Wednesday, 29 April 2015
Spring Economic Statement (Resumed)
Sure I will take the half hour if I have to; I do not mind.
It is little wonder that the citizens of the country are furious, frustrated and in many cases worn down to a degree. Whenever I make criticism it is always measured. I do not criticise individuals, but I am here in opposition to hold the Government to account and that is what I have to do. The Government is completely disconnected from the thousands of people in struggling households who remain unconvinced after yesterday's massive exercise in PR.
People are appalled by the lack of urgency the Government is showing to the awful financial distress they are suffering. That distress was caused by spending cuts and tax hikes amounting to about €30 billion since the recession began. That is the equivalent of about €6,500 for each person. How can we talk about pay increases when the supposedly "emergency" universal social charge remains in place, while the health service in shambles, while schools are underfunded and parents with sick children are being made to jump through hoops for medical cards?
The Government has informed us that spending is up, that unemployment is down - I will deal with the unemployment figures in a few minutes - and that we are now in recovery mode. I accept that there might be a slight upturn in the economy in Dublin. However, if the Taoiseach came to the streets of Waterford city and many other cities-----
Data from the Nevin Economic Research Institute suggests that 90% of the jobs created in the past year were in Dublin and the eastern side of the country. That agency is recognised by the Government as having pretty good facts in recent years. I would like to hear the Government's comments on the statistics from the Nevin Economic Research Institute. The regions have suffered disproportionately in the recession and are being left behind once again.
Yesterday's spring economic statement sent a clear message to Irish emigrants - I think this is what was meant to be sent - that jobs are being created at home. We are told that all jobs lost during the recession will be replaced by 2018. I would like to delve a little deeper into this by considering the unemployment figures.
The Government spin-doctors claim that the unemployment rate in the south east has fallen from 21% in 2012 to 11.9% or thereabouts at the end of last year. However, they are not so keen to publicise that the number of people on JobBridge schemes in my constituency of Waterford increased since by 300% since the initiative was introduced. The number of people who took up places on the Tús programme increased by 400% in the same period. A JobBridge internship might take a person off the live register but it is not a long-term sustainable job.
Every Deputy has heard countless stories of abuse of the system. The Taoiseach may well have heard of companies having a revolving JobBridge chair. In the main it means exploiting workers. They force people to work for very little and, apart from the work experience they get, it invariably leads nowhere. That is exactly what happens with many of the schemes. All one has to do is speak to workers who have been forced on the schemes or who have come off the schemes.
Any drop in unemployment in Waterford and elsewhere in the region is largely attributed to job schemes, the continuing flow of emigration and people returning to education. All the statistics show that. The Government should not insult our exiled emigrants by telling them that there is work for them if they come back to Ireland when clearly there is not work.
Waterford has been left high and dry in terms of the third level sector. The Government's political interference has made a mockery of the 20-year dedicated campaign for a university in the south east, which affects everybody in the region and not only in Waterford. Despite promises from Fine Gael as far back as 2008 that it would prioritise university status for Waterford, the Government has actually reduced funding for WIT by 25% since taking office.
Allowing this regional imbalance to build as the country moves back to recovery will have dire social and economic consequences which no amount of spin will conceal.
If we were to ask the many thousands of people on hospital or housing waiting lists, carers or a chap who has lost his job after working for 30 or 40 years about these promises, what would they say? I know many people who made a huge contribution to this economy only to be asked by their local social welfare office whether they are actively seeking work or told they would not get unemployment benefit unless they went on a Tús scheme for €20 per week or a JobBridge scheme for €50 per week. How insulting would that be to such individuals? A television programme due to be broadcast in the coming weeks will reveal that many people are being treated in this manner.
The Government may be out of touch but Social Justice Ireland is acutely aware of these issues. That organisation stated that the spring statement is unfair, contradictory and disappointing because it lacks clear guidance and vision on policy or a commitment on making Ireland a better and more just society. The Government might consider engaging with Social Justice Ireland because it has invested considerable effort in analysing the Government's performance.
Yesterday the Ministers for Finance and Public Expenditure and Reform left before the Technical Group spokespeople began their contribution and again today the Taoiseach and the Tánaiste left just as one of our Members began to speak. That is outrageous.
After listening to yesterday's speeches by the Ministers, Deputies Noonan and Howlin, a member of staff in Agriculture House asked where the wonderful land they described could be found. That encapsulates the response of many thousands of people to the underwhelming speeches we heard yesterday. The reality is not the nirvana painted by the Government but a society of haves and have nots. This is an extremely unequal society based on low wages and minimal public services. It is a model for a neoliberal agenda. We have a wealthy society, with average GDP per capitaof more than €36,000. However, while the average family household with two adults and two children could be expected on these figures to enjoy an annual income of more than €140,000 per year, 33% of households earn less than €30,000, 56% earn less than €50,000 and 62% earn less than the mean household income of €56,000. A household earning more than €60,000 is classified as high income. One would not be living the high life on that level of income. Our low wages and minimal public services mean that 137,000 children live in consistent poverty and 63% of lone parent households experience deprivation, which might mean going 24 hours without a substantial meal or being cold due to lack of heating. That is the reality, despite what the Government has claimed. The German philosopher, Ludwig Feuerbach, wrote that society should be judged on how it treats its most oppressed members. We have nothing to boast about in that regard.
The Government promised that 2 million people would be employed in well paid and secure jobs by 2018. There was no mention of the huge increase in low paid work or precarious employment contracts. In the 1980s, 80% of employees in the retail sector were full-time and only 20% were part-time. The situation has reversed, with 20% on full-time contracts and 80% in part-time work. The campaign for decency for Dunnes Stores workers has exposed the reality of precarious employment. Zero and low hour contracts make it impossible for workers to plan child care, elder care or family time. One worker told me that even though she repeatedly told her employer that she cannot work between 2 p.m. and 5 p.m., it keeps putting her on the 2 p.m. to 6 p.m. shift. It is trying to push her out of the job and replace her with cheaper staff on new contracts because she is on an older contract which pays higher wages. On the one hand, low hour contracts are used to control and intimidate workers, while on the other, wealthy employers like the Dunnes family are subsidised by the State through unemployment benefit, family income supplement, rent support and lower levels of PRSI and income tax. The Government made no mention of abolishing zero and low hour contracts because it is obviously too radical for the Labour Party to consider. This inaction contrasts dramatically with the recent rich list report which revealed that Ireland's 300 richest people are now worth €84.4 billion, a record increase of €13.65 billion in one year. In 2010, the total for the top 300 was just shy of €50 billion. What sort of country allows the wealth to get richer by imposing austerity on ordinary people?
The long-term unemployed comprise 59% of the overall number of unemployed, the fourth highest in the EU-15. The long-term unemployment rate for males is 65%, which is second only to Greece. The chronic long-term unemployment figures are even worse, with 93,000 people without jobs for more than two years and 54,000 without jobs for more than four years. This problem cannot be solved through the labour market. It requires focused action on job creation. The gateway programme is not delivering and it requires serious reform if it is to prevent job displacement in local authorities and ensure those who go through the programme are employed over the longer term.
This Government's austerity policies emphasised spending cuts over tax increases. It is now proposing a 50:50 split between increasing social spending and cutting taxes. Social Justice Ireland has described the spring statement as unfair, contradictory and disappointing. It pointed out that if a ratio of 2:1 was applied in imposing austerity, one would expect that the same ratio to be applied when the resources become available. I would have expected the Labour Party to argue for an emphasis on spending over cuts. Perhaps, however, it believes cutting taxes is a sure bet in terms of buying the next election.
The remarks by the Minister for Public Expenditure and Reform on well run public services are meaningless to the thousands of people who have to access those services. Among the many failures of the State was a failure to develop decent public services. We never provided a health care or education system which is free to all and treats everybody equally. We have not developed a State child care system and our mental health services are a disgrace. There is no vision for developing social services. Our health system is falling apart, with more than 4,000 people on waiting lists and 600 people on trolleys in January. I have repeatedly raised the problems with scoliosis services in Crumlin children's hospital and Galway University Hospital. The Minister for Health provided money in the Supplementary Estimate to alleviate some of the problems arising in this regard.
I submitted questions regarding nine patients who have been waiting over 12 months for treatment at Galway University Hospital and was contacted by three different people about this. Month after month I have submitted a question asking what the situation is and the standard reply is:
The waiting list for spinal surgery is one of our priorities at Saolta University Health Care Group. There are a number of arrangements being put in place in order to facilitate the level of complexity involved in relation to spinal surgery for patients with scoliosis. We are currently reviewing a number of resources in the context of bed availability, access to diagnostics, purchase of specialist spinal equipment and access to theatre. When the key elements required are in place, potential surgery dates for this cohort of patients [nine patients waiting over 12 months with serious spinal curvature] can be identified and scheduled accordingly.I have received this reply month on month since January and nothing has been done to resolve the crisis for those patients waiting for spinal surgery. This is an absolute disgrace and the Government should hang its head in shame. Resources should be put into these areas.
Finally, I wish to make a point regarding the proposed national economic dialogue. As far as I am concerned, this will be a dialogue that will fall on the deaf ears of those on the Government benches. The people have spoken again and again in their hundreds of thousands. They do not want water charges and they do not want Irish water. How much more dialogue does the Government need to get the message? The Government should abolish the water charges and Irish Water before it is annihilated in the next general election.
Yesterday's economic statement is an opportunity for us all to have a conversation about the country we want to live in and want our children to grow up in. Should we focus on becoming a lower-tax economy or should we invest in enterprise, in public services, like education and health, and in communities? I believe we should do the latter.
The economy is growing again and unemployment is falling and this is great news for everybody. However, in their Dáil speeches yesterday, Ministers went out of their way to convince us that this good news is their doing. It is not. Some of it is, but most of it is not. Had the right choices been made over the past four years, we would have got to this good news a lot sooner than we did. The Minister for Finance, Deputy Noonan, spoke yesterday about "the lost decade", meaning it will take approximately ten years for us to get the economy back to the level it was at in 2007. The phrase, "the lost decade" comes from Mexico in the 1980s, which went through a crisis from which it took a decade to recover. If it takes Ireland as long to recover as it took Mexico 30 years ago, the Government has not done a very good job.
The economic and jobs growth comes mainly from two sources, from the ECB and from the resilience of Irish enterprise and people. When Mario Draghi took over the Presidency of the European Central Bank from Jean Claude Trichet, he changed tack on monetary policy. Where Trichet demanded austerity, Draghi believes in using monetary policy to boost growth. In 2012, he said the ECB would do "whatever it takes" to preserve the euro. This increased confidence in the currency and drove down borrowing costs for Ireland and other eurozone countries. He followed this with quantitative easing, which in essence means the ECB is printing vast amounts of money, approximately €60 billion per month, and lending it to eurozone banks at zero interest rates. The result of this is that mortgage rates fall, businesses can borrow and invest and the euro depreciates, thereby increasing tourism and the competitiveness of Irish exports. It is interesting to note that the euro has depreciated by almost 30% against the US dollar in the past year. This represents a 30% increase in competitiveness, which is welcome but has nothing to do with the Government.
What of the resilience of the Irish people? The latest ESRI economic statement or forecast estimates that about 60% of the economic growth comes from increased labour productivity. This means both public and private sector workers have had to do more with less and have succeeded in that. Again, this has nothing to do with Government policy. To be fair, some Government policies have worked and added to employment. However, even in this area the Government is found wanting. The ESRI carried out analysis of job activation measures and found that Ireland's job activation measures are the weakest in the eurozone. That is a damning indictment of Government policy from our independent economic think tank. Far more should and could have been done.
The mortgage crisis is now in its seventh year and has become the biggest of its kind anywhere in the world. It could have been sorted out years ago, but it has been and continues to act as a massive drag on economic growth and job creation and has caused significant social harm and distress. Supports for SMEs and the self-employed could have been made stronger, for example, by improving how local authority rates are calculated, taking into account things other than the space occupied by the business. Tax treatment for the self-employed should have been equalised with that for PAYE workers long ago. Public works, such as the broadband strategy, should have been pushed sooner. Child care costs could have been reduced at zero cost to the Exchequer, something I have proposed over several years.
Budgets could and should have been progressive rather than regressive. We have now seen four regressive budgets in a row, the last of which was the worst. In the first three budgets, everybody lost, but the less money one had to begin with, the more one lost. However, in the last budget, there was a transfer of wealth from the lower income half of the population to the higher income half. Not only, therefore, is the Government implementing regressive budgetary policy, it is accelerating regression. The evidence on this is unambiguous. We all want growth and jobs, but the evidence is clear that policies that drive up inequality are bad for economic growth and job creation. I believe they are just plain wrong.
What is needed? There is a big push from the Government to reduce taxes, income taxes and wealth taxes. This philosophy, which has been implemented consistently over the past four years, is that economic growth lies with the wealthy. They are the rainmakers and masters of the universe. Therefore, if we are to boost the economy and jobs, we must increase the wealth of the wealthy. This is Thatcher and Reagan economics. It did not work in the past and does not work now, yet for some reason it is being pursued by the Government during a recession. Even billionaires do not agree with this approach any more. Last year at Davos, the world's billionaires club, the two greatest threats to society globally were identified as inequality and climate change. However, the argument in Ireland is if we return wealth to the wealthy, everybody will gain.
Ireland is already a low tax economy, but some taxes need to be altered. For example, there should be equalisation between the self-employed and PAYE workers. I do not know why the current position exists. It should not, but I understand it is a relic of past times, where self-employed people had numerous ways of lowering their tax exposure that PAYE workers did not have. Although that is gone, even in the last budget higher rates of income tax were applied to the self-employed.
A reduction in wealth tax is not required. It is important we understand what is going on. I talked earlier about ECB monetary policy. Quantitative easing will cause a significant asset bubble. That is what it does. Wherever a central bank prints lots of money and gives it to banks, the result is there is loads of money available, people get that money and want to buy stuff with it and the price of that stuff rises. We get an asset price bubble. Who owns those assets? The wealthy. Therefore, by doing nothing, the owners of capital in Europe are about to gain significantly from ECB policy. Therefore, the argument made we should reduce CGT as well is unnecessary. Wealth, due to government policy, will increase substantially. However, it will increase for a very small number of people in financial services, the owners of the capital and the people who facilitate these transactions.
What should we do instead? I believe we should keep taxes more or less where they are. Ireland is a low tax economy, significantly lower than the eurozone average, and we should stay lower. We have some competitive disadvantages, such as being on an island which makes transport costs more expensive. We must have some competitive advantages and having a lower taxation rate than the eurozone average makes sense. However, going lower again does not make sense. What should we do therefore? We should invest. We should invest in enterprise and in public services, particularly education which has been asset stripped over the past number of years. We should also reinvest in community supports.
I was at a fantastic youth outreach programme in Bray on Monday. It turns out that over the past four years, its funding has dropped by 31%. That has got to stop, and that kind of investment from the State must be some of the most important and beneficial spending. Do not reduce capital gains tax. The wealthy will get wealthier anyway, so the money should be reinvested in youth outreach, community-based care, third level colleges and DEIS facilities. That is what we must start doing, and we must invest in the future.
I do not believe people mind paying their taxes if they know those taxes are respected, spent well and invested in them, their children, communities or their country. This is a timely debate and we are at an inflection point. The entire country has come through a very difficult time and the question is where do we all want to go. We are a low-tax economy so let us keep a competitive advantage on tax. For goodness sake, let us start investing in the future as well. If we are going to compete internationally in the next ten years, we must get our house in order. That means bringing everybody out of the lost decade and ensuring we do not lose any more.