Tuesday, 28 April 2015
Spring Economic Statement
Since taking office in 2011, the Government has been determined to fulfil the mandate given to us by the people, to repair the economy and public finances, to create jobs and to give hope and confidence to our citizens of a better future. The scale of the economic crisis that we have gone through has been unprecedented in Ireland’s history. We have essentially lost a decade in terms of economic growth and job creation. Difficult decisions have been taken and huge sacrifices have been made by the people. This has not been in vain, however.
The spring economic statement published today confirms the path taken was the right one. As we now plan for the remainder of this decade, our citizens have every reason to be confident and hopeful about their future. It will be a future of steady, stable economic growth with more people working in secure and sustainable jobs than ever before in the history of the State. It will be a future of stable public finances that will deliver money in people’s pockets, higher quality public services and strategic investment in essential infrastructure throughout the country.
Such a bright future, however, is not guaranteed and is contingent on a continuation of the policies and reforms introduced and being followed by this Government. There are external risks, no doubt, but the choices taken in this House also matter. A return to the “If I have it, I will spend it” ways of the past or indeed the “Even if I do not have it, I will still spend it” policy stance taken by the Opposition over the past four years is by far the biggest risk to economic growth, job creation and the prosperity of our people. Any rowing back on the reform measures through, for example, narrowing the tax base, increasing taxes on work and on businesses, halting labour force activation measures, or reducing Ireland’s competitiveness, will cost jobs, reduce growth rates and tax receipts and reduce the living standards of the people.
Protecting and securing the hard-won gains of the past four years and building on them for the future is the priority. The facts clearly show the policies of this Government have worked and will continue to work in the years ahead. The economy is growing at the fastest rate in Europe, namely by 4.8% in 2014 while the Department of Finance is forecasting growth of 4% for this year. Steady, stable economic growth of 3.25% on average is forecast for the remainder of the decade. The recovery is jobs-rich, with 95,000 jobs added from the low point in 2012. My Department is forecasting we will pass the 2 million people in employment mark next year, replace all of the jobs lost during the downturn by 2018 and, in total, between 2015 and 2020, add 200,000 new jobs.
Net outward migration is expected to cease next year with a return to inward migration from 2017 onwards. The young people who have left are coming back and will continue to do so. The public finances are under control with the deficit falling below 3% this year and debt levels are set to move down towards the European average in the next few years. As a result, we will be in a position to implement another expansionary budget this year and every year out to 2020, if this is deemed prudent and appropriate. We will meet our medium-term objective of a balanced budget in structural terms over the forecast horizon.
The Spring Economic Statement being published today sets out the policies to build upon the recovery and deliver these objectives over the remainder of this decade through a continuation of prudent, medium-term, focused budgetary and economic policies that will secure sustainable increases in jobs and in living standards.
The April 2015 Update of the Stability Programme is also being published today and will be submitted to the European Commission later this week in line with our requirements under the European semester.
The Spring Economic Statement is part of a much broader reform of the budgetary framework. The next phase in this new framework is the National Economic Dialogue which will take place in July. This will widen consultation on the budget with key stakeholders, while fully respecting the role of the Government and the Oireachtas to make policy. The National Economic Dialogue is about ensuring that we have an informed and mature discussion regarding both the short- and medium-term priorities. Full details on these reforms to the budgetary process are included in section 5.3 of the Spring Economic Statement, which has been circulated to everybody.
Turning to the economic situation, I am greatly encouraged by the data flow over the last year or so, which clearly shows that the recovery is gaining momentum and, importantly, is becoming more broadly based. This is just the start of the recovery and the figures tally with what I see on the ground - more people are working, people have more income in their pockets, people are more confident about the future and businesses are being created and are expanding.
Following GDP growth of nearly 5% last year, my Department is projecting GDP growth of 4% this year, with positive contributions from both exports and domestic demand. Over the remainder of the decade the Department of Finance estimates that the economy has the capacity to expand by around 3.25% on average per annum.
Economic recovery is yielding benefits in the labour market. The figures show that 95,000 net new jobs have been created since the low point of the crisis, and the latest data show job creation in 11 of the 14 sectors of the economy reported by the Central Statistics Office. The Action Plan for Jobs has played a key role in bringing together all Government Departments and the target of 100,000 additional jobs by 2016 will be met this year, a year earlier than committed to. Unemployment has fallen by five percentage points since its peak and we will continue to work to reduce it further.
A continuation of the current strategy will see 2 million people at work by the end of 2016. The employment lost during the downturn will be recovered by 2018 and there will be more people working in Ireland by 2020 than ever before.
Stable public finances are essential for economic growth and the first task of the Government was to stabilise the deficit and put it on a downward trajectory. However, the annual budget is not simply an exercise to meet a deficit target. The design of a budget is part of a much broader strategy to manage the economy for growth and job creation. In each of the budgets introduced since 2011, rebuilding the economy sector-by-sector has been a key feature. So unlike the past, in the future we will not be reliant on one particular sector – the construction sector – for jobs and growth, and the transactional taxes that flow from this. We must never again repeat the boom-and-bust economic model. Over the remainder of this decade we expect all sectors of the economy to contribute to growth and employment.
In some areas, such as tourism and agri-food, the approach has been about building on our comparative advantage and exploiting new external market opportunities. The reduction of the VAT rate to 9% in the tourism and hospitality sector, the abolition of air travel tax, and tax changes to support farmers gearing up for the ending of the milk quota, have all proven very successful. In other areas, particularly construction, the focus has been on repairing a sector that was hugely affected by the crisis. The Government has presented plans to continue the sector-by-sector approach to growing the economy.
I would like to give a few examples of the level of ambition embodied in these strategies. Our tourism strategy, People, Place and Policy – Growing Tourism to 2025, aims to increase revenue from overseas visitors by €1.5 billion to €5 billion and to increase employment in the sector by one fifth to 250,000 by 2025.
The IDA's Winning: Foreign Direct Investment 2015–2019 aims to win 900 new investments for Ireland over the period to 2019, creating 80,000 new jobs and 35,000 net jobs. It also sets an objective of winning €3 billion in new research and development investment projects.
Enterprise Ireland's Driving Enterprise and Delivering Jobs strategy to 2016 sets out a range of actions and initiatives that will create over 40,000 new jobs in Irish companies, increasing Irish exports by €5 billion to €22 billion by 2016 and beyond that to €27 billion by 2020.
The international financial services sector 2015 to 2020 policy targets 10,000 new jobs in the IFS sector by 2020.
Construction 2020 sets out the Government’s strategy for a renewed construction sector which can meet the medium-term demand for about 25,000 new dwellings a year over the next 15 years as well as the other infrastructure needs of the economy.
The Government is driving a very ambitious and successful growth agenda for the agrifood sector under Food Harvest 2020. The strategy’s target amount for all primary output of almost €6 billion was virtually achieved by 2014, while a 42% increase in exports and a 40% increase in value added by 2020 remain on course to be achieved.
The rapid development of new payments technologies is fundamentally changing the landscape and throwing up new opportunities and challenges. The advent of the single euro payments area, SEPA, has created a single, integrated payments market in Europe for the first time that can be developed further. Ireland is already an attractive destination for international payment firms but the Government wants to maximise our potential in this sector of the economy and has tasked Enterprise Ireland, in the IFS2020 strategy, with establishing a payments forum to review the positioning, opportunities and dependencies of the sector.
Irish Water has set out an ambitious strategy to invest €5.5 billion between 2014 and 2021. The increased investment over the period ahead will be vital in ensuring communities can access reliable, high quality drinking water and sewerage services, and our economy can continue to facilitate and attract water-intensive industries – ICT, pharmachemical companies and agrifood – which, combined, currently provide well over 200,000 jobs. The investment is also required to prevent the massive wastage of water through leaks and to ensure a reliable safe water supply for all our citizens.
This broad based economic strategy is supported by a domestically refocused banking and financial system, beginning to lend into a much broader range of sectors. Banking supervision has been improved with a strengthening of the powers of the Central Bank, while at a European level the move towards a Banking Union is continuing. All of these will help prevent excessive credit growth in one sector of the economy in the future. It will also ensure that our small and medium businesses, SMEs, and households have access to multiple sources of low cost credit, an essential ingredient for growth.
Addressing personal indebtedness is essential as our economy returns to strength. A mortgage is the single biggest debt most people will ever take on. The number of households unable to meet their monthly mortgage repayments increased with the decline in the economy, as incomes fell and unemployment increased. Supporting homeowners in arrears has been a priority for this Government and a broad strategy has been introduced to keep as many families in their homes as possible. This strategy has assisted borrowers and lenders reaching agreement to restructure about 115,000 mortgage accounts.
As the economy continues to improve and incomes rise, the number of arrears cases is falling. However, there are over 37,000 mortgage accounts, representing about 30,000 homeowners, in long-term arrears of over two years. The Government is actively considering a range of options to strengthen the mortgage arrears framework in order to ensure that families in long-term arrears can find a solution. For the majority of these families the best route to a sustainable and binding solution is through engagement with their bank. Many others will find solutions through the options offered by the Insolvency Service of Ireland.
The Government intends making an announcement on the issue in the coming weeks. A particular focus will be on enhancing the role of the Insolvency Service of Ireland and the range of solutions that become available through an insolvency arrangement.
Access to credit for households is as important as access to credit for businesses, but the mortgage interest rates being charged by banks in Ireland have not been reduced in line with the rate reductions implemented by the ECB. I recently discussed this issue with the Governor of the Central Bank and he updated me on the ongoing work that the Central Bank is carrying out on this issue. The Central Bank will report back to me in the coming weeks and I intend to initiate during the month of May discussions with the six main lenders in Irish banking on the issue. I look forward to hearing their plans for reducing interest rates.
Sustainable public finances are a prerequisite for improvements in living standards. The Government is committed to prudent management of the public finances in the years ahead and there will be no return to the boom and bust model of the past. This commitment is supported by the fiscal rules that are applicable to Ireland and all member states of the European Union. The fiscal rules are designed to support economic growth. The need to bring the deficit below 3% of GDP has been the anchor for our fiscal policy over the last number of years. This was a hugely important commitment and each year we set a target to reduce the deficit on a phased basis. Each year we overachieved on our fiscal target which sent a strong message to the public, SMEs, the FDI sector and investors at home and abroad that Ireland was regaining control of our public finances. This, in turn, led to increased confidence and investment and lower interest rates and borrowing costs thereby supporting growth and job creation throughout the country.
Over the period 2011 to 2015, the deficit was reduced from €15 billion to €4.5 billion. These targets were achieved with fewer tax increases and expenditure cuts than originally envisaged when the troika was brought into the country. With the last budget, we reached the end of austerity budgets and did so much earlier than we had initially planned. The Department of Finance is now forecasting a deficit of 2.3% of GDP in 2015. There are obviously risks to this forecast and it is essential that discipline is maintained in the management of the public finances. With the deficit falling below 3%, a different set of rules will apply from next year and we will be required to make progress towards a balanced budget in structural terms. This will be the new anchor for budgetary policy and it is designed to ensure that budgetary policy supports economic growth. Put simply, it is designed to ensure that the days of "if I have it, I'll spend it" are over. The new approach will protect the Irish people from the boom and bust policies of the past. If these rules had been in place and properly applied and adhered to in the early 2000s, Ireland would have been far better positioned to weather the global financial crisis.
As the House will be aware, the rules can throw up anomalies from time to time and I recently raised this issue with my European colleagues. What I was concerned to ensure was a credible application of the rules rather than a change in them. I am pleased to inform the House that the European Commission has accepted that we in Ireland have a strong point and agreed to a change in the application of the rules. As a result, the Government will be in a position to introduce our second expansionary budget in October.
Fiscal space of the order of €1.2 billion and up to €1.5 billion will be available for tax reductions and investment in public services. The final scale of the space will become clearer closer to the budget. The partners in Government have also agreed that the agreed space will be split 50:50 between tax cuts and expenditure increases.
The actual measures will be announced in budget 2016. The tables in the spring statement are based on a general split of €1.2 billion, but I expect that by October's budget this will be €1.5 billion. Current indications are that a similar amount of space will be available in later years while still ensuring the achievement of a balanced budget before the end of the decade.
We must continue to reduce the national debt. The budgetary strategy we are pursuing will ensure that our debt levels continue to fall and that we are well positioned to withstand any shocks that may occur in Ireland, Europe or the global economy. The Government has been working hard to reduce the burden of this debt and that remains a key priority. We have succeeded in reducing the interest rate on the European loans provided under the programme, secured agreement to extend the maturity of the European loans, replaced the promissory notes with very long-dated government bonds, and replaced just over €18 billion of IMF loans with cheaper market-based funding.
National debt peaked in 2013 and is now on a firm downward path. It is expected to drop below 100% of GDP and move towards the European average in a couple of years. Our net debt, taking account of cash the NTMA is holding and other assets, is of course much lower. The figures for debt which I have given are figures for gross debt. The cost of servicing the debt has also reduced. Interest rates on ten year Irish Government paper are below 1%, the lowest ever, and Irish Government debt is now classified as investment grade by all the main credit rating agencies.
We are now in a much better position. Going forward, the fiscal rules require an annual reduction in the debt ratio by one twentieth of the difference between the actual level and 60 per cent of GDP. Contrary to what some of the Opposition have stated, this will not require further consolidation by way of tax increases and expenditure cuts. This is because, with a growing economy, the debt-to-GDP ratio will fall once we run prudent fiscal policies. In other words, growth will do the heaving lifting.
This is another reason why stable, steady economic growth combined with prudent budgetary policy is the way forward.
The value of our investment in AIB, Bank of Ireland and Permanent TSB continues to rise. It is not the State's intention to remain a holder of its banking investments in the long term. The exit strategy is about recovering the full cost of the taxpayers' investment in these institutions and using the proceeds to reduce the debt further. The sale of 25% of Permanent TSB that concluded yesterday further improves the position. I am now confident that all the taxpayers' money invested in AIB, Bank of Ireland and Permanent TSB will be fully recovered.
This is unlike the €34 billion the Fianna Fáil-Green Party Government put into Anglo Irish Bank.
The forecasts for further budgets are contingent on continued sensible economic and budgetary policies being pursued. Prudent policies support growth and job creation and generate the taxes and the fiscal space for further investment in the economy. The scale of the fiscal space available in later years will be determined by the growth. If the wrong policies are pursued, the economy will not grow and the fiscal space will not materialise. Equally important to the size and scale of the budget plans is the type of measures introduced. As I have stated, lower taxes on income will support more jobs and higher taxes will cost tens of thousands of jobs. This is an economic fact.
In the early 2000s, our taxation system became over reliant on transaction and property related taxes. The revenues from the property boom were used to fund a narrowing tax base to an unsustainable level and to fund current expenditure. The use of tax expenditures in the early 2000s not only served to hollow out the tax base but led to an overheating of the economy. When the property bubble burst, the revenues dried up and the consequences have been eight years of tax increases and expenditure cuts. The response of the Government of the day in the first instance was to load new and additional taxes on work through the introduction of the income levy and the universal social charge.
We must never allow this to happen again and the base-broadening measures that have taken place have moved the tax base to a much more stable and growth friendly footing, reducing the reliance on transaction based taxes. The curtailment of tax expenditures, the introduction of the property tax and introduction of alternative funding mechanisms for vital public services such as Irish Water are all essential elements for stable public finances. The alternative policy choice in nearly all of these cases is to increase taxes on work, an alternative that can significantly impact on economic growth and jobs.
That is why I did not increase income tax or USC charges in my first three budgets. At the first available opportunity, in budget 2015, I used available resources to reduce income tax and the universal social charge. Not only does this put more money into people’s pockets but it boosts confidence and economic activity across the country.
The Department of Finance estimates, based on the ESRI economic model, that continuation of the programme of reducing tax on incomes introduced in 2015 for 2016, 2017 and 2018 would increase employment by approximately 1%. This is the equivalent of 20,000 jobs.
On the other hand, the same research shows that increases in taxes on work would not only result in the loss of the additional jobs, but would actually reduce growth and cost jobs over the next five years.
Unfortunately, the policies proposed by the Opposition will do exactly this. They will increases taxes, increase expenditure, increase debt, lower growth rates, reduce tax buoyancy and cost jobs. The policies of the Opposition will again cause the economy to spiral downwards. In fact, the principal domestic risk to Ireland's continued economic growth is the tax and spend policies of the Opposition.
This Government has a different policy perspective. The strong Exchequer performance, coupled with very positive high-frequency data on the economy, confirm the appropriateness of the economic perspective of the decision to reduce income tax and USC for every worker in the country. Putting more money into the pockets of people has boosted consumer confidence and demand in the domestic economy. It will also encourage young Irish people who are working overseas in good jobs to return home, confident that they will be able to find well-paid jobs in Ireland. The Government will continue to follow this policy in the next budget and in future budgets if the Government is re-elected.
We will continue to enhance Ireland's attractiveness for research and development by introducing a knowledge development box in the next Finance Bill. We have no reluctance to continue, in parallel with our European colleagues, in reforming corporation tax, but we will not, as many in the Opposition advocate, increase the 12.5% rate.
A growing economy is not an end in itself. It is the means by which we will improve living standards, create employment and-----
-----deliver better public services to the Irish people. Economic recovery provides us with the platform upon which to build for a future of economic growth, job creation and increased living standards. A Cheann Comhairle, we must never again repeat the mistakes that left Ireland on the verge of bankruptcy in 2010 and resulted in a lost decade and such hardship in the lives of so many people.
The Government's strategy of steady, stable economic growth will benefit all our citizens. It will provide the resources for investment in our public services. It will fund the building of new schools, health centres and essential infrastructure. It will deliver secure jobs to more people than ever before in the history of the State. It will put more money in people's pockets and give people security around their income and their pensions. It will entice our emigrants to return home and they, in turn, will help to build a strong community in all parts of the country.
I thank you, a Cheann Comhairle, and I look forward to the contribution from my colleague, the Minister, Deputy Howlin, and from the Opposition spokespersons on finance.
The purpose of this spring statement is to set out our present economic and fiscal situation and to generate discussion about our nation's economic priorities over the medium term, not only from the Members of this House, but indeed from the broader Irish community. As the Minister for Finance has outlined, we are looking forward to having between €1.2 billion and €1.5 billion of fiscal space for budget 2016. We will allocate these resources, as he said, on an equal basis between additional spending and reducing the tax burden on low and middle-income earners. Additional investment may also be possible arising from reduced spending on unemployment payments as the numbers at work continue to grow.
Today is about recognising the point we have now reached in our recovery and then setting out the context for budget 2016. Today is not an alternative to that budget; it is a point-in-time assessment of where we stand right now and the challenges we face. I want to outline some of the challenges facing public expenditure as our economy recovers. I will also set out some of the priorities on which we will need to focus over the coming years.
I am confident we can build on the progress achieved if we continue, as we have done for the past four years, to make the right decisions. Having come through the worst economic shock in our history as a State, our primary focus must be, and will be, on sustainability. The Minister for Finance and I share one overriding priority. That is to ensure that what we endured as a nation over the past seven years never happens again. We will not throw away the hard-won progress the people of Ireland have made.
As a result of the decisions we have taken, the State's finances are in a demonstrably better position. The imperative now is to ensure we continue to act responsibly. Last year, gross voted expenditure amounted to some €54 billion. This is a reduction of over €9 billion from the 2009 peak. During that period, current spending was reduced by nearly 10% and capital spending by half, albeit from historical highs. These reductions were made at a time of increased demands and pressures on public services. These included significantly increased numbers of people needing unemployment payments, more medical card holders, and additional students in the education sector. Unlike the private sector, which in a recession sees falls in demand, the demands on public services increase during a recession. In addition, we are facing demographic changes that present challenges for our health and pensions system. A prudent plan for the public finances must prepare for those changes.
The economic crash has taught us that nobody owes Ireland a living. We received emergency funding at a time when the markets stopped lending to us. We owe it to ourselves to ensure we do not allow a return to that position. That is why we have sought to broaden the tax base to prevent an over-dependence on property and transaction taxes, which contributed to the crisis in the State's finances.
On the spending side, we are now planning our expenditure on a multi-annual basis, rather than from year to year. We have implemented a programme of reforms to improve the State's budgetary architecture. Today's economic statement forms the newest part of that reformed budgetary process. Additional reforms in recent years include the introduction of multi-annual expenditure ceilings, regular comprehensive reviews of public expenditure, publication of the updated public spending code, implementation of performance budgeting, and the establishment of the Irish Government economic and evaluation service. We have brought a greater level of transparency and efficiency to the allocation and spending of public money. None of these reforms is in itself a game changer and they are yet to bed themselves in the public mind. They do, however, represent a fundamental improvement in the way we do public business.
It became fashionable for a while to decry this country and its potential. However, the turnaround we have achieved in our economy is indicative of the fundamental strengths of the Irish people and the Irish nation. We are now the fastest-growing economy in Europe. Our recovery from this crisis has been as remarkable as our original descent into it. Ireland is a small, open, flexible economy with the ability to react fast to changing markets. Our population is comparatively young by European standards. We have developed an ability to attract investment that is the envy of the rest of the world. The days when we could plan our economy in isolation are long gone. We are reactors to, not drivers of, global economic demand. We are dependent on the international marketplace to sell our goods and services and we are exposed to external developments. We have learned just how vulnerable we can be to a global downturn exacerbated by domestic policy mistakes.
Our purpose into the future should be to mitigate these threats where we can, to build into our economy resilience, and to focus on how we can continue to grow our economy. Success in these efforts will allow us to build the society that reflects Irish values - one that is fair, caring and decent, one in which people are rewarded for work, and one where every region and county shares equally in the progress. Most in this House know that a fair society cannot be built on the back of a weak economy.
The challenges that come with economic recovery have a context. Increases in public expenditure must be affordable. That is why the European Union has adopted rules to support sustainability. Endorsed by the Irish people in a referendum in 2012, the new fiscal rules serve as a tool to help us to responsibly manage our recovery. The rules mean that any future growth in public expenditure will not exceed the level of potential economic growth, unless we specifically levy additional taxes to fund it. For a country like Ireland where the national debt, as the Minister for Finance has indicated, is high, this is a lesson we do not need to relearn. These rules are new and hopefully will evolve over time and be refined but there is no denying the fundamental truth at their heart. Public expenditure must be sustainable. We must plan carefully, using evidence-based decision-making to ensure that we invest people's money in ways that will be of maximum benefit to the people of Ireland, not just for the next year or two but over the medium and longer term.
As I have already indicated, reductions in spending have made a significant contribution to the overall fiscal consolidation. However, our approach was never to simply apply blanket reductions to all areas of spending. In the context of a poorly performing economy and a weak labour market, we recognised that we need to support economic growth and protect our society's most vulnerable people to the greatest extent possible.
Budget 2015 marked a very welcome point in our journey of recovery. It was the first since 2009 that reductions in expenditure were not required to meet our set fiscal targets. Now, as outlined in today's fiscal forecasts and in the documentation before every Member of the House, when we prepare for budget 2016 we can look forward to increased gross voted current expenditure by an additional €600 million to €750 million. This increase will allow Government to deal with underlying demographic pressures in key areas such as social protection, education and health. It will allow us to target enhancements in key public services.
Including these additional allocations, general Government expenditure, excluding debt interest, is forecast now at just 32% of GDP or 37.5% of GNP. As a proportion of the overall economy, Government spending is back now to roughly the size it was in 2001.
Post-2016, the no-policy-change position outlined in the documentation before the Members is an annual increase of €300 million in current expenditure. Given the improvement in the fiscal position set out today, we expect there to be more space to accommodate additional spending. What we have done, simply, is that after next year we have factored in demographic pressures. The extent of this space, as the Minister for Finance has indicated, will depend on continuing to pursue the correct policies.
Ireland is changing. Over the last decade, our general population has increased by 500,000 people. We have the highest percentage of people aged under 15 in the European Union and the joint highest fertility rate. Life expectancy has also risen and now almost 13% of our population are 65 years old. These changes are positive and welcome and the envy of many countries, but they also present service and resource challenges for our health, pensions and education systems.
On current projections, the ratio of working age people to those aged over 65 is expected to fall steadily from 5:1, which it is today, to just over 2:1 by 2060.
By 2021 the number of our citizens over the age of 65 will have increased by close to 40% from a decade earlier. This represents an extra 200,000 people. Overall, this portion of the population is projected to increase from 11% in 2010 to 15% in 2020 and to 24% by 2060. In the health area, demographic changes alone will cost an estimated €200 million per year over the coming years. This is partly why our focus has been on extending the reach of primary care and taking pressure away from our acute hospital system.
We may be a younger country than many of our European partners but we too are facing pressures on pensions. We currently spend over €6.5 billion annually on pension provision. More than 400,000 people are in receipt of one of the two main State pensions, contributory or non-contributory. The cost of paying for these two pension schemes alone is projected to increase by €200 million per year out to 2026. Let me be clear, however, that there is no threat to the pension. This Government is committed to pension provision and to sustaining the value of the pension. It is because of this commitment that in our discussions on spending, it is important to be clear about future trends. Not enough of our citizens are planning for the future to supplement their State pension entitlements. It is in this context that the Tánaiste has set up a working group to examine the pensions issue.
In education, the number of school children is, thankfully, set to increase every year over the next six years. By 2021 we will need an extra 3,500 teachers at primary and secondary level to provide education to an additional 50,000 pupils. The number of third level students is also projected to increase by 20,000 in the same period. These are welcome and positive developments but we must plan for them. Our economic future is bright as our highly educated work force expands but we need to plan to ensure our public finances can meet these real challenges.
Of course, we need to generate resources by growing our economy before we can spend money. 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. Later, I will speak further on a number of the key areas for which investment is required– employment, education, infrastructure and public services. Before I do that, however, I should state that an economy is not a society. A functioning society is a fair one where the fruits of economic growth are shared among all the people. We are committed to continuing to provide necessary welfare and other supports to those who need them. That is why, throughout the crisis, we maintained core social welfare rates. It is also why, in the last budget, we increased child benefit rates, the living alone allowance and spending to address homelessness.
It is worth pointing out that Ireland has one of the most progressive tax and welfare systems in the OECD. In fact, the most recent figures indicate that Israel is the only OECD country that has a more progressive income tax system than ours. Continued investment and growth in our economy will give us the resources to assist those who need it most. This goes to the heart of our economic model.If we do not create the wealth we cannot redistribute it.
We take the view that reducing unemployment remains the best route to recovery. It increases the tax base and allows investment in public services. By continuing to get people back to work we make our recovery sustainable. Irish people want to work. This has been a central focus of this Government’s efforts and we are now starting to reap the benefits. Employment has increased in every quarter for over two years and we expect this trend to continue. Almost 100,000 new jobs have been created since the low point in mid-2012. We are achieving success through a range of measures, including the Action Plan for Jobs and investment in key capital projects such as social housing. Tackling long-term unemployment will remain our key focus. Our Pathways to Work programme supports almost 260,000 places with 85,000 of these reserved specifically for the long-term unemployed. In budget 2015, we doubled the number of positions on the JobsPlus scheme to 6,000, encouraging employers to hire the long-term unemployed specifically. Not only is the headline unemployment rate important; we must also increase employment throughout the country for all groups in our society and with this in mind, we introduced the Back to Work Family Dividend in the last budget.
A related issue is child care. A successful child care policy helps people who wish to do so to participate in the economy. The Minister for Children and Youth Affairs has established a working group on this issue and the Government looks forward to reviewing the outcome shortly. Obviously, we need to find a balance between the needs of children, parents and the wider economy.
Our investment in research and development is also bearing fruit, with an increase in the number of Enterprise Ireland-assisted companies involved in this area and an increase in the number of patents from the commercialisation of publicly funded research. All of these initiatives are aimed at providing real opportunities for those in need of work and allowing those who were forced to leave Ireland to come home.
This Government has overseen improved outcomes in education. There are more students at higher level and more are taking higher level maths. Literacy rates among our 15 year olds have improved and the number of PhDs awarded by Irish universities has increased. This reflects our belief that the quality of our education system is a key determinant of future living standards. In the last budget we announced 1,700 additional full-time education posts. In the lifetime of this Government, more than 150 new schools will have been built. It is extraordinary that we built more schools during the worst recession in our history than were built in the boom years. At under-graduate and post-graduate level we are providing higher education programmes and services for over 164,000 full-time students. We are also providing 270,000 places on further education and training programmes. We will continue to invest in education. We must embrace the skills revolution, adopting strategies to ensure continuous upskilling and development of our work force to allow our citizens to be at the forefront of new technology and the creation of high-value jobs. The potential of the Irish people is enormous and our aim is to help them to realise that potential.
Thanks to economic recovery, we are now in a position to increase investment in our people and our infrastructure. We will do this in a strategic way, ensuring maximum value for money, with a focus on future needs. The capital review undertaken by my Department will inform a new capital plan which will be published in June. This plan will take our capital funding horizon out to 2020 and identify priority areas for investment. Infrastructural constraints can act as a brake on growth, reducing the productive potential of our economy. We also need a proactive approach to dealing with climate change and its future impact. Investment is needed in parts of our school system, road network, public transport, social housing, broadband infrastructure and flood alleviation. Spending in these areas will increase our capacity for growth, our ability to respond to social needs and enhance our environment.
As I have already indicated, capital expenditure has fallen considerably since the peak. That was the correct thing to do at the time because we simply had not got the money. There is no point in investing to extend one’s house if one cannot pay the grocery bill. It is now time to invest again to meet our infrastructural needs and this will be reflected in the capital plan, particularly in the years beyond 2018.
We now have a considerably smaller, less expensive and more productive public service. Having served in Government for the past four years during this crisis I am proud of how those in the public service have responded to the additional workload and the productivity changes demanded of them. These changes and the reductions in pay have allowed us to minimise the effects of the crisis in essential areas such as health, education and social protection. Indeed, public service reform has allowed us to provide additional resources to front-line services, a process that I have called the reform dividend.
We have added more than 1,000 nurses since 2014. We recruited 300 gardaí last year. This year we will take in 250 more.
As well as being more efficient and productive, the new public service must be more responsive to the needs of service users and more strategic, focusing on longer-term outcomes.
Earlier today, the Government agreed to my proposal to enter into discussions with the trade unions on the issue of public service pay. The pay reductions are governed by financial emergency legislation that requires me to carry out an annual review of the status of that emergency. As the economy continues to improve, the prospect of legal challenges to the financial emergency increases. It is prudent therefore to plan for an orderly unwinding of these emergency provisions. Not to do so would be foolhardy.
I do not intend to discuss the negotiations on the floor of the House today, but let me say this. All public servants have had their pay reduced significantly. Over the past two years, we have seen the beginnings of pay awards in the private sector. As the economy recovers, we need to ensure that remuneration and the cost of the public service generally are managed to ensure that they remain sustainable.
Of course, without the productivity gains made in recent years, we would not be in a position to discuss unwinding the financial emergency measures in the public interest. Given their value to the State, the unwinding of those measures will take time. To do anything else would jeopardise the public finances again, something the Government will not do.
In order to meet the challenges that we face, it is essential that we engage with people. This spring economic statement represents the beginning of that process. Every Government has a duty to engage with its citizens. The Government also has a responsibility to ensure policy making is consistent with broader societal and economic objectives. A national economic dialogue between Government and relevant civil society groups will discuss the most effective and equitable way to achieve our objectives.
Those groups will also have obligations. That holds not only for groups that want more expenditure in every area we can think of, but also of the parties opposite. We cannot meet all the demands of each and every person or group. To try to do so would bankrupt the State. Proposals for increased expenditure should be matched by genuine attempts to find matching funding, commensurate with the proposed expenditure. No party can ignore the general parameters under which public policy has to be made. Our engagement, as a Government, with all groups will be firmly rooted within these parameters.
While these discussions will inform the process, it is the Government of the day that will make the decisions. It will do so on the basis of what is in the long-term best interest of our people.
I repeat that we must not allow this country to return to the devastating cycle of boom and bust that has been the hallmark of previous Administrations. We must learn the lessons of the past decade and not repeat the mistakes that brought us, as a country and as a society, to the edge of ruin.
Our vision and plans for renewed prosperity will not be built on the sand of short-term and unsustainable increases in Government spending. They will be built on the rock of fiscal responsibility and investment in the productive capacity of our people. Since 2011, we have provided stable and responsible government. We have stood up for the people and charted a path to recovery.
We cannot and will not throw money at problems. Expenditure growth must continue to be linked to performance and reform. Any increases in expenditure and incomes must be in line with growth and productivity. Decision making must be evidence based with a strategic focus on improved outcomes for our citizens.
We have come a long way since the depths of our economic and fiscal crisis - a crisis that was supported and cheer-led by some of the more vocal people opposite. The clear evidence presented today proves that fact. Our task now is to map the next phase of our nation’s journey. This will be a country that creates good jobs with secure incomes, that provides well run public services, that listens and responds to people’s needs, that builds real communities and that provides real opportunities for all our people.
The opening statements of the spokespersons for Fianna Fáil, Sinn Féin and the Technical Group, who shall be called upon in that order, shall not exceed 45 minutes. They may share the 45 minutes.
This spring statement is a classic example of a Government over-promising and under-delivering. Built up as some kind of mini-budget, it has ended up as just another PR exercise from a Government that is quickly running out of road. At the end of all this, people who have been hearing about the spring statement for months will be left scratching their heads wondering what it was all about. I cannot find a single element in today's statement that will bring any short-term benefits to families.
As an alternative the Ministers could have said in today's spring statement that the bank veto would end immediately; that they would not tolerate the excessively high standard variable rates banks are charging; that any family making a reasonable and honest effort to pay their mortgage would not be kicked out of their home by the bank; that the almost 1,000 children living in emergency accommodation in our capital city today would immediately be given reasonable and permanent accommodation; and that in light of the improving economic situation the Government would introduce emergency legislation into the House tonight to restore the €325 cut to respite care grant so that come June when the payments for 2015 are made the full payment to carers would be reinstated.
Instead we got none of that. We got an exercise in self-congratulation, a self-serving statement from both Ministers clapping each other on the back.
We accept and very much welcome that a recovery is under way. It raises fundamental questions for us as a people. What kind of recovery do we want? Do we want a fair and inclusive recovery across the economy? Do we want to bridge the divide between urban and rural? Do we want to bridge the growing divide between those who have and those who certainly have not and have lost most under the Government's tenure?
I welcome that the Government has made a fundamental shift in its budgetary policy today. It has moved from the situation, when it was introducing austerity, where it had €2 of expenditure cuts for €1 of tax increases. Today it has shifted to what we have been advocating for a prolonged period of time, which is a 50:50 scenario. However, it has done enormous damage to the fabric of society in the manner in which it has introduced fiscal consolidation in the last four budgets.
I know the Minister does not want to hear it and he is shaking his head in denial. He is in complete denial of what is going on out there. He is in denial about the thousands of young children with special needs who are awaiting urgent intervention services. He is in denial about the many elderly people throughout the country who are being denied access to nursing home beds because of cuts to funding.
I referred earlier to the 1,000 children who will be sleeping in emergency accommodation in Dublin tonight.
A full Croke Park on all-Ireland final day accommodates more than 80,000 people. The Minister, Deputy Noonan, can imagine County Limerick in the final if he so wishes.
Multiply that figure by five and it approximates to the more than 400,000 people who are waiting today for hospital outpatient appointments. We must evaluate the statements made thus far today through the prism of these individuals' experiences of waiting for urgent appointments or who are living with debilitating conditions. I can provide examples from my own area which will be repeated throughout the country. In Cork alone, the number of people waiting to see an orthopaedic hospital consultant has increased by one third in 18 months. The numbers waiting to see an ophthalmologist have increased by 55% in the same period. The number of women waiting to see a gynaecologist has increased by 37%. Where is the recovery for those people? The Government is not giving them any light at the end of the tunnel in terms of the future of this country.
This is why last October, in a departure from the usual politics of opposition, we advocated investing in these critical service shortages given that we had the headway to do so for the first time in the eight years. The Government did not take our advice, however. With each passing month this Government remains in power, the divisions in society grow deeper. Those divisions have been exacerbated by the regressive budgets it has implemented in the past four years, which have proportionately taken much more from those on low and middle incomes than from those on the highest incomes. The Government's ideology was exposed last October, when for the first time in almost a decade there was scope to give something back. The Government gave it back to those on the highest incomes. The main changes to the income tax changes in the budget were to the higher rate of tax, and benefitted only one out of six income earners.
The Government looks set to repeat those mistakes in the next budget. A fairer way of giving back to people through the income tax code would be by progressively dismantling the universal social charge.
The comments by the Minister, Deputy Noonan, about boom and bust cycles ring hollow because his party and the Labour Party subscribed to every ingredient of what he described as boom and bust politics.
I note the following sentence from the statement by the Minister, Deputy Howlin, "It became fashionable for a while to decry this country and its potential." I could play the Minister a few tracks from a CD dating from five or six years ago which would include familiar voices from his own benches. We need a fair and broad based recovery. Towns and villages across this country are dying but the Government does not seem to care one iota about them. It is creating deeper and deeper divisions.
No sooner was the ink dry on last October's budget when speculation started about the new departure of a spring statement in which a range of new initiatives and ideas would be unveiled by the Government. I would use all of my remaining time if I outlined the list of carefully orchestrated leaks to the media about the range of benefits that would be unveiled by the Government in the spring statement. We have seen nothing of the sort in this statement. The documents released today contain nothing new.
The stability programme update is released quietly every year and sent off to the European Commission after a token meeting of the Joint Committee on Finance and the Public Service. As it happens, in the final year of this Government's term it decided to make it a set piece event in the Dáil in order to put the economy centre stage on the political agenda and to create a distraction from the mess it made on so many other issues.
The employment situation has improved significantly. The number of people out of work is falling and the number of people with jobs is increasing. We warmly welcome that but there is no room for complacency when 350,000 people are still on the live register, as well as 86,000 on activation programmes. While I do not seek to demean activation programmes and their role as a stepping stone to real employment, these numbers reveal the scale of the crisis of unemployment. Approximately 160,000 people are long-term unemployed. We need to take a number of steps to deal with this issue. Among the leaks made in recent weeks was a suggestion on supporting self-employed people by extending a tax credit to them that is equal to the PAYE credit. There was no reference to that suggestion in the Ministers' statements.
The self-employed expected some indication from the Government that there would be a change in the way they are treated. Successive Governments discriminated against them in the taxation system and in their failure to provide a safety net through the Department of Social Protection. The Government had an opportunity to deal with that issue today. As the employment situation recovers, we also want to see decent terms and conditions for employees. This Government promised a lot in that regard but it delivered very little. It is running out of time to deliver on major reforms of the labour market, and they need to be introduced without further delay.
In regard to the role of local enterprise offices, I recently had occasion to help a local SME which was not involved in exports. It was directed to the local enterprise office to get financial support. We get lip-service from the Government on supporting SMEs as the heart beat of the economy providing 800,000 jobs. The aforementioned company inquired into what practical assistance it could get, such as a grant to purchase equipment or employ staff, but it could get nothing because financial support is provided only to businesses engaged in manufacturing or internationally traded services. If this Government is genuine about supporting the small business community, it would deal with this type of issue very quickly.
The Government has promised tax reform but it has not addressed the major increases that people will face in the future. Mortgage interest relief is due to come to an end in 2017. Mortgage interest relief amounted to more than €400 million for nearly 500,000 families in 2012. It was worth €260 million last year. The ending of that relief in 2017 will be an effective tax increase which will offset the figures outlined today. The Government is determined to pursue universal health insurance. The White Paper it introduced on this subject last year contained a strong hint that tax relief on private health insurance, which has been already dramatically reduced, could be ended. In 2014, that tax relief was worth €350 million. The White Paper sneakily revealed a proposal to subsume the relief into the overall system for financial support for universal health insurance on a revenue neutral basis. That means people who currently pay for health insurance will be paying a hell of a lot more because the tax relief they currently enjoy will be gone. The Minister, Deputy Noonan, failed to address the issue of the local property tax. He commissioned a review from Don Thornhill but he could have nailed the matter today. Dramatic increases in local property tax rates following next year's revaluation could be avoided if the revaluation does not take place. He could have thereby put people's minds at ease. He outlined a package of €1.5 billion in taxes and spending in 2016 but he did not mention the other factors which directly affect household budgets.
The Minister's comments on banks and interest rates are weak and watery. There is nothing in what he said. I expected, and God knows there were plenty of leaks to the media in recent days, that there would be a significant statement from the Minister for Finance today. Previously, he came into the Dáil thumping his chest and saying the banks would have to deal with the issue of the standard variable mortgage rates, but we got nothing of the kind. Tomorrow, the CEO of Bank of Ireland will come before the Joint Committee on Finance, Public Expenditure and Reform. He will tell it that the cost of funds for Bank of Ireland currently is 1.03%, effectively 1%, yet it can continue to get away with charging 4.5% on standard variable mortgages across the country.
Some 300,000 people are paying way over the odds on their standard variable mortgages, yet the Government has arrived very late to this debate. It was dragged kicking and screaming into the debate having shown no interest in the issue. The Minister said it was a commercial matter for the banks and he would not get involved. We heard that many times. However, the penny has finally dropped that people will not put up with the situation. The issue is gaining a head of steam. An interest rate of 4.5% being charged at a time when the cost of funds for the banks is around 1% is unacceptable. As Minister for Finance, the Minister has a duty to speak up for ordinary people on this, as does the Governor of the Central Bank. We need to see progress on this issue because the current situation is not good enough. People will not be bought off with a 0.25% cut as the difference between the rate charged in Ireland by the banks and the rate charged in the eurozone is just over 2% at 2.09%. The Minister is aware of this yet he missed an opportunity today to lay down a firm marker in respect of saying he expects progress on this issue. His words were far too weak.
Where is the promised package of measures to deal with the problem of mortgage arrears? For weeks we have been hearing in the media about measures to dilute the bank veto and new measures to reform mortgage to rent schemes, but the Government cannot seem to get it together because its members cannot reach agreement among themselves on the issue of reducing the discharge period from bankruptcy. All this time, families who are struggling to hold onto their homes are paying the price. The official figures from the Central Bank show that the banks have proposed to take 30,000 family homes from people across the country and they say they have concluded solutions in respect of 16,000 homes. I hope this will not come to pass. I hope negotiations will take place and that these will result in sustainable restructurings being put in place in respect of these mortgages.
Currently, the banks hold all the aces. The Government has given them more and more power. It has diluted the rights of mortgage holders in the code of conduct on mortgage arrears and has allowed thousands of other mortgage holders have their mortgage sold from under their feet. They have been left powerless and are at the mercy of foreign owned vulture funds who can treat them as they like. Those mortgage holders have nowhere to go to vindicate their rights. They cannot go to the Department of Finance, to the Central Bank or to the Ombudsman and have been left hanging in limbo. The Minister has introduced legislation and we are awaiting Committee Stage of that legislation. I do not like how the Minister proposes to amend that legislation, but we will have that debate on Committee Stage. I urge the Minister to accelerate the legislation as it is vital for people who find themselves in this situation.
The bottom line is the bank veto needs to be removed. It is all very fine for the Minister to say the banks only use it in 25% of cases, but the people know it is there and know they will not get any restructuring of their mortgage unless the bank agrees. This is not good enough. The Minister seems to be coming around to the view that he must do something on the bank veto. We told him this was necessary over three years ago. We told him the way the insolvency service was being set up would result in the banks holding all the aces and homes being unnecessarily repossessed. The frustrating fact is that the solutions exist, for example a proper split mortgage with no interest accruing on the warehoused portion of the mortgage.
The banks are open to writing down debt. They should be, because the Government, the previous Government and the people have recapitalised them. They have more than adequate buffers to deal with the issue of mortgage arrears, yet they are singularly failing to do so. The Minister needs to bring forward the long-promised package of measures in respect of mortgage arrears and to deal with the issue of bankruptcy. We support the reduction in the discharge period to one year. If nothing else, that would put manners on the banks and force them to come to the table to negotiate a settlement. The bottom line is that the family homes of well over 100,000 ordinary families around the country are in mortgage arrears. These people should not have to become bankrupt to deal with their mortgage indebtedness. They deserve to get a proper restructuring of their mortgage and this should be done within the confines of the Central Bank code of conduct, the targets programme the Minister unveiled and through the insolvency service if needs be.
Fianna Fáil has outlined a number of other key changes we believe would make a real difference to the economy. We talk a lot here about an enterprise economy and about supporting entrepreneurs, but Ireland is being left behind. Let us be honest about that. When I look at the international trends in corporation tax and how entrepreneurs are treated, Ireland is now in the halfpenny place. The United Kingdom, for example, has relief for entrepreneurs of 10% in respect of capital gains tax and has also introduced a 10% patent box on intellectual property. Much of the investment Ireland is competing for now is highly mobile. We are operating within a hugely competitive marketplace and need to be conscious of that.
The Minister has started what I would regard as a dangerous trend, of diluting our corporation tax offering. Companies making decisions need absolute certainty about the corporation tax environment in which they will compete. It is in that context that Fianna Fáil opposed the measures the Minister brought forward on that issue. We have brought forward our own proposals on a special entrepreneur capital gains tax relief which we believe would make a significant difference. We have unveiled other proposals on DIRT and a range of other issues and we will have an opportunity to tease these out.
The Minister says the biggest risk facing the economy is domestic and political. I am not sure who he is pointing the finger at when he is talking about high taxation and high spending. That, as he knows well, is not the Fianna Fáil policy.
The Minister should have been fairer in his analysis in regard to the passing comment he made to external factors. He never had the good grace to acknowledge the favourable external factors the Government and the country are benefitting from, the historic low interest rates which he knows are extraordinary - that a country like Germany is being paid money to borrow and that Ireland can borrow money at less than 1% over a ten-year term. The Minister knows this will not continue and knows this is being driven by ECB policy. It is being driven by the massive quantitative easing programme by the ECB, the Bank of England and the Fed. The Minister knows that, but it warranted only a passing mention in terms of the risk this country is facing.
As an export-led economy, the Minister knows well that the current foreign exchange rate and weakness of the euro has transformed the export landscape within which companies are operating. However, he did not see fit to acknowledge that or even to mention it as a risk for the economy. Nor did he mention the strength of our trading relationships with the United Kingdom and the United States, which thankfully have insulated us against a pretty anaemic eurozone economy. The drop in oil prices did not do us any harm either. The Minister could at least have acknowledged all of these factors.
There was no mention today of the bank debt deal. I assume that is dead in the water. The Minister spoke about national debt and banks, but did not mention the bank debt. Will he come clean with people and acknowledge that the June 2012 game-changer or seismic shift will not happen or that Government policy has changed? He has been dropping little hints here and there in a cute way, but he should just come out and say it. The bank debt deal seems to be off the table and the Minister should acknowledge that.
What the people want is a fair recovery. We want the Minister to be honest in what it is saying to people. We want a progressive recovery that will benefit all parts of the country and all sections of society. Today was a self-serving exercise for the Government in congratulating itself. People will be deeply disappointed.
I would normally start by welcoming the opportunity to speak on an important occasion like this; although it is an occasion, it is not very important. I have studied the two documents and there is very little in front of us of real significance and relevance to people today.
The first document is the April 2015 update on Ireland's stability programme. The second document is the 2015 spring economic statement. Essentially, the two documents are the financial envelope to pay for the election promises of Fine Gael and Labour. The Government has never done this before. A moment ago, the Minister made virtue of saying that finances should not be dictated by the electoral cycle but that process has been invented today. We had similar documents last year and in previous years but because there is to be an election within 12 months, there is a set-piece today. Essentially, the Government is standing down the Dáil from its proper business for a week so we can discuss its financial envelope for the next general election. That is not an appropriate way to start this business. The Government has lectured others about spending money in electoral cycles but we have never seen the likes of this happening before.
People may ask about what we are talking and specifically what election promises have been made. These are promises that have been announced by Ministers in recent weeks or since the beginning of the year. That is excluding everything that has been in the newspapers for the past 48 hours. In the past two to three months, Ministers have promised more paid maternity or paternity leave, tax relief for landlords who agree not to increase rent and a free second year of child care, as well as tax reliefs and subsidies for child care. Another Minister promised to abolish the public sector pension levy, while others have indicated the introduction of a living wage and rates holidays for small start-up businesses. Yet another Minister has indicated the self-employed should be given the same jobseeker's allowance entitlements as people who are in the PAYE system. Ministers have spoken about the reduction of the universal social charge for self-employed people and bonus pay for couples if they split paternal leave. Ministers have spoken about the removal of the bank veto on personal insolvency arrangements, although there has been nothing about that today. Others have spoken about the return of the first-time buyers' grant, with Ministers - including those who spoke today - talking about increasing the bank levy to force banks to reduce variable interest rates.
These are the specific promises contained but not mentioned in today's financial envelope. These were mentioned even before the two most senior Ministers from a finance perspective came out with their list over the past few days of what they propose to do in order to buy the election in the next 12 months. The people of Ireland will see this for what it is. I know the Government might feel the people of Ireland should be more grateful for the reductions made in the top rate of tax last year or that it should be doing better in terms of public esteem. The Ministers might be disappointed that people are not thanking them on the street.
The Taoiseach has said that people phone to thank him but we take that statement with a grain of salt, as others would also do. The Government has sought to hijack the Dáil for a week and take over the media so that people will hear Ministers congratulating other Ministers on a wonderful job being done. They got their time but the exercise may be counterproductive. The public will see this for what it is, which is pure political spin. The Government is doing us a disservice. Is this what it meant by "democratic revolution"? Is that the setting aside of Dáil time so we can all come to listen to Ministers for hours and days on end? We will listen to senior Ministers today, the Taoiseach tomorrow and the next line of Ministers after that. Maybe there will be two weeks set aside in the autumn to discuss the budget. That seems to be what the Ministers see as the democratic revolution. It is an abuse of this House to turn it into the launchpad of a general election campaign.
I have examined the documents. There were contradictory statements in them. The Minister for Public Expenditure and Reform, Deputy Howlin, stated that the finances of the State are now in a demonstrably better position as a result of the decisions taken by the Government. The Government is congratulating itself and the Minister is nodding in agreement with his statement. That says it all.
The Minister was honest enough to later say the people of Ireland, by way of referendum, introduced these European financial rules that forced the Government of Ireland today and tomorrow, as well as every other government in the EU, to abide by these rules and regulations. That is why we have stability programme updates. The Irish people decided by referendum that we would not have runaway Governments any more and we will not spend money we do not earn. The Irish people decided if there is a major debt, we will take steps to reduce it. All the Government is doing, correctly, is implementing the democratic decision of the Irish people as public servants. The Government has no legal authority to do anything other than comply with the referendum result and the financial packages set out by Europe. We accept that but the Ministers have argued that the wonderful achievements in the economy arise from their actions. They should not delude themselves. The Irish people passed the referendum to allow this to happen; it is their work and sacrifice that is responsible rather than the work of a Minister.
For the first three years, the Government followed the agreement in place with the troika. It now has to follow EU rules on managing finances from now on, which is quite proper. We can consider the big ticket items of this Government, which the Ministers had a role in and which they chose to follow but which are outside of the previous programmes. When the Government makes a decision which nobody else asked it to implement, how does it measure up? Where are the big ticket items in the announcements from the Ministers?
The documents set out projections for Government debt, for example. The question must be asked as to whether Irish Water is today a standalone, commercial semi-State company or on the Government's balance sheet. The straight answer is that it is on the Government's balance sheet. The Government indicated that in setting up Irish Water, it wanted to make it an independent semi-State company and have it operating on normal commercial business lines. Both the Government and Irish Water have failed to meet this objective.
Last year, EUROSTAT rejected the Government's proposal to have Irish Water taken off the Government's balance sheet and on a second occasion, EUROSTAT again rejected taking it off the Government's balance sheet, as per the statement issued four weeks ago. That is the second time the Government has been refused. That is extraordinary, as the Taoiseach came before a committee to discuss Estimates for his Department in February, with the Central Statistics Office, CSO, coming under that remit. On 28 February, just a short while ago, he told the Oireachtas committee dealing with finance and public expenditure that the CSO was "working to finalise the report in the next two to three weeks" and that the assessment "will then be provided to EUROSTAT". The Taoiseach indicated that the CSO was advised that the final response from EUROSTAT is likely to take at least two months from date of receipt, and it is clear that the Taoiseach gave the impression that we would have a decision on this matter by the summer. That is not true and the Taoiseach did not know about what he was talking; EUROSTAT made it quite clear that it will be the end of October before it makes any further announcement on the classification of Irish Water in the national accounts. The Taoiseach told the committee one version but EUROSTAT stated some weeks later another version. The Taoiseach should have known this as it only makes classifications on national account issues twice per year.
There will be much discussion today about funds available for taxation purposes and increases in expenditure. We can consider how the Government handled its biggest project, which is the €1 billion of expenditure that has gone into Irish Water, and that leads to questions about its ability to run affairs when the Government is not governed by an arrangement we put in place or which the EU did instead. To date, €1 billion in taxpayers' money has been spent setting up Irish Water, and we have all heard about the payments for bonuses and consultants. The Government has forced the Irish taxpayer to pay commercial rates bills to local authorities for Irish Water.
In the first phase of the installation of water meters, various contractors have incurred additional costs. They include Siteserv, which will seek additional funding from the Government arising from the difficulties it is experiencing in installing water meters. When these costs are combined with the cost of the new conservation grant, one finds that the cost of phase one will be more than €1 billion. This figure excludes the one third of all motor taxation receipts that has been siphoned off from the local government fund and handed over to Irish Water as a direct subvention.
The second phase involves the installation of an additional several hundred thousand water meters. The cost of delivering this phase, which will run to several hundred million euro, has not been included in the figures. None of this expenditure will be used to improve water infrastructure.
The employees of local authorities who have always carried out this work on the ground are being asked to do more for less. Irish Water is a €1 billion failure, a financial fiasco that must be abolished and the Fianna Fáil Party in government will abolish it.
The corporate governance of Irish Water is fundamentally flawed and unacceptable. The company is part of the Bord Gáis-Ervia group of companies. The Government constructed Irish Water in a manner that ensured its board does not have one independent external director. This practice is unacceptable and should not be allowed to continue. The board consists of staff in the Irish Water-Ervia group and it is not fit for purpose. Is it surprising that a controversy has arisen regarding the appointment of major contractors such as Siteserv to Irish Water when the company's board does not include a single external director? This approach shows how the Government set about establishing its pet project. It should not have been allowed.
The Government promised to eliminate cronyism. Last year, in an example of Government cronyism, it appointed a person to the board of the Irish Museum of Modern Art in order that the appointee could be elected to the Seanad through the back door. Subsequently, Fianna Fáil proposed legislation to ensure all appointments to State boards would be made on a statutory basis. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, single-handedly rejected this approach, stating that he had requested Ministers, on a voluntary basis, to do the right thing. It is hardly surprising that cronyism persists when the Government refuses to address appointments to State boards.
It is clear to anyone who has observed recent events that for several years the Minister has sat on information held in the Department of Finance on Siteserv. He has decided to establish an inquiry solely because the matter has entered the public arena. If these issues were of concern to him two years ago, he should have established an inquiry at that time. It should not be necessary to shame him into taking action through the release of documents under freedom of information legislation.
As I stated immediately after the Minister spoke on this matter on radio last Friday, the inquiry he has established is by insiders into insiders. It is cronyism to have insiders inquiring into themselves. It is also wrong that the Minister issued, under IBRC legislation, a direction to the special liquidator that he carry out this review. I understand the Minister did not consult the special liquidator before directing him to do this job on his behalf. In doing so, he has abused his ministerial powers and forced a conflict of interest on the special liquidator. As Deputies have thrashed out in the House, the special liquidator is not a suitable person to carry out the review owing to the conflict of interest that arises. The fig leaf of appointing a retired judge to monitor the issue is wholly insufficient. It amounts to an acknowledgement by the Minister that the process he has set out is flawed. An independent commission of inquiry is needed to get to the truth and members of the public will not settle for anything less. The Fianna Fáil Party will oppose the whitewash the Minister has proposed.
I will now address the financial emergency measures in the public interest legislation, which comes within the remit of the Minister for Public Expenditure and Reform. Five Financial Emergency Measures in the Public Interest Acts have been passed since 2009. Pay and pensions across the public service have been reduced by 14% and public service numbers have declined by 10% in the same period. These pay cuts and job losses were mirrored in the private sector and no household was immune from their effects. It is welcome that the economy is improving as a result of the hard work of Irish people. The assumptions underlying the Financial Emergency Measures in the Public Interest Acts no longer hold. Financial resources permitting, the legislation must be undone, rolled back and removed from the Statute Book in an orderly manner. The Minister and I are almost singing from the same hymn sheet on this matter. He can no longer justify the legislation and will be praying that nobody challenges it. However, given that the basis on which the legislation was introduced no longer exists, it should be wound down in an orderly manner.
Pay talks must commence in the public service with a view to increasing pay. The process has already commenced in the private sector and is ongoing. The priority in the first instance must be to look after those who are on low and middle incomes. It is better to have improvements in pay work their way up the economy than to take a trickle-down approach, as the Government has done since it started to address the issue last year when it cut taxes for those on the highest rate. Improvements in public sector pay should concentrate on net take home pay. This means incomes can be improved by increasing pay rates and reducing the universal social charge, PAYE and PRSI rates and pension levies. Retired public servants who are in receipt of pensions must also be involved in any discussions this summer. The pay talks must also be transparent because taxpayers in the public and private sectors will want any changes to be in their interests and independently verified. This was not the case in respect of the Haddington Road agreement.
A third issue has been sadly absent from the Ministers' contributions. One Minister wants tax reductions, while the other wants pay increases. The issue of public services cannot be ignored in this debate. The growth in the economy must lead to improvements in the public services on which every family relies. The pupil-teacher ratio must be improved, for example. The Minister referred to the recruitment of new teachers. The purpose of the increase in teacher numbers is to respond to the increase in student numbers, rather than improve the pupil-teacher ratio. We must ensure that hundreds of thousands of children are not taught in overcrowded classrooms. Career guidance and resource teaching must also be restored.
As Deputy Michael McGrath noted, it is unacceptable that 400,000 people are waiting for outpatient appointments in the health service. Elderly and sick people are waiting for fair deal applications to be improved, waiting times for operations have increased and queues in accident and emergency departments are larger than ever. In addition, mental heath and suicide prevention measures are not being funded adequately.
In recent years, the Government has completely neglected people who are seeking housing. Its inaction in this area has resulted in an increase in homelessness and housing waiting lists. Rent supplement rates must be increased to assist in this area. The problem is being exacerbated by the Government. The mix between taxation and expenditure measures it has adopted in the past four years demonstrates that its principal effort each year has been to cut front-line services first.
In response to each Government budget, the Fianna Fáil Party has argued that the adjustment should be balanced 50:50 between taxation and expenditure measures. We are pleased the Ministers opposite have come to see the merit of the approach we have advocated for the past four years and are now moving in our direction.
Every family benefits from public services and requires improvements in essential front-line services. We must all contribute to such improvements. We cannot allow the debate to be reduced to a simple trade-off between improvements in public services and improvements in public sector pay.
The Minister spoke about demographic challenges, noting that the health service will require an additional €200 million per annum and an additional €200 million will be required to pay the pensions bill because people are living longer. He also referred to the need to recruit an additional 3,500 teachers to accommodate the increasing population. As such, demographic changes mean he will need €600 million of the €700 million available to him just to stand still. People want improvements in services. They do not want the vast majority of the money available used to address demographic changes, with all remaining moneys used to reduce taxes. Front-line services need to be improved.
I read something interesting in the document provided. The first item of chapter 7, which deals with policy and strategy, is public service pensions. New entrants to the public service join a new pension scheme that is based on career averages. This new scheme will not have a significant effect for another 40 years. The second issue referred to in the chapter is the abolition of the State transition pension. This measure will mean people will have to sign on for jobseeker's allowance for one year when they reach 65 years. It will not deliver savings but it will hit older people.
The next item in the policy statement is long-term care with the Government wanting to revisit the sustainability of the fair deal scheme. Every policy to secure long-term economic sustainability the Ministers have mentioned is actually an attack on the elderly. The Ministers said everything today except the truth. Retired public servants in the years to come will have reduced pensions, the Government has cut the transition pension and now it wants to re-examine the fair deal scheme. Every policy proposal in this document is an attack on the elderly. I am amazed the Government did that today.
I would have liked to see a more equitable approach to what the Government is proposing. However, these are the Minister’s proposals and I am shocked he has done this to the elderly. Maybe he feels they should pay more. I actually think he is penalising them for living longer. That is the underlying theme to this. Health, pensions and the fair deal scheme are costing more because people are living longer. The Minister is begrudging people their good health in their retirement. Everything proposed here is a hit for the elderly.
While reductions in capital expenditure need to be reversed, it also needs to be done on a regional basis, not just within the M50. The Minister for Finance did not refer to the sale of State assets. He spoke briefly about the sale of the Government’s shares in Permanent TSB. We know Fine Gael is gung-ho to sell the State’s shares in Aer Lingus. I am sure the Minister had to compromise on that to get his 50-50 arrangement for budget day activities. The Government also has shares to sell in AIB and Bank of Ireland. For years, when in opposition, the two Ministers opposite gave out about the money going into the banks. Today, they have changed their language, talking about investment in our banks. How the wheel has turned. When Fianna Fáil was putting the money into the banks, the Ministers opposite called it a bailout, a waste of money and a blackhole.
Here we are summonsed at short notice without any real information, bar the leaks we have seen in the media over the past several weeks. Obviously, the Government’s spin doctors went into hypermode trying to set the public up for what would be a great new dawn heralded by this Government after four years of austerity. We have had selective leaks from Ministers and this was to be the opening salvo of the Government’s election campaign. Fianna Fáil used to start elections with the phrase, “It is Showtime”; the Fine Gael-Labour Government starts with the spring statement. What a damp squib it has turned out to be. It does not take a bloodhound to smell an election in the air in Leinster House.
What we have seen in this statement is the nod-and-wink promises and actions that will mean nothing to the majority of people for many months to come, if they materialise at all. Today should have been about serious debate about the budget parameters and the options available to meet the needs of our society.
Instead what we have is this set piece. In the past, we would have had the publication of the update for the stability programme which was then scrutinised by the finance committee, looking at the macroprojections and risks in all of the pages that we do not have time to read here today. Instead, the Government went with an election salvo, trying to suggest to the people that the bad old days are behind them and that Fine Gael-Labour are reformed parties that now care about the elderly, the sick, the vulnerable. It is asking the people to forget about all the cuts to child benefit, young people’s social welfare benefits and the imposition of the austerity unleashed by it over the past four years.
The people are cute, however, and have learned many lessons over the past several years under this and the previous Governments. They know about false promises. They also know when an election is in the air and how political parties in government deal with the electorate. Once again all talk of political reform is out of the window. Today is the first chapter in budget 2016. Unfortunately, the next chapter will be after the decisions the Government will announce in October. This Government is not genuine when it comes to political reform.
The facts show this Government is unfair and regressive. It was unfair in recession and will be even more unfair in the recovery. We know this because we have lived under four years of this Government and have seen what it has done with resources available to the State in the last budget. The ESRI independently stated the impact of budget 2015 meant the 40% wealthiest in society benefited. The more one had, the more one got from the Government, while the 60% of others were left behind and actually lost out. The less one had, the more one lost out. The Ministers opposite can shake their heads until the cows come home but that is what the ESRI stated.
It stated this on the impact of budget 2015 and water charges. It has produced nice graphs to show this too. This is a Government in denial.
A fair recovery could start today with a commitment to abolish Irish Water and water charges. That is what Sinn Féin would do.
I did not open my mouth when the Ministers had 45 minutes to give their addresses. I have only started and, again, they are bickering, sniping and all the rest because the truth is sometimes hard to swallow. I understand their big day is not going down as well as it was planned in the strategy rooms of Labour and Fine Gael.
The truth is that the Government has shifted the tax burden on to low and middle-income families, families who are struggling. Sinn Féin has a positive vision for this society and economy. We would get rid of bad and unfair austerity taxes like water charges and the family home tax. The most radical action we would take is to keep our promises. Nobody likes paying tax but we are not afraid of saying that those who can should pay some more. We think it is right to tax those individuals earning over €100,000, particularly when the top 1% owns 12% of the wealth of the State. We also think promising a tax cut and a pay rise for the Taoiseach and other politicians on the same day that 368 people are lying on trolleys in our hospitals is wrong.
The whole set-up today is based on dishonesty. The dishonest notion this Government has a mandate is the principle one. It has long since lost the trust of the people. The other great dishonesty of the day is the notion that austerity worked. The third one is that we all made sacrifices. Let us be original and actually examine the facts. Let us judge it by the Government’s own predictions on coming to power. It has met none of the claims it made for itself on coming to office. In the stability programme update in April 2011, it stated the economy would grow by 8.7% from 2012 to 2014. In fact, the total growth over that time has been little more than half of that at 4.7%. This is because the Government’ policies slowed the economy and even caused a double-dip recession. Personal spending is still 7% below where it was at the beginning of 2008. It has not even recovered to the point it was at when Fine Gael and Labour took office in 2011.
Austerity has failed. Maybe not for all the friends of Fine Gael, including big donors in the past, as we have seen recently, but for the vast majority of people austerity has been a nightmare and a useless waste of years. We have seen falling incomes for most families. Many people in work find themselves poorer. Household incomes fell after this Government took office. Benefits have been cut - everything from support for single parents to respite care for carers. Austerity has ravaged our public services and has hollowed out public investment. Nearly all of our public services and public investment have been cut.
GDP growth has only benefited a few so far. This is because both Government policy and the recovery are only for the few. GDP growth, such as it is, is not being shared around, it is passing most people by. It is a one-sided recovery, benefiting only some parts and some people. Seven years after the economy reached a peak, it was still, at the end of 2014, more than 3% below that level. The economy is only convalescing and has not fully recovered. For most people it has not even got that far.
This is the truth behind the Government’s talk of recovery for the last number of years. The truth is that every downturn ends and every recession bottoms out. The question is did the Government policies of the time deepen, lengthen and inflict pain on citizens that they could have done without? The answer is clear from the facts. The Government caused a double-dip recession after it took office in 2011 and prolonged the crisis. The Government said the recovery is fair, but the growth in GDP is almost entirely from the overseas sector, net exports or net financial flows from overseas.
It is widely accepted that these involve a large element of financial chicanery and accounting practises that are designed to avail of very low taxation rates. I am not saying all of it, but much of it has little to do with the real economy in Ireland. The CSO has been talking about contract manufacturing which bumped up GDP growth in 2014. I am sure the Minister will not deny those facts.
Austerity began under Fianna Fáil at the beginning of 2010. They were the architects. At that time, total general government quarterly expenditure was €29.2 billion in Q1 of 2010. By Q4 of 2014, however, it had fallen to €19.6 billion, a fall of nearly €10 billion. All of this and more is accounted for by an €11.3 billion fall in capital transfers at the same time. This is just stopping more bailout money going to the banks. That is why expenditure decreased. All the rest of the cuts, which were severe, did not add up to the savings, just as we warned. This is because cuts are not savings. They lead to slower growth and increased poverty, which puts pressure on different areas of Government spending.
In days to come we will no doubt hear about the Government’s commitment to investment but this is guff from a Government whose sole area of expenditure that it did manage to cut was investment. In 2010, under the Fianna Fáil-led Government, public investment was cut to €5.6 billion, but the current Government went further. By 2014, Fine Gael and Labour had slashed public investment to just €3.5 billion. They still have no investment plan, as the Minister for Finance, Deputy Noonan, recently confirmed to me.
Does anyone seriously suggest that cutting investment is the road to recovery? Ireland does not have too many flood defence systems, too many great public health facilities or too many ultra-modern schools. We will all pay in the long run for this fiscal vandalism, dressed up as fiscal rectitude. Of course, the Government parties and Fianna Fáil see no problem with this. That is because their policies represent the interests of the few, not of the many.
All the austerity parties claim there is no alternative to austerity. They always claimed that, but they have been proved wrong. Sinn Féin has consistently argued that there is an alternative to these policies. Today we heard that action will be taken on mortgage arrears and interest rates. Is this from the same Government that must have quoted a thousand times by now that there is a memorandum of understanding and that it cannot interfere with the banks? Is this from the same Government that voted down my Bill to protect the family home, which could have gone some way towards preventing the tsunami of repossession proceedings? Is this from the same Government that allowed the mortgage crisis to double in the first two years of its term?
We hear the Government is going to lay down the line with the banks on interest rates. Are we supposed to take this seriously? How many times have the Taoiseach and the Minister for Finance told us they were powerless? How many times have we - not for months, but for years - asked the Minister to call in the banks concerning unsustainable mortgage debt and variable interest rates? Yet we will have action now, as there is the smell of an election in the air.
As a republican party, we stand for equality. The burden of the crisis should have fallen on those who caused it and could afford to bear it. We know this Government waited barely weeks before throwing out its promise to burn the bondholders. It caved in, just like Fianna Fáil before, to the ECB and not for the last time. Let us be clear that Sinn Féin’s way is definitely not Frankfurt’s way. Sinn Féin has a vision whereby banks owned by the people are not facilitated in evicting families and are not allowed to dictate government policy. Under Fine Gael and Labour, the banks own the people. Sinn Féin would say “No way” to banks that are trying to rip off homeowners and evict them in order to fatten up their own accounts.
The recovery could be broad-based and could benefit everyone. If policies are changed, it still can be fair and can be broad-based. We can build a country that works for all of its citizens. We have an alternative. We have said that all priorities in the past should have been different. We have called for investment in our future and protection for the hardest hit. The policy of Fianna Fáil, Fine Gael and Labour was that no bondholders would be left behind. Even now, KPMG is preparing to pay out, on behalf of the people, hundreds of millions of euro to junior bondholders and vultures at IBRC. That is the legacy of this Government's banking policy.
A recovery should mean more gardaí in Garda stations, more nurses in our hospitals, and more teachers for our children. Not teachers on JobBridge schemes, but young teachers who are paid. The improvement in the Government's finances should be used to support a real recovery. It should be a recovery that benefits the majority, not a giveaway that benefits those who are best off. We need to invest in our shared future. Building affordable homes is an acute necessity in many areas. It creates decent, well paid jobs and new homes generate income for the Government that can be used for reinvestment purposes.
Today's debate is really about a Government trying to get re-elected by promising the moon and stars in its nod-and-wink fashion, having stolen the shirt off people’s backs. The Fianna Fáil Party is trying out a new policy because the Government stole its old ones. It should be about laying out a vision of a sustainable and fair recovery as we approach the centenary of the Rising. That is the debate Sinn Féin wants and is ready for. We challenge the logic that the way to create jobs is to cut taxes. Any investment creates jobs. Investment in the real economy creates sustainable jobs. The Minister estimates that a fiscal giveaway of €1.2 billion to €1.5 billion for four years would create 20,000 jobs. This is between €4.8 billion and €6 billion in total. These must be some of the highest paid jobs in the world. It would be far better to invest in creating high quality jobs in the real economy.
We heard today that the marginal tax rate must come down to attract our young emigrants back home. Is this a joke? Does the Government think that 80,000 people are leaving this State every year because the marginal tax rate was too high? Is this what the trauma of emigration has been reduced to? What we have heard today is tax-cutting McCreevy-style, but with less logic and delivered in a Limerick accent. It is a reckless hollowing of our tax base just as we begin to grow. It is a poke in the eye for anybody who believes in a strong, sustainable economic model based on more than certain industries doing well.
Fine Gael and Labour are Fianna Fáil in reverse. Let me explain that. First, they gave us austerity which damaged the economy, kicking it when it was down. Then they stoked up property prices in Dublin and other parts of the country, and now they have moved on to dangling tax cuts.
That is exactly what Fianna Fáil did but just in reverse. It is an attempt to bribe the people with their own money but it repeats all of the stupid mistakes of the previous Government.
Let us be clear. We need better schools, better roads, more affordable homes and affordable child care. We need to invest in the economy so that our children have a better future than we did. That is Sinn Féin's pledge. Instead, we are promised tax cuts and if we are to base them on budget 2015, as the Minister said, we know that they will benefit the better off. This Government is making the same errors Fianna Fáil made. It is a return to boom and bust but this boom will pass most people by, and tax cuts which mainly benefit the better off will not provide the homes, the schools, the bus services and the child care we need. The Government's tax policy has moved the burden from those who can afford to pay it onto the shoulders of those who cannot afford to pay any more. That is the opposite of what is needed.
The record of this Government shows that its tax cuts always mainly benefit the rich more than anybody else. It is not interested in our children's future. For it, long-term economic management is getting as far as the next election because it will not be around when the next generation is suffering the consequences of its decisions. Now that the public finances show €1.5 billion available for reinvestment it acts like a drunken sailor on leave. It is burning a hole in its pocket, but it belongs to the people of Ireland. It could be used to benefit the whole of society. At least the priority should be to protect the poorest and to ensure that low and middle income earners get something back, but the Government's tax measures will do nothing of the kind. If someone is on €500 a week or €5,000 a week and the marginal rate is cut by 1%, guess who is better off? The Ministers say they are helping the middle earners but the reality is that their policies always end up benefiting the richest the most. If any of that sounds familiar it is because it is familiar. It is the policies of Fianna Fáil dressed up as something different. It is tax cuts for the better off, too little investment and stoking up a property boom that passes most people by, and we know what happens next - a bust. This is the politics of failure. It is boom and bust: the sequel.
However, there is an alternative, and Sinn Féin is the party that wants to lead the entire nation to a better society. Our pledge is to protect the poorest, the most disadvantaged and those whose aim is to get a better life for themselves and their loved ones. These people will never benefit from rising prices in penthouse apartments. We also pledge to use the improvements in Government finances to build for the future, and to build a fair recovery now, but that means investing in our future, not tax cutting our way to another boom and bust as Fine Gael and Labour propose.
There is an alternative to these policies. We have argued that fairness is the key. This is not a fair recovery, as we have seen today. The Government and Fianna Fáil do not believe in fairness. The proof of the pudding is in the eating. They believe in congratulating themselves for failure dressed up as success. People have been sacrificed rather than having made sacrifices but we will put money back into people's pockets the fair way by scrapping water charges, ending the family home tax and removing those on the minimum wage from the universal social charge, USC, tax net.
Politics is about choices. The choice now is whether to invest in public services so that our young people, those with disabilities and others have the same rights as others, our older people have the right to a bed and not a hospital trolley, those on the housing waiting list have a right to a house, and those in mortgage distress have a right to live in their homes. That is the option the Ministers opposite have, or they can choose their option of tax cuts because an election is coming.
Sinn Féin is committed to the former. We are committed to hiring more nurses, more midwives, more resource teachers and more special needs assistants immediately. That is the choice we would make. A fair recovery is possible. We can invest in the future. We can have a fair recovery. We can build an Ireland for all its citizens but, unfortunately, that is not possible under Fine Gael and Labour. They were unfair in the recession and their plan for the recovery is unfair because they do not have it in them. They do not understand the word and the reason I know that is because we, and the Irish people, have lived under four years of their unfairness and austerity.
Today's spring economic statement was billed, among much fanfare, as a roadmap to the great recovery, drawing a line under this Government's devastating cutbacks and austerity and marking an end to what the Minister, Deputy Noonan, describes as the lost decade. They are grandiose claims that have amounted to nothing. There is nothing new whatsoever in them - no change in thinking or direction, no real commitment to rebuild society and the economy in the aftermath of catastrophic hardship for so many people, and no real understanding of where things are at for hundreds of thousands of families and workers who are really struggling and are at their wits' end.
Listening to both Ministers, Deputies Noonan and Howlin, brings to mind the great Irish writer Jonathan Swift, who once observed that blessed are those who expect nothing for they shall never be disappointed. Bravo to that. It just goes to show one today.
Most people were not taken in by the Ministers' hype, certainly not the people I represent, but for those who were perhaps gullible enough to believe the Government guff of recent weeks about increasing people's standard of living and bringing relief to low and middle income families, that bubble has been well and truly burst here this afternoon. Today, the Ministers have clarified again the position of this Fine Gael and Labour Government. It is progress for those at the top and patronising tokenism for the rest.
I am sure people were relieved to learn that the Minister, Deputy Noonan, is greatly encouraged by the data flow over the past year or so. I would think people were very concerned to hear him assert that the recovery is, to his mind, broadly based. I do not know the circles in which the Minister mixes. I do not know the people he talks to in the course of his political duties but I want to tell him, unequivocally, that a recovery has not reached the homes, the livelihood or the pockets of countless thousands of people across this State. If he has a difficulty in believing that he is more than welcome to visit the north inner city of Dublin or my home neighbourhood of Cabra where he will meet no end of people who will him that very directly.
Where is the big initiative, the game changer, for the low paid or for the squeezed middle about whom the Minister claims to be so concerned? Having starved public services of funding and staff, taxed working people into poverty, driven hundreds of thousands of our best and brightest to emigration and stood idly by in the face of homelessness, mortgage distress and eviction orders he comes in here today looking for brownie points. As he now limbers up for a tilt at re-election, for what is he hoping? A pat on the back or an expression of gratitude perhaps from the very people who have borne the brunt of his failed Government?
Today’s rhetoric from the Ministers is very familiar. There is a real sense of déjà vu. They have the neck to rehearse again the same tired rhetoric that marked their 2011 election campaign. They replayed the charade that they care about fairness or a decent society as the Minister, Deputy Howlin, loftily announces to the Chamber that an economy is not society, and vice versa. They used this Dáil Chamber to spell out again their empty, meaningless promises but, after all, that is what Labour and Fine Gael do in elections. Do they imagine for a second that people cannot see through them? They are fooling no one but themselves.
It is fitting that the backdrop to today’s statement is the ongoing controversy surrounding Siteserv and other IBRC transactions.
As the Government crows about its great reforms and introduces a new concept of national economic dialogue, we are faced again with depressingly familiar questions around the insiders of Irish society. The Ministers opposite know who I mean - the people in the know; what I call "the entitled classes".
They are the people for whom write-offs, tax breaks and even tax amnesties are always possible. The refusal by the Minister for Finance to have the very serious issues surrounding Siteserv and all IBRC transactions, including NAMA transactions, independently investigated by a commission of investigation makes nonsense of any claims he makes to political reform. The truth is that he has no interest in reform. He is committed to the status quo and to business as usual. Labour and Fine Gael are parties entrenched in defence of the status quo. That is why for the past four years they have implemented Fianna Fáil style punishment on working people. That is why they absolutely refuse to confront the rampant cronyism that still plagues our political system. If the Government believes it is a reforming one, it is deluded. Over the last four years, the Government has reinforced the strongly held view across Irish society that there are two classes of citizens, the insiders and the rest. There are the ones who are to be protected and enriched and the rest; the haves and the have nots. It is hardly the stuff of the democratic revolution the Government promised.
Today was the Government's opportunity to spell out and commit to a fair recovery. It should have abolished water charges. It should have abolished the tax on the family home. It did neither. It missed the chance to put €800 million back into the pockets of families to give real and immediate relief to low and middle income people across the country. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, may throw his eyes to heaven, but that is the reality.
All of this is happening on the Government's watch. This is the Government's policy in action. Meanwhile and without regard to ability to pay, citizens are to be charged for their water, which is a basic human necessity and right. This is the Government's policy in action. There are 110,366 households in mortgage distress and at any given time an average 5,000 people and families are homeless. As at January 2015, over 7,000 civil bills for repossession have been lodged in the 26 circuit courts across the State and we are told that repossessions could reach as high as 25,000 this year. This is all on the watch of Fine Gael and Labour and it is their policy in action.
The pattern of utter contempt for struggling families is unmistakable. What makes it worse is that the parties almost wear it as a badge of honour. People's inability to pay these taxes is trumped only by the Government's inability to listen and a more fundamental inability or unwillingness to understand the realities of people's lives.
We are in the grip of a housing crisis, but one would certainly not guess it from the spring economic statement. We have no real indication of the Government getting to grips with the huge levels of homelessness, housing waiting lists and mortgage distress. We have no promise of rent controls and no real measures to bring the banks to heel to ensure that struggling mortgage holders will not lose the roofs over their heads. It is not sufficient to say that the Minister for Finance will call in the bankers for a chat. None of us believes it would be anything more than a chat with those individuals. Four years into government, Fine Gael and Labour have spectacularly failed to assert the interests of citizens against the banks that those same citizens bailed out. The veto contained in the legislation of 2012 must be removed. Why did the Minister for Finance not make a commitment today to revisit that legislation and balance the relationship between mortgage holders and bankers?
The Minister for Public Expenditure and Reform made one reference to health and it seemed to be a statement that indicates more of the same. There is a holding position in respect of health. One would never guess that our health services were stretched and under pressure. With the shortage of hospital staff and the crisis in accident and emergency, there are currently 405,000 people on waiting lists to be seen in outpatient clinics. The Government has failed to make headway in reducing waiting lists and waiting times. January 2015 saw record numbers of people on trolleys in our hospitals, standing at one stage at over 600 for the first time. Despite promises to end the scandal of patients on trolleys, there is no sign of this problem being resolved. On the Government's watch, our public health system's workforce has shrunk by 11,000 whole time equivalent staff. According to Dr. Stephen Thomas of TCD's Centre of Health Policy and Management, the State had seen the "biggest proportionate drop in healthcare across Europe". He says we have lost almost 20% of our funding and 11% to 12% of staff.
What is the Government's response and what indications do we glean from today's statement? It is precious little bar a muted response. There is a commitment, if one can classify it as such, to do no more than continue what has gone before. It is disappointing and worrying. There was no reference to prescription charges and one would never imagine there was an issue with them. Do the Ministers remember promising to abolish prescription charges for medical card holders? Far from being abolished, the charges increased from 50 cent per item to a staggering €2.50 per item, which hurt the poorest and sickest of our citizens and caused real hardship for senior citizens in particular. The gentlemen opposite may smirk, but these are the issues and measures against which citizens will judge whether or not there is a recovery in the air and whether they are to be invited to the table to participate in it. It would have matched the gentlemen better rather than smirking at me to have given some consideration to that fact and to the expectation they created through the media among the general public that today we would hear and establish what the Government's version of the recovery might look like.
There was nothing of any great import said by the Minister for Public Expenditure and Reform on education. Our primary school classrooms are among the most overcrowded in the EU. More than 125,000 pupils are in classes of 30 or more, which is a very large class size.
The Minister's cuts in special education and the utterly disgraceful 15% cut to resource teaching hours for children with special needs - does the Minister remember that cut? - have really damaged the educational opportunities for so many of our young children.
Today, the Minister could have announced or indicated a reversal of these cuts. If the Minister was committed to a real and fair recovery, that is precisely what he would have done. He might also have indicated the reinstatement of dedicated supports for Traveller children and non-English speaking children. Does the Minister remember that he abolished those supports in their entirety? The Government broke the Labour Party promises to third level students not to increase fees. In addition, the capitation grants for third level students and those in further education were cut.
The big claim of this Government, and the Minister, Deputy Howlin, repeated it again today, is that it protected social welfare entitlements. That is simply not true. Child benefit was cut. Young people’s jobseeker's allowance was cut. The invalidity pension was cut. Most shocking and cruel, the respite care grant was cut by €325. The Government intends to carry on true to form. Come July, in excess of 30,000 single parent families will no longer qualify for one-parent family payments. These families will experience a real cut in their living income.
The Tánaiste, who introduced these cuts, promised that no change for single parents would come into place until such time as "safe, affordable and accessible child care is in place, similar to what is found in the Scandinavian countries". She went further, pledging,"If this is not forthcoming, the measure will not proceed." In case the Ministers have not noticed, there is no such child care provision in this State. Yet the Tánaiste, Deputy Joan Burton, is hell bent on introducing this cut anyway. Why has the Government not abolished this measure? Will there be a dividend for single parent families? Are they not worthy of protection? Is the Tánaiste not prepared to keep her word?
We have a real crisis in this State as regards low pay. According to the OECD, this State has the second highest levels of low pay, just behind the United States of America. The Government's approach to tackling this epidemic is both timid and limited. The Low Pay Commission is welcome but its remit, as we in Sinn Féin have argued, is far too restrictive. A Government with a plan for a fair and real recovery would task this commission with dealing with low pay in all its dimensions. It would task the commission with moving in a planned way to establishing a living wage at a decent threshold for all workers. Instead the Government has limited and restricted its terms of consideration to the minimum wage, which is a big mistake and which sums up the Government's minimalist view of what low income families and workers, in particular, can expect or are due in its grand new era of economic recovery.
There has been a lot of speculation about the restoration of public sector pay and the "unwinding", as the Minister terms it, of the emergency FEMPI legislation. Workers in the public sector have taken a substantial hit in their income and there is no doubt that many of them are in real hardship. It is wrong to imagine that all public servants or civil servants are in overpaid, cushy numbers. That is far from the truth. It is equally true to say that there are some in the upper echelons of the public and civil service who have traditionally been overpaid. The crucial point about reinstating public pay and people's take home pay is that we must start at the bottom. We must start with those workers, some of whom receive family income supplement because they exist on poverty wages. These are State employees and yet they are so badly paid.
The Minister has previously indicated that he envisages such pay increases in percentage terms. I suggest that this might not be the most effective way to target the reliefs and benefits at the lowest paid. What would certainly be totally unacceptable is any suggestion that the high paid, dare I say overpaid, minority at the top should receive any pay increase. I include in that the Taoiseach, the Tánaiste, Ministers, Deputies and Senators. There can be no question of pay increases for elected officials while the Government persists with its agenda of cuts and while we still have the utterly scandalous level of poverty wages in the public and private sectors.
The Minister for Finance, Deputy Noonan, made some pretty outlandish commitments on job creation when he spoke earlier. He committed to pass the 2 million people in employment mark next year and to replace all of the jobs lost during the downturn by 2018. He is making the assumption that the Government will be in office to do so. In total, between 2015 and 2020, the Minister committed to adding 200,000 new jobs. That does not tally with this Government's record to date. Some 69,300 net new jobs have been created over the past four years. Some 26,900 of these were created in 2014. Bearing in mind those figures, Fine Gael and the Labour Party would have to improve its record in job creation annually by 50% to meet those targets as announced. On the basis of their previous track record, that does not look hopeful.
I am also disappointed to see a marked lack of ambition in respect of job creation via the IDA and Enterprise Ireland. Their results have not been spectacular; rather, they have been extremely underwhelming. For a Government that states repeatedly that it puts work and the opportunity to work at the heart of its agenda and the recovery, this is most alarming.
Is é seo an focal deireanach a bheidh agam. The Minister, Deputy Howlin, states that the Government has governed fairly and in the interests of the people. I suggest to the Minister that when the time comes to go to the people, he may find, in fact I believe he will find, that the people do not regard this Government's period of governance in that benign light.
On a point of order, we have a situation yet again where the Minister for Finance and the Minister for Public Expenditure and Reform leave the Chamber before the Technical Group has a chance to respond. It is the utmost disrespect to this group of Deputies that the two Ministers leave every time they get to speak.
I have not made my point. This happened at the time of the budget. It is happening again today. It is disrespectful and I am asking that it be resolved. I ask that the Chair, through the Office of the Ceann Comhairle, resolve this matter once and for all.
I thank Deputy Mac Lochlainn for making that point. It is one we make during every budget and the situation is very insulting. I accept some of the things which were said in the spring statement. I accept that there is growth in the economy, and that is welcome. I accept that there are more people at work, and that is very welcome, but I question the quality of some of those jobs, including some of the public service jobs.
We all want to have hope for the future, but the economy has been stabilised at the expense of society.
The elephant in the room is the debt. That we are servicing a debt that is the equivalent of the entire education system is delaying the prospect of a recovery, one that is not just of the economy, but of our society. By "at the expense of society", I mean that various groups have been targeted in recent years: carers, students, lone parents in particular and some medical card holders. We have a new class of homelessness. This is damaging.
Everyone has been hit. The universal social charge, USC, which was introduced under the previous Government, the property tax and water charges have hit people's pockets. Equally damaging is the fact that we have failed to seize the once-in-a-generation opportunity to change fundamentally how we govern ourselves. In much of the public service reform, "reform" became code for "cuts". Our political reform was only superficial.
We must be ambitious about what kind of society we want for the future. We are a great country, but we are not great because of our politics or institutions. We are great because of the people and despite some of those institutions. We must change that situation and transform this country. There is a desire for this type of transformation.
The longer term vision requires us to grasp some issues that have not been adequately addressed. The Minister, Deputy Howlin, referred to not considering the economy in isolation, but in the wider global context. This is why I sought a debt conference. It is necessary. Consider the levels of debt in Italy, France, Belgium and even Germany.
We need a fiscal expansion into key areas if we are to build a better country and society. We need to take a longer term approach, one that cannot be about an electoral cycle. We need to see investment in, for example, retrofitting homes if we are to escape paying large amounts of hard cash under our climate change obligations. There must be investment in public transport and cities and towns must function in a way that is not wasteful of time and energy. Compared with many western European countries, some of which are our competitors, we are still in the ha'penny place in terms of broadband. This impacts on the economy.
We must invest in water, but what has happened to date has been wasteful. For example, there is a 25% leakage rate in Kildare. Using an educated guess, the centre of Dublin, Cork or possibly Limerick is where one will find leaks. One does not need meters to know this. One needs to find out how old the pipes are and put meters on either end of them. The Government did not go about this in a way that would get to the core of the problem.
I have often acknowledged that the Government inherited many of these problems, but we are not challenging the consensus among the big guys. We are seeing it again and again. That the big guys are being dealt with differently than people with mortgages or indebted small companies that are being chased around by banks is getting to people.
The Minister, Deputy Noonan, stated that what happened must never happen again and that the Government could not get back the €34 billion put into Anglo Irish Bank, but the Government did not ask for it. It is criminal that people are still paying for it. It is as if we took on the mortgage of the big house up the road, subsequently restructured it and were singing the restructuring's praises because we no longer had to pay as much as we believed we would. This is the spin, but we are still paying every penny of it as well as the interest. In response to a parliamentary question, the Minister told me: "The schedule for extinguishing the balance will be €500 million in 2015, 2016, 2017 and 2018." On 23 December, the first €500 million was borrowed and burned. He continued: "That will rise to €1 billion in 2019, 2020, 2021, 2022 and 2023. It will double again to €2 billion" per year from 2024 onwards until it is paid, which looks to be in 2034.
I am coming to a point about the relationship between this and that awful night when we turned the IOU into a sovereign bond. We have no way of knowing what the relationship was between IBRC and the Department of Finance on that night. In the Chamber, the Minister talked in glowing terms about IBRC's board and chief executive and IBRC was only being wound down so quickly for one reason. However, we were not told what the relationship was. This issue needs to be addressed in the House. Why was there a sudden urgency to liquidate IBRC? Was there even a relationship? Not even the senior management knew. Remember how Mr. Alan Dukes was told that afternoon; we saw it on Twitter. The question of the relationship is important. Many issues like that arise. According to Mr. John Moran's diary, he met Mr. Mike Aynsley on 1 and 2 August, but there are no notes from that high level meeting. How could it be that two days of meetings were held between the most senior people in the Department of Finance and IBRC and not even one note was kept?
Turning again to the big guys as opposed to the small guys, Mr. Denis O'Brien owed IBRC millions of euro. If he had a spare €45 million lying around, why was he not asked to use it to pay down his borrowings instead of using it to purchase a company that we have been told was a bit of a basket case? Why would the bank allow someone in such debt to use €45 million to expose himself further or did he know that Siteserv would quickly turn into something profitable?
The inquiry by KPMG relates to this debate. If we are to have hope for the future, we need to do things differently in terms of governance. We cannot ask the same people who were part of a deal to review that deal. It will not wash. The public knows this. I took great offence when the Taoiseach yesterday spoke about the accuracy of some of my questions and how they were written. It was beneath him and his office. He should correct that statement. There was nothing wrong with the questions I posed. What was wrong was that I was not getting answers. They had to be pulled out like hens' teeth. This is unacceptable.
I am concerned by section 31(2)(b) of the Freedom of Information Act 2014. Under it, where a member of the Judiciary is involved in a review or inquiry, freedom of information requests are out of bounds.
It is important that this issue is not just pushed off into the future and buried until 31 August, right bang in the middle of the silly season.
I am very hopeful about this country. The claim has been made on many occasions from the Government benches that those of us on this side of the House show no evidence of having hope. In fact, we do have hope, but we may well have a different vision for the type of Ireland we want to create. This is an opportunity to acknowledge that we should not dismiss things that are positive. Indeed, both of the Ministers, Deputies Richard Bruton and Simon Coveney, who are in the Chamber have been very much at the heart of driving some of the positive improvement we have seen. It is only fair that we acknowledge that. However, we should not be codding ourselves about any of the issues or tolerating spin; our discussions must be real. The Government would do well to remember that the public is wide awake and engaged with all of this.
I thank the Government for introducing me to a brand new emotion, which is a kind of combination of, on the one hand, being incredibly underwhelmed and, at the same time, offended by the fanfare that is scheduled for this week. That fanfare displays an arrogance that is becoming increasingly a hallmark of this Government. While it has scheduled yet another backslappers' convention for us to have to endure, real issues that were touched on this morning, such as the scandal of Siteserv, goings-on at IBRC, the contract for installing water meters, the list of private bodies benefiting from those contracts and the whole Irish Water diaspora debacle, are ignored. It is head-spinning stuff. All the big names are there, including KPMG, Arthur Cox, the Davy Group, Ernst & Young, Denis O'Brien and the usual roll-out of consultants, advisers and middle men. We are not being given a chance to discuss any of that. Even the Government's own backbenchers are embarrassed by what is happening today. In fact, none of them has been present for the jamboree. It seems even they are a bit scarlet to have to sit through it. This whole thing really exposes how utterly out of touch the Government is with the real lives of citizens.
I will bring Ministers back to earth by reading a letter I received last weekend from a person in Cavan. He wrote:
Hi Clare,This citizen has made a more articulate contribution than anything I have heard from the Government benches today, and how right he is about the type of Ireland the Government is standing over. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, had the brass neck to come in here today and allude to vague efforts that will allow us to build a society that reflects our values, one that is fair, caring and decent. He talked about how a functioning society is a fair one, where the fruits of economic growth are shared among all the people. He is certainly right there, but let us use this as the yardstick against which the Government's achievements may be measured. Look at the type of society it is building. The Sunday Timesrich list published at the weekend claims Ireland is home to 13 billionaires with an accumulated wealth of €38 billion. The wealthiest 250 people have a total net wealth of €75 billion, a wealth on which the Government does not charge a cent of extra taxation.
Just to keep you up to touch with things, I'm starting back to work again after three years of really tough times. I have spent €6,000 of my own money trying to retrain and get back to work. I received no assistance from the system. Absolutely soul-destroying stuff. Three weeks ago I became a member of a very special group, the group that comes under the title of ghosters. Now, the ghosters are the group of citizens that have reached the point where the welfare system says "No more, your wife is working, so you don't qualify for any payment at all." For the first time in 43 years, I had no income whatsoever. That's a situation I never, ever want to be in again, nor did I in the first place. The sense of embarrassment, shame and complete loss of self-esteem is indescribable. I never thought, even after being made redundant three years ago, that I'd be out for so long. I really believed that I'd be back at work in a couple of months at most, but that wasn't to be. The rest, as they say, is history.
Two weeks ago, I was standing on a bridge here in Ballyconnell looking into a very fast-flowing river and deciding if I'd end it. Two things prevented that from happening. Number one, I looked in and I asked who'd feed my dog. Number two, I want to see Enda Kenny and co. get their comeuppance. In fact, I want to play my part in it. My vote counts. I count, somewhere in the overall picture of things. Now isn't that scary? But the real scary thing is that there are thousands more like me. They need help, real help, not just a lip service from some pompous git in a suit, shirt and tie telling them that we are in recovery. Recovery for whom? The Denis O'Briens of this world? Greed-motivated buggers who care only for the quick buck at everybody's expense?
The myth Ministers are putting out there, that we have all put our shoulders to the wheel and brazened out this austerity bravely together is nothing but an utter fallacy. It is absolutely not true. The Government has seized on the economic crisis to stand over a counter revolution, a transfer of wealth from ordinary people and those in the middle to those at the top. The statistics prove it, with a wealth increase to that top group of almost 16%. These are people like Denis O'Brien, the Weston family, who own Penneys and Brown Thomas, the Dunnes family, renowned for its great labour practices, and so on and so forth. The country's wealthiest people are immensely more wealthy thanks to the governance of this Administration.
All I can say to that is, "Good job, Fine Gael". The people it has prioritised are generally the people who vote for the party. It has looked after its own. However, the charlatans in the Labour Party, none of whom could even be bothered to sit in this Chamber today - perhaps the embarrassment has got to them - are an entirely different matter. They have facilitated a race to the bottom, where the idea of a secure, permanent and pensionable job is a fallacy for most people. The doctors, nurses and gardaí who though they were part of the middle classes are in jobs with a starting rate of €24,000. If they marry one of their colleagues, they will not be able to buy a house in today's market and probably will not afford to rent one. Half the population is on an income of less than €27,000. The question we should be asking is not whether we can patch this up a little bit and throw a few extra bob back at the wealthy but, rather, what type of society do we really want to live in. Going by the vague nothingness that was dished up the Ministers, Deputies Noonan and Howlin, today, the answer the Government has given to that question is that it pretty much wants things to continue as they are. That is really the height of its vision, and it is a shocking disappointment to citizens.
As other Deputies noted, the fabric of our society is unravelling. There are people behind respectable doors who do not have enough money to put food on the table and are worried sick that their children will come home and ask for a few bob for a school tour. There are people becoming homeless who are in employment. There are people in public sector jobs who are getting supplements from the Government. There is a homeless crisis the like of which we never saw, but the Government's responses are actually making the situation worse. When Jonathan Corrie tragically died before Christmas, the Minister for the Environment, Community and Local Government, in a knee-jerk reaction, announced that half the houses the local authorities have must be allocated to the homeless. This means that in Fingal, for example, 50% of the houses have to be given to 0.6% of the population on the list. The problem, of course, is that there are no houses there. Staff on the front line are experiencing a massive rise in the number of people who are homeless and they do not have the resources to deal with it.
We have a Government that includes the Labour Party which wants to frog-march people into compulsory private health insurance. People have paid PRSI for decades to get access to a health service, but the Government wants to force them into a privatised system. It is absolutely horrendous. I have no doubt that when it comes to October, Ministers will puff out their chests and tell us they are putting more money into the health service. Well, yippie, yuppie and yahooey. Where is that money going? The scandals being exposed inside the HSE are nothing short of scandalous. Care packages for vulnerable adults are costing the State between €450,000 and €500,000 a year from an outsourced provider that is not being regulated by anybody. Let us face it, the Government has done very well by the middle men.
All the middle men, through the contracting of all those outsourced companies to deliver public services, are being enriched by the Government at the expense of front-line staff.
We have an education system and if the Government has a few extra bob to play around with, surely to God if it wanted to build a better society it would start with our young people. Surely it would start investing in young people as the hallmark of a better type of world, yet the INTO has been forced to run a campaign to increase the capitation levels in our primary schools. The rate is €8 per capitavis-à-vis€11 per capita at second level and €16 per capitaat third level. That must be reversed. We must deal with the crisis in our classroom sizes if we are serious about educating our young people.
I believe that citizens are happy to pay tax, if they get good public services in return, but we should be going after those at the top to get them to pay more. If the corporations even paid the paltry level of corporation tax that we level them with, we would have billions of euro more to seriously invest in proper infrastructural programmes that would deal with our water supply and provide a proper comprehensive transport system that would begin to tackle issues such as climate change, but instead those in government are happy to tinker around the edges, throw a few bob in enough ways in the hope that they will get back in here again so that they can carry on regardless.
People say that those in government have done nothing but I do not agree with that. They have done the nation a great service in one way. They have advanced the political education of our citizens beyond anything every seen before. The citizens voted in their hundreds of thousands for something different. They knew they had been betrayed by Fianna Fáil and the Green Party and they thought that the Government parties would be different, but now they know that is not the case. Those in government have taught them that they cannot rely on the people in here and that the only power they have is that of self-organisation, of taking matters into their own hands and trying to control their own destiny. That is the movement those in government have singlehandedly unleashed through its clumsy and appalling handling of the Irish Water debacle. They have not learned the lessons from that and they will pay a very heavy price for that in the next election which will probably be after their next backslapping exercise in October if they last that long.
I thank Deputy Mac Lochlainn for pointing out the Government's quite deliberate and studied contempt for the Technical Group but I take heart from the fact that the senior Ministers felt the need to walk out of the Chamber. It brought to mind the motto of a great American journalist of Irish descent, Finlay Peter Dunne, also known as Mr. Dooley, and about whom James Joyce wrote poems, who was a political satirist in the 1930s in the United States. His motto was that our job is "to comfort the afflicted and to afflict the comfortable". When the senior Ministers walked out before we were due to speak it was precisely because they knew we would afflict the comfortable and they did not want to hear it. They do not want to acknowledge the points or give them respect but, to some extent, that, at least, is a testament to the impact of the points and arguments we are making on this side of House.
I want to point to one positive aspect of the spring statement. They has been a lot of waffle, as there often is in political and media debate, about the timing of this. I believe a spring statement is quite a good idea. It is quite useful to begin the budget debate early and to set out perspectives in order that we can debate them in the run in to the budget. My problem is not with the timing but with the substance of the spring statement and the rather nauseating tone of self-congratulation and triumphalism that has accompanied it. What we are really witnessing is a barrage of propaganda, aimed at constructing a mirage of economic recovery in the run in to the election that belies the obscene increase in the level of poverty and deprivation in Irish society; the fact that the recovery in employment is based on a further race to the bottom in terms of pay and conditions for tens of thousands of workers in this country; an unprecedented housing and homelessness crisis that is bordering on the catastrophic; a disastrous situation in our public health system; the worst student-staff ratios in education anywhere in the European Union; and a disastrous collapse in investment in some of the key infrastructure that we need to have a genuine and sustainable economy and recovery.
One claim that I find ludicrous, and to which the Minister, Deputy Noonan, referred on a number of occasions in his statement, is that all of this and the policies being pursued and promised by the Government are moving us away from boom-bust economics, which we all want, but, ironically, it is doing exactly the opposite. The Government has singlehandedly and quite incredibly stoked up another property bubble within a few short years of the last property bubble that crashed the economy and beggared the nation. It is quite an achievement that following the previous Government having brought the economy and society to its knees by letting profiteers in property and in the banking industry off the leash and creating a property bubble this Government has managed to start the same process again within a few short years of that economic collapse. That is a remarkable achievement, but it is very frightening and worrying. The Government is putting in place precisely the ingredients that led to the last bubble and to boom-bust economics. It is congratulating itself on handing back the parts of the economy that we were forced to bail out to the very people who caused the crisis in the first place. The banks that we bailed out are now being sold off and handed back. We took all the pain of bailing them out. When we bailed them out we exercised no control whatsoever over what they had done in recent years and as soon as they start to make money again, we will hand them back to the very same people who crashed the economy, recreating the conditions for the collapse.
Similarly, we have the Siteserv scandal and what that opens up into, namely, the much bigger scandal of the same process happening in terms of the handing over of the assets of these banks that we bailed out back to the golden circle who helped crash the economy in the first place. It beggars belief. I do not know whether brown envelopes went back and forth or the exact nature of the relationship that led Denis O'Brien to get, between Siteserv, Topaz, the Beacon and Independent Newspapers, €450 million of debt written off by IBRC, Allied Irish Bank and Bank of Ireland. Where was the concern for the moral hazard? When we were asking in 2012 while this was happening if people in unsustainable mortgage arrears could get a write-down to current market levels, the Government said it could not possibly do that because of the moral hazard involved. Where was the concern of the Minister, Deputy Noonan, for the moral hazard involved in giving the richest man in Ireland, Denis O'Brien, €450 million in debt write-downs from these banks that we had bailed out? It is extraordinary, and that is only the tip of the iceberg. We do not know who else got them but we have got hints from Mike Aynsley of the extent of the debt write-downs being handed out to those in the inner circle, the golden circle, the crony circle or whatever it was called, to the insiders and the pals, having regard to whatever was the exact nature of the relationship.
It is in stark and dramatic contrast to what was being said and done to ordinary citizens who were in mortgage distress and who were suffering under the vicious impact of cuts to social welfare, the housing budget, to incomes and to services for people with disabilities in 2012. We need to remember what this Government was doing to ordinary people in 2012 when these debts were being written down. I was looking back at my own comments about Siteserv and Denis O'Brien in 2012 and found it almost humorous. The Ceann Comhairle cut across me four times and told me that I was entering into dangerous territory. That is what he said - dangerous territory - and that I should stop talking about it. A few days later I got a letter from Denis O'Brien saying that I was abusing Dáil privilege. I think he mentioned his lawyers and the possibility that he would be talking to them about what was being said by Deputy Catherine Murphy, myself, Deputy Pearse Doherty and others in the Dáil in 2012. It has taken this long for the truth to come out but let us remember what was happening to ordinary people back in 2012 while these guys were getting their debts written off. That is the sickening part of all of this.
What we are actually seeing is a Government which is intensifying and accelerating the giveaway of this country's assets, economy, enterprises and banks to a tiny elite of corporate vultures. There is no other word for them. The truth of what is happening, in terms of the economic policies of this Government, as has been alluded to already, is not to be found in the Government's Spring Statement but in the rich list that was published last weekend in The Sunday Times. This is only the latest piece of evidence which follows on from a TASC report as well as the Credit Suisse global wealth report showing the same thing, namely that there has been an astonishing growth in the wealth of the tiny elite of wealthiest people in this country such that the 250 richest individuals now have €75 billion between them which is equivalent to more than 30% of our GDP. That is extraordinary, especially when one considers that the bottom 50% of our population has only €63 billion. The spectacular growth in the gap between the rich and poor has been accelerated by this Government. We will not address the injustice that has been inflicted on Irish citizens unless we have a redistributive tax policy that is willing to tax the wealth of the super rich in this country and take back some of the money they have taken from us, the corporate profits that have shot through the roof and the incomes of the very high earners and redistribute that money to finance economic equality through investment in the infrastructure and strategic enterprise we need to have a genuine and sustainable economic recovery that will not return us to the boom-bust cycle.
I hope the press and the media will begin to look into the concentration of wealth in Irish society, which this Government dismisses but the evidence for which is piling up. Economies go from boom to bust in a continuous cycle because a tiny number of un-elected and unaccountable people control all of the money. They can pull the plug on an economy at any time. Unless we address that wealth inequality, we will return to boom-bust and we are on the road to it again already.
This Spring Statement is effectively an election manifesto of sorts with the bulk of the promises made to be implemented after the next general election. It is a series of political promises but we know well what happens to political promises. They are made to be broken, according to the former Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, who said that is what politicians do at election time - they make promises they fully intend to break after the election. That is what happened in 2011 and this Government cannot be trusted or believed. What we have heard today in this Spring Statement is effectively pie in the sky.
It is important to note what this Fine Gael-Labour Party coalition promised in 2011 and what it did with its promises and commitments. We heard a lot about a democratic revolution but we hear very little about it nowadays. Fine Gael told us that it would burn the bondholders and that not another cent would be given to the banks. The Labour Party went even further and said that it would be Labour's way and not Frankfurt's way. Its infamous Tesco-style advertisements promised no cuts to child benefit, opposition to domestic water charges and so forth. It contained very specific promises and lines such as "Look what Fine Gael have in store for you" and "Fine Gael - Every Little Hurts". The Labour Party in government went on to cut child benefit, with a loss of up to €1,500 for many families. A Labour Party Minister is now implementing the introduction of domestic water charges, having gone around north Tipperary in the last election campaign asking people to vote for him to ensure that Fine Gael could not introduce such charges. We were also told that the Labour Party would protect the vulnerable, a point to which I will return later.
This Fine Gael-Labour Party Government continued the austerity of the Fianna Fáil-Green Party Government and did exactly the opposite to what it had promised. Government policy in the past four years has deliberately increased the income and assets of the super rich in society. It ensured that austerity affected only low and middle income families while there was a recovery for the wealthy and the super rich. The Minister for Public Expenditure and Reform, Deputy Howlin, spoke about sharing the fruits of economic growth. He said that a functioning society is a fair one, where the fruits of economic growth are shared among all of the people, which demonstrates both dishonesty and hypocrisy. We know for a fact, as referred to by other speakers, that very wealthy people have increased their income and assets hugely during the course of this recession. An article in the Sunday Timeslast weekend pointed out that Ireland's super wealthy now have a combined wealth that surpasses the heights reached at the peak of the Celtic tiger era. Ireland's 250 richest people have increased their wealth by more than 15% in the past year to €75 billion, equivalent to 30% of Irish GDP. The number of Irish billionaires has increased from nine last year to 13 this year. There have been huge increases in the financial assets of the super rich as confirmed by the Central Statistics Office. The increase in assets from the time of the bust in 2008 to 2013 was €93 billion or an increase of 51% of GDP and there have been further increases since then. The situation is exactly the same with regard to income.
A very small proportion of very wealthy people have huge incomes. The 10,000 wealthiest have average incomes of €595,000, a figure supplied to me by the Minister, Deputy Noonan. That wealth situation was confirmed about a month ago by the Sunday Independentrich list of the 300 wealthiest people in Ireland. Those 300 people have €84 billion between them. So the super-rich have done very well out of this recession while ordinary people have paid for it which they had no hand, act or part in creating.
On the other hand, it is instructive to look at what has happened to ordinary low and middle-income families. A recent Central Statistics Office report, the SILC report, shows that 400,000 children are living in households experiencing multiple forms of deprivation, of whom 135,000 are suffering daily material deprivation. The number of children living in consistent poverty has doubled from 6% to almost 12%.
The Labour Party claimed it would protect the vulnerable and particularly social welfare recipients. What is the record of the Labour Party and the Tánaiste in social welfare? She protected the social welfare recipients and low and middle-income families but I am afraid the cuts she introduced in recent budgets have devastated ordinary people and undermined the social welfare system.
It is important to mention some of those cuts, which I call the dirty baker's dozen cuts: child benefit was cut by up to €1,500 per annum per family; cuts to the back-to-school allowance; cuts to maternity benefit; cuts to the fuel allowance; abolition of the telephone allowance; cuts to the household benefits package; cuts to jobseeker's allowance; new qualifications for State pensions particularly affecting women who are out of the workforce to rear their families; the carer's respite grant was cut by €325; farm assist payments cut; back-to-education allowance cut; exceptional needs payment cut; increase in eligibility for State pensions; taxation of maternity benefit; abolition of illness benefit for widows and lone parents who work; huge cuts, of course, to one-parent families with another huge cut coming on 2 July; cuts to rent allowance; and abolition, unbelievably, of the very small bereavement grant.
The so-called recovery is a recovery for those who are already wealthy and it certainly means continued austerity for low and middle-income families. The public does not trust or believe the Government. They know that what the Government says does not transfer into action. They know that middle and low-income families have been crucified by the Government. They want to see the Government going to the country and calling a general election. The Government has absolutely no mandate for what it has done. The public believe that it simply cannot be trusted. This Spring Statement is simply an election manifesto of sorts, one that the public will not believe and one that should be put to the country sooner rather than later.