be had on the floor of the Chamber of the Parliament as to the advice the council is giving and the decisions taken by the Government in order that people ultimately can consider in the round whether the correct choices have been made.

I want to commend the Irish Fiscal Advisory Council on both its most recent pre-budget report and its work since the council was established in 2011. The fiscal council team is small in number and the overall cost of running the council in modest. Good-quality research and advice does not come cheap but in the context of the many ways in which the State spends its money, the output it gets from the Irish Fiscal Advisory Council can be seen as good value. The members of the council rightly can be proud of the contribution they are making to national economic and political debate. They are a dedicated group of members who are fulfilling their mandate and are working in the public interest. They have appeared before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform a number of times and I always have been highly impressed by the contributions they have made. The chairperson of the Irish Fiscal Advisory Council, Professor John McHale, should be singled out for mention because he has taken on the onerous task of chairing the body and of pulling together the various strands of its work. Moreover, when its members appear before the aforementioned finance committee, he is the main spokesperson and is very impressive. This is why Members should take it seriously when someone of Professor McHale's stature and competence must almost threaten in public the tool of resignation, as he put it, for notice to be taken of the council. This is why this debate is fundamentally important because while the council will not say so itself, having read between the lines and having listened to Professor McHale on the morning of the budget last week, I believe that a number of the council members are likely to feel frustrated at present.

Its pre-budget statement for 2015 was a valuable piece of work and it makes a number of important points. Much attention has been focused on its recommendation that a €2 billion adjustment be made in 2015. I will return to this point shortly but it is important to put on the record of the Dáil that it also made a number of important observations about the state of the economy and the challenges it faces at the current time. The report provides a sobering reminder that the State's expenditure for 2014 will exceed its revenue by approximately €7 billion and that Ireland will end this year with a debt level five times that which existed when the crisis first took hold in the summer of 2008. As the report states:

...the level of debt is [now] 1.2 times the size of the economy. This highlights the continued vulnerability of the overall fiscal position.

In actual fact, what we got on budget day was a €1 billion stimulus to the economy. This included €520 million of tax cuts and €630 million of new spending commitments. The net adjustment was reduced modestly by the inclusion of €100 million of revenue from a change to the basis on which VAT on telecommunication services is paid.

As I stated on budget day, these measures are not being paid for out of general revenue buoyancy, rather they are being paid for with increased borrowing, which will have to be paid back with interest in future years. Essentially, the Government panicked, as it saw the result of the recent by-elections confirm what we had seen in the local elections, namely, that dozens of Fine Gael and Labour backbenchers' seats are at risk in the next general election, and a political calculation was made. The Government's promise of an end to boom and bustpolicies rings truly hollow. An opportunity had existed to get ahead of the game in regard to the goal of achieving medium-term debt sustainability in this budget. The Minister decided not to opt for that avenue.

We also concur with the view expressed in the Fiscal Advisory Council report that: "The 3 per cent ceiling should be regarded as the maximum tolerable deficit level, not a prudent level." The decision to allow the deficit to rise to 2.7% next year from the opening position, as set out in the White Paper on receipts and expenditure, is not something on which the Government should be congratulated. It is allowing the deficit to go dangerously close to the 2.9% limit under the State's medium-term budgetary objective. Lauding itself for having a deficit target of 2.7% is a like a bank customer congratulating himself for not maxing out his credit card. What is interesting is that the Government has not even had the decency to say why it is that it is not just rejecting the advice of the Fiscal Advisory Council but going in the exact opposite direction with a pro-cyclical budget.

The Government should be required to set out a formal response to the Fiscal Advisory Council's report. I note what the Minister said in terms of setting out a response in the next fiscal publication or separately in written form. There is a case for changing the legislation, which would require the Government to set out in writing, within two months of a report, the recommendations which it is not accepting in terms of the correction mechanism and budgetary rule, but not in regard to budgetary advice. The Government should be bound by statute to set out its response in that regard. What we got instead was a dismissive response to the report from the Taoiseach.

I am grateful to RTE's programme "The Late Debate" for being able to listen back to what the Taoiseach actually said. At the UN climate change conference on 23 September he was asked by RTE's Caitriona Perry why the Government persistently refused to take the advice of the Fiscal Advisory Council. His words are quite astounding. He said:

... the fiscal council is a statutory council, its views are clear, they are always valued, but it is a matter for the Government to make its own decisions. It was an important introduction to have an independent fiscal council so that Governments of the future can always be reminded of what the fiscal council actually do.

Pearse Doherty (Donegal South West, Sinn Fein)
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Ba mhaith liom fáilte a chur roimh an díospóireacht atá ar siúl againn anocht ar Chomhairle Fhioscach Chomhairleach na hÉireann. Sílim go bhfuil sé in am againn an chomhairle seo a phlé toisc go bhfuil sé anois dhá bhliain ó cuireadh an reachtaíocht i bhfeidhm. Sílim fosta go bhfuil sé ceart agus cóir athbhreithniú a dhéanamh ar reachtaíocht a cuireadh tús leis sa Dáil achan cúpla bliain. B'fhéidir gur fiú amharc a thabhairt ar an reachtaíocht sin go bhfeicfimid anois, leis an gcomhairle úr bunaithe, an bhfuil leasuithe de dhíth agus an bhfuil gá rudaí a bheith difriúil. Cruthaíodh rud neart úr agus nuair a chruthaítear rud neart úr, ní féidir a bheith cinnte conas a n-oibreoidh sé.

I welcome the debate.

It is important that we review legislation. Considering that we have given statutory footing to a new body, it is important to determine whether the expectations that existed when it was being set up have actually been met and whether there is now a need to decide whether the establishing legislation needs to be tweaked or amended.

There is no doubt but that the Irish Fiscal Advisory Council has become a very important and regular part of economic debate, with its reports outlining and contributing to the political debate. I have thanked the staff of the council for their work on reports and I have said to them that I do not believe the recommendations they have made are in the best interest of society at large. This reflects my position at the time of the council's establishment that its role should be expanded to include other considerations, which I will touch on later.

As Deputy McGrath has said, the council came into being following the Fiscal Responsibility Act, which was required under the EU treaty. It had strict targets on debt and borrowings, with no regard for their social and environmental effects. Sinn Féin rejected those austerity targets, which will continue as long as the treaty exists. They have the potential to stunt economic development in the North and South. The targets have been used as an excuse by the Government for brutal austerity. The new rules now form part of each year's budgetary discussion. The council is basically a referee appointed to ensure, crucially, that there is fair play within the parameters that have been set. The primary role of the council is to ensure the austerity rules are adhered to.

The council's job is to advise. The elected Government should listen to the advice but ultimately it is accountable to the people for its decisions. It is in this regard that I differ from Deputy McGrath. It is interesting that he gives the impression in the media that the Government is too harsh because Fianna Fáil is actually calling for more austerity than the Government introduced in this year's budget. This is sometimes missed in the public debate.

During the debate on the Fiscal Responsibility Bill, I proposed amendments to ensure the council's remit would cover the social element of fiscal policy and objectives such as greater income equality, social inclusion, poverty reduction, economic growth and the delivery of high-quality public services. These should have been factored into the council's assessment and forecasts. I was disappointed the Government could not support my amendment. The council does not deal with these issues to any great extent in its reports because it is not its mandate; it has not been tasked to deal with them. It can do only as good a job as the information it has will allow.

I listened to what the Minister, Deputy Noonan, said about the Government's record. There is no doubt but that if one considers the austerity rules and the deficit reduction, one will conclude the Government has reached its target every single year despite the fact that it has rejected the Irish Fiscal Advisory Council's recommendations. The latter always recommended more austerity believing that it was only through further adjustment that the rules would be adhered to.

I value independent advice. It is important to have the statistics and the considerable work thereon but I question why the council was suggesting that we needed a €2 billion adjustment to reach a deficit target of below 3% of GDP when the Minister could actually spend nearly €1 billion and reach a target of 2.7% of GDP? Why was it recommending an additional adjustment in previous years when the Government opted for a smaller reduction and was able to reach its targets?

When I asked the Minister about the detail on this at the committee meeting in June of this year, he mentioned that he had additional soft data that explained why the Government’s forecasts did not match those of the council, which had been issued just a couple of weeks previously. I find that completely unacceptable. When I asked the council about this, it said the opposite and that it has all the data. There is clearly a mismatch in data. There is no point in having a fiscal advisory council if it does not have all the data. There is no point in individuals giving of their time and producing reports if they do not have all the relevant data and if the Department has other data that are not available to them. This is a core issue that needs to be addressed. If there are soft data, including on car sales, as mentioned by the Minister, they must be factored in. Either the council is not doing its job, by not factoring them in if they are available, or the Department is not doing its job, by failing to ensure the council has the most up-to-date data. If the two had the same data, we could have a really proper and independent examination of the fiscal position.

The Government cannot simply dismiss the council's findings by hinting it knows more than it. The council must be allowed to do its job, which means it must be given all the relevant information, including what the Minister calls soft data. We cannot have circumstances in which the council publishes a report only for the Minister to imply within a couple of weeks that it is of no use. These are not the words the Minister has used but he said at the finance committee meeting that he has soft data such that what the council recommends does not need to be done. This was only a couple of weeks after the issuing of the report. There is a problem, therefore.

Let me return to my opening comments on the establishment of the council and our ability to change the legislation. However, we need to get this right. I can understand people may be disillusioned and losing faith. The reports have not been on the money. The recommendations from the council have proven to be incorrect. It will dispute that. I appreciate that trying to forecast events is very difficult. In fairness to the Department, despite my objection to the type of austerity politics the Government has introduced, it has really got its act together on profiling. Bearing in mind that there has been tax buoyancy this year, the Department has been decent enough in regard to some of the other areas. There has been significant over-expenditure in the health service but the departmental recommendations are not as wide off the mark as in previous years.

The council's report from June helped to shed some light on the short-term thinking of the Government. It stated that the prolonged, tight spending plans will be difficult to achieve given demand pressures and rigidities in certain areas of expenditure. It stated the forthcoming comprehensive review of expenditure needed to be used to identify appropriate detailed expenditure plans to promote informed public debate and enhance the credibility of budgetary projections over the medium term. We are starting to see in the national newspapers some of the information contained in the comprehensive review. There are suggestions on social protection, in respect of which there have been cuts. As the council said, the review should enhance the credibility of budgetary projections but also inform public debate. However, there is no public debate because public debate on this issue as a whole has been shrunk. In my view, this does not suit anybody. We discuss the council's report at a meeting of the committee and then invite the Minister, who has access to additional data. The Minister outlines his position. However, the Minister, who in fairness listened to what I had to say, will know about the original responses from the Department or his office. The first was six lines, if I recall correctly. We have now arrived at a position where there is a more comprehensive response given to the council. This is welcome but we need to go further. We need to be examining the increased pressures that will be exerted in the areas of health and education and others because of demographic change and other factors. We must determine how we will meet demand and provide social services under the types of expenditure ceilings that obtain.

This leads to the issue of the budgetary scenario. The Minister or perhaps the former Minister of State, Mr. Brian Hayes, MEP, stated there is debate on the budget. What really happens is that the Government announces a draft budget. Its recommendations are debated when considering the Finance Bill. It is argued that all the expenditure ceilings will be discussed on Committee Stage and that we have until the next year, when the measures kick in, to introduce the social welfare legislation.

Technically, the Minister is correct. It is a way of getting round that one, but in practice, it is wrong.

A number of things need to be done. First, when the Finance Bill comes to the floor of the House, we, as Opposition spokespersons, will have to do what the Minister, Deputy Noonan, had to do as an Opposition spokesperson, namely, try to find a way of amending the Finance Bill to include provisions we want because it is next to impossible to amend it in any meaningful way. The Minister will know what I mean. It is not impossible, but we cannot, because of constitutional bars on us, place a charge on the State. That is something on which I drafted legislation. We will have referendums next year and that should go to referendum. If we are to have a proper parliamentary democracy and debate about this here, all Members, and not only Government Members, should be able to raise and put proposals in legislation to the floor that could place a charge on the State. It is up to Government Deputies, backbenchers, the Opposition and Independents to decide whether that is an opportune matter, but to vest that role solely in Government does not help the type of public debate we have.

There is also the issue of the costings. Sinn Féin went through the Minister for Finance's office and the office of the Department of Public Expenditure and Reform and I thank the officials in both Departments who assisted us in preparing those costings. I said to the individuals to whom I personally spoke that I knew that was not their priority. They were dealing in the weeks running up to the budget with the priority of Government, which was to ensure that the budget was correct, and they were taking calls from me, my staff and others. It was not suitable. I personally had to go to the Minister to ask if this process could be initiated because there is no right for the process to be initiated outside of election-time manifestos.

We need an independent costing unit. If the Fiscal Advisory Council can provide that role, that is something that should be explored. Given the political dynamic in all of this, I am not sure whether that would be appropriate. There is a need to get away from the kind of debate that happens every year as to whether one's proposals are costed. We need an independent facility to which one can give my budget proposals. I have no fear. If my proposals are wrong, I want somebody to tell me that they are wrong and I will correct them because what we need in this country is a debate about the options and ideology. Let us have that battle of ideas and vision, instead of this stupid debate about whether a proposal is costed. Let us have a transparent process in that regard.

My party had to use its priority question in the week before the budget to try to find out what type of scope there was in the budget. The Minister mentioned that, on a neutral basis, we will come in below the 3% target and we pressed him on what that meant. He asked us not to hold him to the figures and said it would be maybe €50 million, above or below. Four days later, at midnight on Friday before the budget was announced, the receipts and expenditure were published. They showed that, on a neutral budget scenario, the Government had €1.2 billion of scope to reach the 3% target. The ambition was to get below that, but that is the type of scope. It is incredible that the Minister would not have information of that nature before Friday. If the Minister, Deputy Noonan, did not have it, then there is a serious problems. Obviously, he did have it, as did the other Ministers. However, it does not make for good public debate when information is only released on a Friday after all of our alternatives are already done.

The role of the Fiscal Advisory Council is hugely important only if all of the information is provided. Let us stop talking about what is not possible. Let us base our arguments on facts and figures that are independently costed and scrutinised. Let us set up an independent costing unit that will deal with budgetary proposals, but also with policies. For instance, we have policies that cannot be costed by the Department of Finance because it does not have the models. If we were in government, they would create the models, but it is not their priority and we understand that. Let us also lift the restriction on Opposition Members placing proposals on the floor of the Dáil to place a charge on the State. These are three proposals that would help our budgetary debate and then change our mindset about sharing the information.

Michael Kitt (Galway East, Fianna Fail)
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Deputies Paul Murphy and Richard Boyd Barrett are sharing time.

Paul Murphy (Dublin South West, Socialist Party)
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The rationale for the Irish Fiscal Advisory Council's call for yet more austerity is given away in one of the first few key messages where it states, "Maintaining the fiscal discipline required to achieve large primary budget surpluses will become politically harder following a long period of fiscal consolidation and as crisis memories fade". What we have there is an open, honest admission of what has been the strategy of the troika, of the previous Government and of this Government. It is to use so-called "crisis memories" to restructure the economy further along neoliberal Thatcherite lines, which was already the plan of these right-wing economists and the Government to start with. It is an classic example of what Naomi Klein called the shock doctrine, that one uses the shock of a capitalist crisis caused by neoliberalism to further embed that system in Ireland and right across Europe. It is what has been happening economically where economies have been restructured further along neoliberal lines. In this country, there have been €30 billion worth of extra cuts and taxes. There has been a driving down, or at least a repression, of labour costs right across Europe and a driving of privatisation. That is on an economic plane. The shock doctrine also takes place on a political plane with a conscious attempt to undermine the democratic rights of people, including the democratic rights of Government to determine economic policies. That is why in the course of the crisis there has been economic decision-making power shifting, from elected Governments with all their faults to unelected bodies, such as the European Commission and the European Central Bank. It is why there has been austerity written into law and, in some cases, into constitutions in terms of the fiscal treaty, the six-pack and the two-pack. It is why the Commission has been given the right to fine member states that do not implement enough austerity. It is why there has been the removal of elected governments in Greece and Italy and their replacement openly by governments for bankers by bankers. The is what is happening.

A key part of that is the establishment of so-called "independent" bodies. The establishment of independent central banks predates this economic crisis, but it is a central tenet of neoliberalism. It is the idea. The reality is that they are independent of any democratic check and any accountability to ordinary people, but dependent on the same right-wing economic ideas that serve the interest of the 1% at the expense of the 99%. The likes of the Fiscal Advisory Council play exactly the same role. Their job is to play a role in what is the technocratisation. It is to say that economic policy is no longer a matter of debate, between right and left, about acting in the interests of working class people versus acting in the interests of big business - one can make an argument about trickle down, etc. It is to say that there is no longer a debate between all the neoliberals, with Fine Gael, with Fianna Fáil, with Labour, with the Keynesians in Sinn Féin and with socialists such as some of us in the Technical Group and in the Anti-Austerity Alliance, and instead it is a choice between right and wrong, between responsible and irresponsible. That is given clearly in the first sentence in the introduction of the Irish Fiscal Advisory Council's statement on the budget, which states, "In recent years successive governments had little choice but to implement an enormous programme of fiscal retrenchment against a backdrop of an already weak economy and labour market". According to the council, there were no choices and the Government made the only choice it could make, which was to impose austerity. That is the job of the council. It is to remove political debate about economic policy and to say the only course is even more austerity than the Government wanted to implement this time around.

When there is a genuine left Government, the Irish Fiscal Advisory Council, if there still is one, will say that the Government cannot repudiate the debt, that is, the banking debt, and that to do so would be entirely irresponsible and would spook the financial markets. They will say the Government cannot invest significantly to build houses because that would distort the property market and one could not distort the property market. They will say the Government cannot provide invest public investment to create jobs to go some way towards solving the unemployment crisis because that would displace private investment because, whether they do so consciously or unconsciously, the fact that they are completely tied to right-wing neoliberal economic ideas means they service the interests of the 1% at the expense of the rest of us.

To look concretely at the advice of the advisory council this time round, the main advice was to go for a full €2 billion in austerity. It was to hit it hard, first, because Irish people are so stunned that they can still take it - that is basically there in the document.

The second reason was to send a strong signal to the financial markets. Of course neo-liberals always like to think about the financial markets and what signal we send to them. The third reason was because of the debt, which it hints is barely sustainable. The third point is the only one on which I am in agreement with the Irish Fiscal Advisory Council because it is a decision of the Government for political reasons to overstate the sustainability of the debt and how quickly it will reduce. The Government’s projections will be proven false by events. The only response of IFAC to that is austerity because it completely rules out any notion that one could repudiate the debt.

One could ask where IFAC thinks the debt came from. The second sentence refers to the huge increase in the Government deficit, mounting bank losses partly funded by Government expenditure and the State’s eventual loss of market creditworthiness which necessitated the introduction of tough measures to repair the public finances. The first responsibility is placed on a huge increase in the Government deficit, but that is part of the lie that is put by the Government, the troika, the Commission and right-wing governments throughout Europe to rewrite the history of the economic crisis which started with the bailout of the banks. Ireland had a debt-to-GDP ratio of 25%. Portugal and Spain all had low debt-to-GDP ratios. Ours was lower than the ratio in Germany. The only reason it ballooned was due to the massive bank bailout, the collapse of an unsustainable system built on the interests of developers and bankers and the fact we decided to bail them out. That is where the debt and the crisis come from rather than it being due to the lie that is continually peddled that we were spending too much on public services.

The IFAC gave me a laugh in stating that the coming years would demonstrate whether Ireland has learned from past mistakes and if it will take the actions necessary to break the historic cycle of boom and bust. Does it not remind one of the hubris before the current economic crisis that right-wing economists think there is a way to avoid the cycle of boom and bust? The system of the Government and IFAC is one of boom and bust. If we want a break from boom and bust, the only way to do so is to break from the domination of the 1%, for public ownership of the financial institutions, which should be run as public utilities in the interests of ordinary people, and democratic planning to have sustainable, economic and environmental redevelopment.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Irish Fiscal Advisory Council might have written a different pre-budget statement about the capacity of people to bear even more austerity because of the crisis memory, as referred to by Deputy Paul Murphy, had it been written following the demonstration last Saturday week. It got that very wrong. What the demonstration showed is that people have had enough and they are not willing to take any more.

I apologise to the Minister for not being present for his speech. The reason I was late is because I was attending a meeting to organise the next big demonstration which will take place on 1 November. He will see that last Saturday week was not a one-off event but is part of a growing and sustained revolt throughout the country with people saying they have had it and they are drawing a line with water charges or any attempt to make them pay any more for the crimes of others such as bankers and bondholders. The Irish Fiscal Advisory Council has got it very wrong on that front.

I have no problem with the concept of independent monitoring or overview of Government economic policy in terms of ensuring policies are not pursued which would create instability or crisis. I would equally say democratically elected Governments and, more important, the people who elect them must ultimately have the freedom to make their own decisions. I do not have a problem with the Minister, Deputy Noonan, saying he does not agree with the Irish Fiscal Advisory Council and the Government will do things in its own way because, ultimately, such decisions must be made by the people. The problem I have is that this so-called independent group has been set up by the troika and its main task has been to ensure ordinary people pay the price for a banking and financial crisis that was not created by them but was created by the financial institutions, the big political institutions in Europe and the political establishment in this country. Its main job has been to ensure ordinary people pay the price for that. That has been a terrible price. The choices we are offered are between the Irish Fiscal Advisory Council saying we have to continue down this road and take a further €2 billion out of the economy, thus inflicting even more suffering on ordinary people, or the Government’s claim that we do not have to do it because its policies are such a fantastic success that it is not necessary to do so, that we are out of the woods now due to its policies which charted the way forward, and that perhaps the Irish Fiscal Advisory Council did not fully understand just how fantastically successful the Government’s policies have been, which is the reason it is not necessary to make a further cut of €2 billion.

Both of those options are false, but there are aspects of truth in both. I agree with the Irish Fiscal Advisory Council's statement that the downside risks in terms of the European economy are such that we must be careful about the rather spectacular growth projections that are emerging. The IFAC has a good point to make about there being a serious danger involved in that regard. I worry a lot about the Government’s current triumphalism in terms of the projected growth it states will alleviate the debt burden, solve the deficit problems, and chart us on the way back to economic recovery and out of a boom and slump cycle. I do not see that at all. There is a problem with both the way the Government and the Fiscal Advisory Council look at the situation in that they have not identified what it is that produces the boom and bust cycle in the first place. The analysis of both parties has failed to address that fundamental question.

As Deputy Paul Murphy indicated, there is a significant element of trying to rewrite what happened. The Government’s narrative, which it shares with IFAC, is that the problem was we were spending way beyond our means and therefore it was all about reining in public spending to avoid the boom and bust cycle. I put it to the Minister that is not what caused the crisis. I am amazed the Minister does not understand that and I am shocked beyond belief that IFAC, as a body of economic experts, does not understand it. Of course one needs a balanced budget and a link between expenditure and revenue, but the claim that such was the problem is simply not true. Our debt was manageable until the crash came. Our expenditure was not vastly outstripping revenue but what was a problem was the type of growth we had. At various times the Minister acknowledged the point, although even when he was in opposition he did not do much about it. Very few people - really only the left - called for a stop to what was happening and said the focus and disproportionate emphasis on the property sector was dangerous and was an accident waiting to happen that could result in an economic crash. That was the problem that led to the crash, which was facilitated by bankers, rather than us spending more than we were getting in revenue.

I am worried about precisely the same thing now. There does not seem to be any real analysis either from the Government or IFAC about the type of growth that is necessary if we want to get out of the boom and bust cycle. Could the Minister clarify whether our plans for economic growth are based on sustainable models where one takes into account what we produce, for whom, and whether it is about meeting the needs of people and society or if it is just about growth numbers and balance sheets? That is the fundamental problem with the approach of both the Minister and IFAC. We need a different model that starts with what society needs, what people need and plans to meet those needs rather than the market model which is just about rampant, naked competition which is what produces the boom and bust cycle the Minister says he wants to get away from.