Dáil debates

Thursday, 23 June 2016

Summer Economic Statement 2016: Statements (Resumed)


3:25 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I would like to share time with Deputy Paul Murphy.

Photo of John LahartJohn Lahart (Dublin South West, Fianna Fail)
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Is that agreed? Agreed.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I would like to start on a positive note because we are often accused of being naysayers.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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I would not do so.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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No. That is good. It must be the new politics at work again. I welcome this discussion on the summer economic statement. While I would not say the new budgetary process is revolutionary, it will certainly represent an improvement if it works out. I hope that rather than being something tokenistic or decorative, this process will mark a serious attempt to open up the budgetary process and allow for a serious debate on the budgetary proposals made by the Government and the Opposition. Voices from civil society need to be allowed in to that debate as well. I think this would be positive.

I see this process as being connected to what is being referred to as "the new politics", which is a phrase that is becoming somewhat tiresome. I would be a little more optimistic about the new politics in the context of the seismic shift that took place in the recent general election. New forces, particularly from the left, have come into the Dáil on the back of significant politicisation and mobilisation in society in general in the aftermath of the 2008 crash. I think the public at large has become far more sophisticated in its attitude to what is going on in the political sphere, far more knowledgeable about economics and far more involved in debates about why the crash happened and how it was responded to. Frankly, I do not think many people inside or outside the Dáil knew what a bondholder was before 2008. These days, we can go to the nearest bus stop to hear a fairly sophisticated discourse on bondholders and bond yields. As things have changed, the mass of the public has engaged in a positive and more politicised way with what happens in here and with economic debate. I think that has forced the political system to take debate more seriously. I hope this budgetary process will see that change reflected.

It is nice to win a victory, or a few victories, at the outset of this budgetary process. I refer to the Government's decision to back off on water charges, in effect, and to back away from bin charge increases. The overwhelming rejection of this regressive form of taxation by the majority of the people, which was an absolutely critical factor in the general election, has sent a salutary message to the establishment political parties. This has been reflected in the decision to suspend water charges. Obviously, we will continue to fight for the abolition of such charges. Those who spoke loudly on the streets and at the ballot box as they demanded a change of direction with regard to tax policy have won some tremendous victories on foot of such mobilisation. The establishment has been forced to concede. I joked briefly with the Minister, Deputy Noonan, outside that he seems to have been turning to the left. Maybe I should now start referring to comrade Donohoe and comrade Murphy.

Photo of Eoghan MurphyEoghan Murphy (Dublin Bay South, Fine Gael)
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That is going too far.

Photo of Eugene MurphyEugene Murphy (Roscommon-Galway, Fianna Fail)
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I assume Deputy Boyd Barrett does not mean me when he refers to "comrade Murphy".

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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We will not go too far.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Deputy should not get carried away.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I was vaguely amused to hear the former Minister, Deputy Burton, asking what Fine Gael will do now that it does not have the left-wing influence of the Labour Party to mitigate its right-wing neoliberal tendencies. The irony is that in its first few weeks in power without the Labour Party, Fine Gael has been forced to do left-wing things that the Labour Party was not willing to do in the last Government. In the first few weeks of this Government, Fine Gael has had to make certain changes in the face of massive pressure from a popular movement.

Having said those positive words, I want to move on to the more serious side of this debate. The broad thrust of the Government's economic statement is to laud itself for the increase in growth rates, the recovery in the economy and the increase in employment. I assume Deputy Burton was alluding to us when she suggested that certain people do not recognise that there is something of an economic recovery. It is not the case that we do not recognise it. We cannot dispute that significant growth rates are taking place again and that there has been a significant decrease in unemployment. However, the issue for us is whether that growth is sustainable in the long term. We want to make sure it is not the kind of growth we saw prior to 2008.

That sort of growth was lauded up until 2008 but then produced the biggest economic crisis in the history of the State. No one in the establishment predicted it would come crashing down, although the left did, but no one in the establishment, whether economists or politicians, saw it coming. The key question, therefore, is whether this is sustainable growth or the kind of growth that could lead us back to the disasters of 2008 and what followed.

Linked to this is the question of whether the growth is actually producing a real improvement in the living standards and quality of life of ordinary citizens. In other words, is the growth shared evenly? I would and will argue that this is not the case. The type of growth we are pursuing, and the strategy the Government is pursuing, is not sustainable and is recreating the dangers that led us into the last crash. The major beneficiaries of the economic growth are not ordinary people, who are not seeing it in their incomes and living standards, but the usual suspects, that is, vulture funds, landlords, banks and a very small and wealthy elite. They are doing very well. Profits are going through the roof. The banks that we bailed out are or will soon be back in profit. The vultures are making an absolute fortune. Landlords are creaming it at the moment. The rich are getting richer by every single measure.

On the other hand, as the UNITE report on pay in the economy concluded categorically, we are a low pay economy. It is clear that the period of the recession was used by those in Fine Gael and in Fianna Fáil who support the market-for-profit approach as an opportunity to further attack wages and conditions for ordinary workers. This is probably best summed up in the yellow pack entry rates for teachers that the Government tried to impose on nurses, although they have successfully resisted. However, we saw young teachers out on the streets the other day. Disgracefully and just because of their age, they are being asked to work for 10% less than those who just happened to come into teaching a few years before them, even though they have the exact same qualifications and do the exact same work. This is symptomatic of how those who subscribe to the neo-liberal, for profit, pro-market approach to economic management want to encourage a race to the bottom in terms of wages and conditions and see it as the basis of so-called economic growth. However, it is one that does not translate into better living standards.

This is most sharply expressed in the housing crisis. We have more people working but their earnings are so miserable that they cannot put a roof over their heads. Given the three years extra he or she will have to work, the lower entry rates and so on, the average public sector worker will earn during his or her lifetime approximately €300,000 less than someone recruited before the crash. That is the cost of a house. It is as simple as that. People entering the workforce on average earnings, who in a previous generation would have been able to afford a house, will not be able to afford a house. It is as simple as that, something which is sharply expressed in the current housing crisis.

The question is whether the Government strategy is designed or likely to deal with those contradictions, namely, the unsustainability of certain types of growth, the unequal sharing of the economic growth that does exist and the growing inequality between a small number of "haves" and a huge number of "have nots". This brings me to the issue of the fiscal space. It is tempting to paraphrase and slightly adapt the dictum that "there are lies, damn lies and statistics" to "there are lies, damn lies and the fiscal space". Even the Irish Fiscal Advisory Council has indicated that the Government is still playing around with figures or not being entirely honest on the issue of this so-called fiscal space given its refusal to factor in demographics and our growing population and how that eats up the fiscal space. It refuses to factor in property inflation, pay agreement commitments and so on after 2018. The €11 billion shrinks in reality to considerably less. There was some debate about how much less but even the council is saying it is very much less.

What this means for ordinary people, to translate the debate about fiscal space and how it is calculated into a language that ordinary people can understand, can be put like this. It is how a Government can say it is spending more than anyone else but it is actually spending less. It says that it is spending more on health than anyone else, but of course it is given demographic pressures and so on. However, proportionately, are we spending more or less on the services people need given the demands on those services? No matter how much the Government goes on about how it is spending and will spend more on health, in reality we see services being pulled in a whole range of areas, an ongoing crisis in our accident and emergency departments, waiting lists and so on. When one factors in the pressures of a rising population and rising demand, the cost of drugs and all the rest of it, in reality what the Government is proposing in terms of health expenditure simply will not deal with the level of prices we are facing.

Last night, we had an extensive discussion on all sides about how much we love the arts and how important and what a good investment they are. However, when we proposed an amendment to the motion providing that we would spend a bit more real money in the arts, Fine Gael and Fianna Fáil refused to do it. They will not even raise, as suggested by us, the pathetic level of investment in arts from the current level of 0.1% to 0.2% next year. They will not even do that, which is absolutely shocking.

This brings me to the question of the fiscal rules, the Government's strict adherence to them and the madness and irrationality of that approach. In simple terms, the fiscal rules state that if a country's private banks go bust, the country has to borrow €64 billion to bail them out and the rest of society pays a cruel price. However, if we want to invest in health infrastructure, social housing that is desperately needed, the arts, education or even forestry, we are told we cannot do it. We are allowed invest in propping up private banks but we are not allowed invest in things that would make life better for people or, God forbid, give people a wage increase. That is out the window.

I apologise to Deputy Paul Murphy, but I will conclude on this point. The real issue that is absolutely missing in terms of a sustainable economic outlook and perspective is the question of wealth redistribution. That is simply not on the Government's agenda. It is the inequality in the distribution of wealth and the control of capital by a tiny number of banks and multinationals, which the Government keeps nurturing and point blank refuses to tax, that is at the heart of the economic instability at national, European and international levels. The Government is not willing to address that and staunchly protects the 1% and puts all the pain, caps and restrictions on the pay and conditions and of employment and the services of ordinary people.

3:35 pm

Photo of John LahartJohn Lahart (Dublin South West, Fianna Fail)
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Deputy Boyd Barrett has been eating into his colleague's time. I call Deputy Paul Murphy.

Photo of Paul MurphyPaul Murphy (Dublin South West, Anti-Austerity Alliance)
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I congratulate the Government on what is an effective act of misdirection. This is a trick of magicians and worthy of Houdini. The Government points to the fiscal space and seeks to have a debate on the crumbs while ignoring the debate about who owns and how to distribute the big massive cake.

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

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

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

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

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

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

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

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

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

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

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

3:55 pm

Photo of Mick WallaceMick Wallace (Wexford, Independent)
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According to one of the early lines in the Government’s document, “Economic recovery is now firmly established” but I do not think anyone who had to knock on doors a few months ago could be under any illusion that the majority of the people feel this economic recovery. I happen to live in one of the more deprived counties in Ireland, Wexford, and at that time, there was 23% unemployment which is very frightening given that the State boasts in the region of 8% nationally. If we are to talk about economic recovery, we need to talk about it for the people of Ireland. If so many of the people are not feeling the economic recovery, are we reading it wrong? How are we looking at it?

In Dublin, everything is far more rosy generally speaking for business than in the countryside but rent must be very challenging for people. It has become very difficult to make those ends meet. Many of the good jobs lost in recent years have been replaced by yellow pack jobs. There has been a dumbing down of well-paid jobs, working conditions and job security. We understand that has not only happened here. People are striking on the streets of France every day over similar issues. The French Government is trying to change labour laws, which diminish the rights of workers in different ways. There are just over 100,000 people on the housing list. Maybe the Government is going to tackle this in some positive way and will take on board some of the measures of the Committee on Housing and Homelessness which, while it did not deliver everything that it could, delivered some things and it would be good if the Government took them on board.

We are being told that 11% of the children of Ireland live in poverty. Surely one of the top priorities and challenges of the Government is to do something really strong about that. The Euro Health Consumer Index found that in early 2016, Ireland had the longest hospital waiting times in Europe. Children with special needs face a yearly lotto which determines their access to special needs assistants, SNAs, in schools. These are issues we have raised many times over the past few years. Figures released under freedom of information show that 20,000 children are on hospital waiting lists, with some waiting up to four years to see a specialist. It is little wonder that the Euro Health Consumer Index is a bit concerned.

I have listened to some of the debate today and there seems to be a general recognition that our expenditure on infrastructure is not good enough and will not be good enough given the projections that exist. It seems to be almost a game to see how economic figures can be played with. Unless everyone here is getting it wrong, it looks as if our investment in infrastructure will be a major challenge in the years ahead. Will the Government address that or will it just toddle along and hope that everything will work out all right? Our lack of investment in infrastructure is glaring and is a huge problem for the State. Has any thought been put into making an independent assessment of our long-term infrastructural needs? Has one ever been carried out? It would be very interesting. There is much to be learned in this area and it looks as if there are serious problems coming down the tracks if we are not to change direction.

I am sorry I have so little time.

4:05 pm

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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It would be great if we could bottle some of the delight, enthusiasm and positivity from last night's match and bring it to our economy and today's economic statement.

I did not get the opportunity to speak on other Estimates. I would like to make a couple of points on justice. We know the Garda need more resources, in terms of the increase in numbers, equipment, technology and asset profilers, but there is another aspect to this, namely, prevention. In many Departments, the prevention aspects are the Cinderella part when it comes to budgets.

This area will require cross-departmental co-operation with the Minister for Children and Youth Affairs in order to continue resources and support for the diversionary projects run through the Department of Justice and Equality. Such projects are in place in the north inner city, and are positive and creative ways of diverting and encouraging young people away from crime and antisocial behaviour, thereby building resilience and strategies for them to cope with problems, in particular intimidation from drug debt. That intimidation fuels even further drug-related activity. I am particularly pleased that we will have mini-CABs, something for which I have asked for a number of years.

We discussed the arts yesterday. If there could be a link between arts, justice and children and youth affairs, there would be potential to consider much more creative preventative measures for young people. In the long run, that would be much more cost-effective.

I refer to the language used in the summer economic statement, which refers to growth of 7.8% and states that our budgetary position is on a safe and sustainable path. We know that offers very little comfort to those who are struggling, whether through illness, disability, mental health issues, a lack of decent work, poor housing, emergency housing or homelessness. While a rainy day fund is all very fine in theory, it is very difficult to accept when resources and funding are needed now to deal with very basic matters.

In the foreword, I was struck by the phrase "Recovery is now firmly established". I would love to believe that. It is probably true for certain sections of society, but we know that it is very definitely not universal. In mid-April, I, Deputy Wallace and others sat on the Committing on Housing and Homelessness, which continued until the week before last. The committee brought home to us the stark reality of life for those in very difficult and deplorable living conditions, whether because of mortgage difficulties, increases in rent or mental health or addiction issues, who ended up homeless and in emergency accommodation. The talk of economic recovery is meaningless while that situation persists.

We can do things right. Sophia housing on Sean McDermott Street was opened this week by the Minister, Deputy Coveney, and it provides excellent accommodation. Last year, Peader Kearney House opened and the year before that Patrick Heaney housing. We can do things well, but a sense of urgency and impetus are required to get things going. There is no economic recovery if over 2,000 children are living in emergency accommodation, people continue to live in direct provision and we consign former prisoners and those in recovery from addiction to a revolving door.

We have to be ambitious about the housing targets. The cranes are back and building is going on, but my fear is that a certain kind of housing is being built, which is mainly for workers in companies such as Google. The type of housing that is needed for those who require social and affordable housing is further down the line. Funding is core and I hope the recommendations from the Committee on Housing and Homelessness will be taken on board.

The Minister and I share the same constituency, and I know that he knows that economic recovery is not firmly established in parts of Dublin Central. Unemployment levels, for example, are still considerably higher than the national average of 8% and are higher again for young males with addresses in Dublin 1. Our city has huge potential when it comes to culture and heritage. There are areas which are very much in need of repair and maintenance. Our city needs to be more energy efficient and we need more retrofitting of buildings to attain climate change targets and ensure we are cost efficient. There is great potential for local long-term unemployed people to be targeted with a policy of positive discrimination. We know that decent work has to be at the core of employment because there is no point in saying that our employment figures are rising if people are not in decent work that allows them to live with dignity.

The summer economic statement is probably good for investors and economists, but I do not represent many of them. That brings me to our growing dependence on foreign direct investment. Recently, TASC warned about this as being increasingly problematic. Total employment in the sector is estimated at 174,000 people out of a total employment of 2 million. I do not think any other European country approximates to that level. The nominal corporation tax rate is 12.5%, but we know the effective rate is far off that. It would be good to see a commitment to more openness and transparency so that we know exactly what revenue is being generated.

Since 2000, there has been a major deficit in the number of GPs in the city centre. There are very significant and serious health needs in the area. There is a correlation between those from lower socio-economic groups when it comes to ill-health, rates of cancer and obesity. We have been waiting on a primary care centre for a long time, and it will not be in place for another three years. We need public expenditure on services as well as capital projects.

We are a small and open economy and the experience of the recent crisis years demonstrates the swings. The usual line is that recession will lead into recovery, but recovery also leads into recession unless it is managed efficiently and fairly. We know the contrast in our constituency between the high-flying economy and the debris for families.

I am always struck by two lines from a Don Baker song of 20 years ago or more, "[L]iving in a one room slum ain't easy... No place for kids to play while you build your motorway". It is very sad that we are seeing that happen again in recent years. Economic choices are available, and what will happen in the north inner city can be challenging but it can also be the micro of the macro in addressing those challenges.

Photo of Tommy BroughanTommy Broughan (Dublin Bay North, Independent)
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I am grateful for the opportunity to make a brief contribution to the discussion on the summer economic programme. Unfortunately, it is another prime example of Government spin and window-dressing, without placing any real emphasis on the major challenges facing our country, which has been deprived of significant capital investment for the majority of the past decade. There is no attempt in the statement to address the decline in living standards and suffering of much of our population, to which previous speakers alluded.

I welcome the inclusion in the statement the necessary elimination of FEMPI legislation. It is well past time. We should have gotten rid of FEMPI before now. We know the tremendous negative impact it has had, especially on pensioners and across the public service. It should be a priority for the forthcoming year.

A number of speakers referred to football. In some respects, the document before me, given the day that is in it, reminds me of the great Jock Stein who led Glasgow Celtic to very successful championships in Scotland and Europe over many years. He said one can have all the plans one likes, but one obviously has to contend with the other team. Given the day that is in it, the other team may face dramatically changed economic circumstances tomorrow. We hope that will not be the case, but it could be.

I note with interest that the fiscal space is expected to be around €1 billion for 2017 and just over €11 billion over the four-year period up to 2021. I agree with earlier speakers that this seems a very restrictive space for the State and our national economy to be placed in given the investment required in areas such as health and housing. The Minister stated the Government is compliant with four of the five commitments set out in the Programme for a Partnership Government and has exceeded one of them, but the ambition of eliminating the deficit by 2018 and our debt to GDP ratio by 2021 should not be at the expense of the critical current and capital spending required by our population, given that we have had almost a decade of austerity.

The establishment of a rainy day fund was mentioned. On balance, it was a good decision years ago. The former Minister, Charlie McCreevy, established the National Pensions Reserve Fund. As an earlier speaker said, the raid on the fund and its transfer to bankrupt financial institutions has been one of the most deplorable results of the crash and the following years. I hope on this occasion a rainy day fund is ring-fenced, perhaps in the same manner as the Norwegian sovereign wealth fund. It should be used for future pensions and investment in health and housing, in particular.

I hope the rainy day fund will not impact badly on projected spending in the early 2020s.

The budget strategy to allocate the available fiscal space 2:1 in favour of investment in public services over taxation reductions is a small step in the right direction. We must pick up on the deficit. Deputy Wallace suggested we need an audit of the infrastructural deficit. I mentioned the metro north plan in the context of public transport to the Minister for Transport, Tourism and Sport, Deputy Ross, a few weeks ago but we need fundamental investment in housing, health and education in particular.

I am a member of the Oireachtas Select Committee on Arrangements for Budgetary Scrutiny, which I hope will lead to the new estimates committee I proposed many times in recent Dáileanna. I am cognisant of the need to equality proof, gender proof, regional proof and carbon proof budgets, and to do so with greater foresight than was the case with year-on-year planning. I am sure the Minister, Deputy Donohoe, will remember some budgets where poverty proofing amounted to an exercise in box ticking. We must get away from that and have real interactions. We had no input whatsoever into the summer economic statement, as is evident from the contributions of Members. I hope this is the last year that will be the case. The Minister, Deputy Donohoe, came before the committee but I was attending another meeting. There must be a real willingness in the Departments of Public Expenditure and Reform and Finance to engage on a partnership basis with the new budgetary committee. Yesterday, we heard from the equivalent parliamentary budget office in the UK to the one we hope to establish about how it interacts with the treasury committee there. In future there should be real engagement from the Department of Public Expenditure and Reform and the Department of Finance in terms of incorporating the stability programme update, SPU, figures from the spring statement into the summer statement, and again in October, so that from now on budgets will no longer be a big mystery and surprise on the day, as we will all have taken part in them and all the suggestions the Minister, Deputy Donohoe, has heard from Deputies will form part of the budget.

4:15 pm

Photo of Thomas PringleThomas Pringle (Donegal, Independent)
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The dominating feature of the summer economic statement is the commitment by the Government to phasing out the universal social charge, USC, over the next five years. I support the organisations and other politicians who call for the retention of the USC, at the very least for the higher paid, in order to reinvest the extra spending in public services as a way to address the consequences that have resulted from years of austerity measures, income inequality and persistent poverty levels.

The Government claims that the "fruits of economic recovery will be used to ensure a reduction in inequality and poverty, as well as to ensure greater levels of inclusivity in our society", but the claim does not fit with the measures outlined in the statement. Increasing the minimum wage to €10.50 over the next five years, reinforcing labour activation measures targeting jobless households, using income tax to support employment growth to incentivise and reward work and phasing out the USC will do nothing to address inequality and poverty levels in this country. Only by reform of the tax system to redistribute income, by reinstating income supports, through equality-proofing budgets and investing in public services, schools and hospitals can we tackle those debilitating social problems.

Reform of the tax system could address the long-standing issue of low income households below the poverty line. In 2014 it was calculated that 16% of people in this country were living in poverty. The figure has steadily increased since 2010 due to the effects of budgetary changes to social welfare and taxes driving more low income households into poverty. The largest group of people who are poor are children, accounting for more than 25% of the total. The second largest group are those who are unemployed and stay-at-home parents. Barnardos announced today that it had dealt with more than 13,000 children and families living in poverty. We must remember that children remain the most vulnerable population group. We only need to look at recent figures which show that more than 2,000 children are homeless in Ireland today. We must remember that a person who does not earn enough to claim his or her tax credit cannot avail of any income tax reductions in upcoming budgets, as is proposed by the Government.

Budgets have consistently bypassed low-income earners because they simply do not earn enough to benefit from changes in taxes. According to Social Justice Ireland, making tax credits refundable would incentivise employment over welfare, as it would widen the gap between pay and welfare rates. Almost 113,000 low-income individuals would receive a refund and would see their disposable income increase as a result of the proposal.

I note in the report the focus on labour activation measures targeting certain groups of people. The Government seems fixated on making the individual conform to certain economic behaviours without incentivising employers to change their behaviour and without addressing the inherent inequality in income levels across the board. Plans to increase take-home pay by introducing a working family payment to promote work over welfare is really another name for family income supplement. Currently, 60,000 families receive family income supplement. In effect, the Government is subsidising low wages and exacerbating income inequality.

Income levels have also been driven down in recent years. According to Social Justice Ireland, the median income in Ireland was €19,794 in 2007 and it decreased by 8% to €18,210 by 2014. The trade union, UNITE, published a striking report a few weeks ago which officially labelled Ireland as a low-pay economy with high levels of income inequality compared to other prosperous countries. Pay increases since 2010 have disproportionately benefitted higher earning groups and Ireland was found to have the second highest level of wage inequality in the EU15.

Another aspect of UNITE's report is its finding that poor pay is compounded by low levels of employers' social insurance, which means Irish workers have to pay more to access services such as health care. That dispels the myth that Irish wages are too high and are uncompetitive. According to the report, Ireland suffers from a very low social wage, namely, employers' social insurance, and that explains the high cost of public services and low in-work supports for Irish employees. The social wage would have to more than double to reach the EU15 average. That is a very important point because in my constituency of Donegal, 40% of disposable income is from social welfare transfers and the county is still experiencing persistent deprivation levels in comparison to the rest of the country. Furthermore, vital income supports such as farm assist, jobseeker payments and income disregards were cut in previous budgets which have hurt many families in Donegal that are struggling to keep above the poverty line.

I wish to draw attention to the Irish Human Rights Commission's work on bringing about equality proofing in the budgetary process. The commission's report last year to the UN committee found that many groups already susceptible to poverty or inequality were particularly affected by the recession. It found that the Government fell short of the basic core standards required by international human rights law. The impact of a seven-year austerity drive has been enormous and the burden of the crisis and of the dominant policy responses to it has fallen disproportionately on those least able to bear its impacts. I welcome the Irish Human Rights Commission's push for a process of budget and policy proofing as a means of advancing equality and strengthening economic and social and cultural rights. The only way to do that is to enshrine those rights in the Constitution, as a rights-based way to tackle poverty, income inequality and inequality in all aspects that are still prevalent in society. If the Government is really committed to tackling income inequality and poverty, it will support a Bill for a referendum on having economic, social and cultural rights enshrined in the Constitution when it comes before the House.

Photo of Clare DalyClare Daly (Dublin Fingal, Independent)
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It is no accident that everybody seized on the breezy opening statement that economic recovery is now firmly established because of course that is not true for so many citizens, against a backdrop of monstrous rents, precarious living situations for so many and casual and precarious work. It is somewhat ironic that years ago, when economic resources were far less than they are now, the basics, namely, a roof over one's head, access to health care when one was sick, the idea of a job in which one would progress and where one would end up with a pension were better delivered than is the case at present.

It is ironic that when one reads the opening part of the statement in respect of housing we hear that the supply response has been insufficient to keep pace with demand. It is almost as if the Government is washing its hands of it, as if it were some act of God that had nothing to do with Government policy. It is a little frightening to see that the solution to the housing problem is the publication of an action plan for housing when in November 2014 the Social Housing Strategy 2020 was produced. We must see some work being done rather than just reports being issued.

While I welcome those parts of the report that deal with the issue of the financial emergency measures in the public interest, FEMPI, being addressed, it does not get to the heart of many of the problems in the public service involving really low rates of start-up pay for teachers, gardaí, nurses and so on. Even county councillors appeared before the Ministers to deal with the stipends and expenses they get, which are not keeping apace with the economic demands on citizens at present. Recovery is not firmly established for many people and when one judges a society, one must do so on what it can deliver for its citizens. There used to be a lot of pride in the idea of looking after people from the cradle to the grave.

I wish to give particular consideration to older citizens and the idea that one would have a job in which one could contribute to a pension, after which one could retire on a decent standard of living. This concept is under threat, even for the many hundreds of thousands of citizens who have been paying into pension funds all of their working lives. Members were discussing this issue in the debate last night on the social protection Estimates, but it and the decisions made on it are firmly in the charge of the Department of Public Expenditure and Reform. I refer, for example, to the case of the Central Remedial Clinic, CRC, where the pension fund was wound up overnight last month and people were told they essentially were being left with nothing. How is that an economic recovery, when the decision was based on three months' bond yields? The decision was based on three months' bond yields against all the best advice on long-term strategy and investment. Moreover, the Minister's approval was required for this move but I do not believe it was sought and I am pretty sure the Minister probably did not grant it. In addition, one must factor in that if staff members move to the single public service pension scheme, SPSPS, some revisions to the Minister's expenditure forecasts must be made because it will place a demand on the Exchequer that is not factored into these figures or into the summer economic statement. These contingencies must be worked in, but there are no contingencies, for example, regarding Brexit and how it will have an impact on the finances. I thought the points made by Deputy Broughan were highly pertinent in this regard. One must see issues in the context of the team with which one is dealing on the other side, as well as unforeseen events. However, Brexit potentially is a foreseen event that could be factored in but it is not being addressed in that regard.

When Members consider how public expenditure is managed and the social wage, the way in which pensioners are treated is a key part. What consideration has been given, in the context of the Estimates, to the Department of Public Expenditure and Reform taking on pensioner liabilities pertaining to the CRC plan or any other pension plans that decide to follow a similar path if the CRC gets away with it? How can it be allowed that an organisation which provides a crucial public service and is funded by public money basically can wind up a pension scheme unilaterally and state those affected are to be transferred to the SPSPS? I reiterate this is a potential drain on the Exchequer when that organisation has resources at its disposal, including a capital development fund of €12 million that easily could be used to plug the relatively small gap, rather than this amount ending up back on the public purse. Why does the CRC need new buildings? If there is a problem in the pension fund, surely there are other ways to address that matter. When Members consider the summer economic statement, they must give space for the possibility that if pension funds are allowed to wind up in this way, there will be an avalanche of other defined benefit schemes going down the same road. Moreover, the State and the Department of Public Expenditure and Reform will be obliged to pick up the pieces in this regard.

In conclusion, I believe that in some ways, Members are dealing with the fact that the neoliberal model does not really work. Members must put people and public services first and when they deal with tax cuts and put that upfront, they must give consideration to the social wage and what people get in terms of public services. In the Irish context, we are far behind our European peers in this regard and these are the issues that must be addressed if Members are to deliver the quality of life they all believe citizens deserve from the cradle right through to their retirement years which, given the ageing population, is a huge area of concern.

4:25 pm

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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I am also delighted to have some time today to speak on this summer economic statement. It used to be said at one time that one swallow never a summer made. I will not call them swallows but two Ministers addressed Members with speeches on this issue today. I would not dare call them that and I wish them both well in their new portfolios but it is a case of tús maith leath na hoibre. As Members are aware, there is much work to be done.

As a participant in the talks on the programme for Government, I understand a small part of the background to the current economic position, as well as the aspirations within the programme for Government regarding the economic outlook, employment, jobs and the general economic well-being of people. A responsibility is placed on all elected Members to deal with many and varied issues and with people's lives from the cradle to the grave or as far as I am concerned, from even before the cradle to the grave. It is important that Members have well-being uppermost in their minds. Since the economic crash of the banking crisis ravaged the country, as well as the building boom and the madness around that time, we have been picking up the pieces and trying to deal with it. It has rendered much hardship in people's lives and there has been much emigration and huge challenges. When one sees an organisation such as Barnardos issuing a statement today to the effect that thousands of children are suffering from poverty in Ireland, it is not a nice backdrop against which to launch the summer economic statement. It is vital that Members be prudent, that real and tangible reform take place and that there be real checks and balances to avoid ever revisiting a situation like that.

As someone who voted for the bank guarantee - I have made this point a number of times in this Chamber previously - I regretted it from the time I did so. I will regret it for the rest of my life because I believe we were led a merry dance by the bankers. We did not have the proper information and while I will not use the word one is not allowed to use in the Chamber, we were told a lot of porkies and a lot of misinformation was around. Given events that have transpired subsequently, one now can see that many things that happened or were happening were under way long before Members entered this House on that fateful night to rescue the banks and were led a merry dance for which we are paying the price. Members must ensure that nothing like that ever besets the economy again and that Members of this House never again are given the choice they had that night. They faced the threat that the morning after there would be no money in the money machines or the holes in the wall or money to pay the wages of the public service, civil servants and so on. It was not a nice choice.

As I stated, there is a new budget process with budget reform and a budget committee. The Economic Management Council has been stood down, that is, the four Ministers in the previous Government who made all the decisions. As I understand it, even the Cabinet did not have a say; it was only the mighty four, as the fellow said. Had there been seven of them, one might call them the magnificent seven but I cannot call them that. I suppose another acronym will be found for them before Members finish. I wish the new Ministers and the new committees well, as well as the Chairs of the committees. The budgetary process will start much earlier and hopefully the days are gone when Members would come into the Chamber and sit down. I myself was a backbencher of a Government party and we used to just praise the Minister and applaud him when he finished reading out a statement into which we were waiting to dig afterwards to try to find out the bits and pieces that would be the sting in the tail. I believe it now will be up to all members of the different committees - but in particular the Committee on Finance, Public Expenditure and Reform, and Taoiseach - to have their input and to have a better understanding. All Members will have a better understanding by sitting in, joining in, by being involved in and by engaging in that process.

As for what Members have been told about the economic outlook, as anyone who lives in rural Ireland is aware, it has not jumped in leaps and bounds and has not taken massive steps. If there is a recovery, it is a fledgling one and trying to find an economic recovery in rural Ireland is like looking for the corncrakes, which are very scarce these days. Gone are the days when the corncrakes were in the meadows. I have heard the cuckoo this year several times but lamentably, the corncrakes are long gone and the recovery is as scarce as that.

It is as scarce as hen's teeth in many sizeable towns and regions, not to mention villages and communities. It is very serious.

It is very serious to see numerous tower cranes now in Dublin. We know what happened before. They were boasting that there were more cranes here than there were in London. We know what happens and we cannot allow that to happen again. I have certain fears that it will overheat in the capital again. Members present know that trying to get accommodation when we are here during the week is now nigh on impossible. That is a good thing in a way, but it is a very bad thing as well because we need balance in the regions.

The Minister with responsibility for regional development and rural affairs will have a big role to play. Not only the Minister with responsibility for rural affairs, Deputy Heather Humphreys, but every Minister in Cabinet will have to rural-proof and poverty-proof all legislation. The problem I have seen with legislation since I came into the House is that is it drafted by the drafters. I mean no ill will to them. They can mean well. However, by the time it is debated, put through Committee Stage, sent back and forward and made into legislation, it can become draconian. That can have a severe impact. Each and every sentence in any legislative procedure we pass in the House should be rural-proofed and poverty-proofed to judge its impact. There should be an assessment of the economic and social impact that those measures may have on the people we represent, our families and our communities. That is vital and I hope it happens.

As the Taoiseach said to us on numerous occasions during the talks on the programme for Government, the political landscape has changed utterly and will never again be the same. I believe he was right. He gave a commitment to meet with us for several days. The Ministers were there. The Minister for Public Expenditure and Reform, Deputy Donohoe, was certainly there. The Taoiseach said there was going to have to be a seismic and full change in the public service and the civil service to reflect the new situation. I worry if that is coming and if it is there. Are we ready and is our public service up to it? I am not bashing them. Since the foundation of the State we have had some very distinguished civil servants, and many or all go in to do a good job. However, I have found over the years that they are the permanent government. It is very hard sometimes to get them to change their ways. Ministers might want to do something but are not able to do so because the civil servants that are there will be there when the Ministers are gone and were there before they came in. We need a seismic change and must bring them with us on this journey for better governance, better social-proofing, economic-proofing and rural-proofing and a better understanding of how a life works and evolves. I am not saying that they are in an ivory tower. They are not. However, the system has become very cumbersome. Speaking for the self-employed, which I am myself, I must say it has become very cumbersome. There is so much legislation. Some of it was badly needed, but more of it is overarching, doubling up and criss-crossing. One piece of legislation sometimes directly contradicts the other. It is very hard now for a young man, woman or entrepreneur - whom we are encouraging - who has an idea and the energy, the passion, the enthusiasm, the foresight, the vision and all of the ingredients that are needed to stimulate our fledgling recovering economy to get on the road. While we have agencies out there trying to help them, many is the time the agencies do not come from the same breed and do not have the same passion and understanding.

While there are support agencies, the banks are closed for business. Do not mind even talking about them. They messed us over, tricked us and are not open for business, full stop. They are not supporting any business people at the moment. They are not supporting families, communities or any business initiatives. People can see that in the housing crisis. They are out to get property values up and out to get as much as they can. They have sold on many loans very unfairly - though obviously legally, because we have no proper legislation to deal with them - to vulture funds. They are not supporting any of the entrepreneurs that we need nor the businesses whose fingernails are worn from holding on since the onset of the recession in 2007. As we found out last night when discussing the social welfare Bill, if self-employed people default, crash or cease to trade, they have the Revenue Commissioners and everybody else to deal with. Their workers get social welfare supports, and rightly so. However, the businessman himself, the self-employed person, gets diddly squat. Zilch. That is unfair. Many of them are in very precarious positions and their families have to be educated, fed and clothed as well. Therefore, it is very important that we deal with that and try to support those people. There must be a better understanding from the system as to how these entrepreneurs think, what drives them, what makes them tick, and what hours they put in to make a reasonably successful business. We are not talking about multi-millionaires, though some of them will come on and grow into huge businesses.

The labour market has been mentioned in the debate. We are told we have a young, active and well trained market. However, we are finding that some of bigger foreign direct investment companies are telling us they are not seeing the kind of qualified people they want to see coming out of our universities. They did not say that today or yesterday. They have been telling me that in my region for ten or 12 years. We are too slow to adapt. We need to listen to messages like these, because FDI is huge in my county and region. We have some great long-standing FDI companies. It is tremendous work. We heard it at a conference in Galway about five years ago when we were told clearly that the labour market was not fit for purpose. The education system was not turning out the right kind of people. It was not that they were not smart, clever, able or capable; it was that they were not being trained in the proper direction. We need to look at that seriously. We need to look at the impasse in some of these universities. They are too colonial and they think about their own area. We see that at the moment with the Minister with responsibility for housing, Deputy Simon Coveney, who is looking at building accommodation. We dare not touch the universities or go near them. They are like fiefdoms that we cannot enter. We must get rid of that. Public service must serve the people and their needs from the cradle to the grave. We need to look at that quite seriously.

The dreaded words that came up during the election and some time before it were "the fiscal space". My goodness. We saw last night that thankfully the goalie on the opposing team had not the fiscal space, or the physical space, to stop the ball going in. We are all celebrating today and last night. That is a good thing and I salute it. Sport gives us all a lift. It is very important that the flag of the green, white and gold is out there. Two teams from Ireland are now into the last 16. I am not a big soccer enthusiast but I wish them well and I hope they do well. There is a spin-off of the feel-good factor from that for everyone as well. Whoever came up with this fiscal space, we know after the election what the people thought of it. We are told that in 2017 the Government might have a billion euro to spare and over four years it might have €4 billion extra. That is all predicated on the recovery and on the status quo. Hopefully, on the matter of a Brexit, the people voting today in torrential rain will vote to stay. The impact of the UK not staying has not been properly evaluated by us at all as a peripheral economy and island country that does so much business with its neighbour. Those figures are predicated on that. It is very slow progress.

On the agricultural situation,I am old enough to remember three or four deep and dark recessions. Each time, the farming and agricultural sector played a huge part in dragging us out of those recessions. This time, it has done so again. The sector had done reasonably in the previous two years, but this year it is on the floor. I have farmers coming in to me looking for farm assist payments. I am sure Deputy Scanlon and every other Member has the same. They are in abject poverty. They are not people who ever put their hands out to beg. They are always people who give and support. They are proud people who love the land and the produce and love to be productive, engaging and supportive of society in general. There is a deep crisis looming in farming with the price of milk in particular. The co-operative movements were set up by the late T. J. Maher, my own dad and others in the spirit of community and the little village of Kickhams, Mullinahone and all that. The ideas they had were very noble and brought it a long way. However, greed got in the way. There are huge conglomerates now. While they do good work, the likes of Kerry Group and Glanbia are too controlling. I have small wholesalers and business people who are supporting farmers whose milk is going to those co-ops. Yet they cannot get a penny in payment, cannot feed their animals and can hardly feed themselves.

That is not good enough. They have a set price, all kinds of schemes and millions in profit. Many of them went on adventures overseas but many of those went askew. Sometimes obscene wages are paid to the chief executives and others while the people who put them there are forgotten. If we forget about the source, we will not nurture the seeds. Those seeds are our rich agricultural land for sheep, cattle, corn, cereals, potatoes, fruit and so forth. If we do not support the farmers and the growers, there will be little point in talking about the PLCs because they will not be there. We have flagship industries but they must now turn back, bring the flag down to half mast for a while and look after the people on the ground. Those people must be supported. They are crying out for support but it is not being given. I have never seen the like. I work in that area. I must declare an interest in a business that supplies diesel to farmers. The farmers do not have money. They usually are very good at paying their way and their bills but they are in a deep financial crisis. It is not easy in that sector.

On the fiscal space and what we will do with it, there must be better value and accountability for our spending. We must get better value for every euro we spend. It is also important that we evaluate it. There should be not only spring, summer, autumn and winter economic statements but also proper debates such as this one and debates in committees on the economy, where it is going and the value for money being achieved. There is a great deal of waste across several Departments. One can see that in the HSE and in the crisis in accident and emergency departments, even in my home county. It is awful and makes me sad. I am called regularly to the accident and emergency department in my home town and I see the mayhem there. We see on television what happens in war-stricken countries but it is not far behind what is happening in some of the accident and emergency departments. The front-line staff are under pressure.

Again, there is too much management in the HSE system but not enough front-line people. It is smothered with managers. When the matron ran a hospital, it was run properly. Now, there is every type of manager one can think of, with people walking around with clip charts. There are floor managers, ward managers, bed managers, linen managers, perhaps mattress managers and catering managers but there is no management. Then the Health Information and Quality Authority, HIQA, visits and issues damning reports of unclean and unsafe practices, despite all of the managers. We must root that out and have accountability. The HSE should have been stood down, as was promised to me by two previous taoisigh, former Deputies Bertie Ahern and Brian Cowen. There were also commitments, or at least rumblings, about it from the Government but the HSE is still there. Staggeringly enough, the HSE has more officials employed now, and I am not referring to nurses or doctors, than it had in 2007, despite the recession. It beggars belief.

I wish the Minister, Deputy Harris, who is young, intelligent, capable and a man of vision, well in his office as well as his four Ministers of State. We must serve the public patients and not close down wonderful old institutions, such as St. Luke's Psychiatric Hospital in my home town. That has been turned into offices and the offices in the Department of Public Expenditure and Reform, which I visited during the talks on forming a Government, do not have carpet, paintings or seating that are as good or as plush. That is not necessary. Money must be invested in our hospitals. We saw the fiasco with the new children's hospital and how it has taken so long. We must examine every shilling of our spend.

There are huge costs in the justice area. This was raised this morning by Deputy Michael McGrath. There are savage costs for young drivers. I have a young girl who passed her driving test last Thursday night. To pass a driving test a person must take 12 lessons, and rightly so. People must pass the theory test and the driving test but before they can get out on the road, they are penalised. They are being made criminals before they start. They should certainly be penalised if they have accidents or are reckless but why should they and their parents be penalised otherwise? The parents cannot afford to drive them to work but if they buy a car for the young person, the insurance will cost more than the car. The cost of insurance is a racket. I described the insurance companies previously as terrorists and I was challenged about it but they are because they are creating terror for families and businesses who cannot afford the insurance. That is what terrorists do - they hold people hostage for ransom. One cannot manage without insurance.

A man stopped me in the street in Tipperary town last Monday week. He has been driving for 60 years. His insurance last year cost €400 but this year it is nearly €1,200. He was given no explanation. He also has a no claims bonus. We must stop that. We have a consumer protection agency and a plethora of other agencies and regulators but they are not doing their business. They should be disbanded because they are not fit for purpose and they are not regulating.

Some speakers have mentioned the labour market. The labour market has been ill-treated. I have been an employer since 1983 or 1984 and I have tried my best, within the legislation, to have a good relationship with my employees, which I believe I have always had. Many of them have come and gone, progressed to other jobs, returned to me and so forth and tried to better themselves. However, the way big companies are treating their staff now is inhuman. It is not good enough. Clonmel experienced this a couple of months ago. Suir Pharma Ireland has been in Clonmel for nearly 40 years and it was taken over 15 months ago. Obviously, the competition authority was not consulted or was not watching. Suddenly, it was gone. Workers had come to me about it eight or ten days beforehand and I tried to contact the company but could not. They were called in on the Tuesday and they thought it was good news but they were given their P45s on the Thursday morning. There was no explanation. That is no way to treat staff. They were left to the machinery of the State.

I thank Joe McGrath, the county manager, South Tipperary County Council, all the other agencies, including the Department of Social Protection, and the Tipperary Institute who arranged an evening in the Clonmel Park Hotel to provide the workers with somewhere to go where they could talk to somebody and find out what opportunities they had. One gentleman had worked there for 37 years. Where will he go? It is not good enough that companies can come here and buy such good, long-standing businesses. It was an indigenous business in Clonmel. It started up there as a little acorn and grew to a big oak tree but now it is plundered and gone. There is no organisation watching out for that. We saw it happen with Clerys and elsewhere.

There are also the low-paid jobs, which are now in the public service. The unions must take responsibility too. Their representatives meet us in the House and elsewhere to discuss the yellow pack wages. However, they negotiated them and they had no problem pulling up the ladder when they got to the top. They must take some responsibility. It is a shame to expect a young Garda recruit to be paid €23,000 a year when one considers the cost of rent if they are posted to Dublin or any busy town. It is unacceptable. How can we expect them to respect the uniform and serve the public? There are so many who apply to the Garda and are willing to go through the rigorous application and training process. We must support them with a decent wage. The same applies to teachers. There is discrimination in the school staff room with some teachers on one wage and new teachers on a different wage. The unions must take a certain amount of responsibility for that as well. They bought into it and accepted it, although they are wringing their hands about it now. The Financial Emergency Measures in the Public Interest, FEMPI, Acts also must be addressed. It is very serious.

As I mentioned last night, there are many activation schemes. They are necessary. I am a passionate believer in the community employment, CE, schemes, - I have been involved in one since 1988 in my constituency - the Tús scheme and the rural social scheme, which is a lifeline for farmers. They want to go to work and enhance their community, be it by cleaning rivers, involvement in the Tidy Towns competition or otherwise. Those schemes are important but they have become restrictive. One only gets a year on them. The CE schemes have also become restrictive. When good people reach 55 years of age, they are turfed out. At one time, 15% of them were kept on the schemes and one did one's best when choosing which people should be retained. It is not a very nice job for volunteer sponsors. They are volunteer employers and volunteer boards. We will see what will be exposed tonight about a charity. It is awful. Throughout this country volunteers, who are ordinary working people with little expertise but with commonsense, are running those schemes. However, they are becoming too restrictive, so we must examine that.

On the other hand, a new programme has been set up for job activation called JobPath. It is in my constituency. A gentleman from a family I know - he and his wife have worked all of their lives - has contacted me a number of times in the past 15 months trying to get a job. He cannot get CE or any meaningful employment. He is being forced into JobPath now and must do training, which he has already done several times. If he does not do it he has been told he will be knocked off jobseeker's allowance. That is unacceptable. I support the establishment of programmes such as JobPath but they cannot bully people into doing training which they have already completed. That is farcical. It must be examined and I will talk to the Minister, Deputy Varadkar, about it because that is not respectful of any man.

This man is quite intelligent and is a capable and able worker. He worked in all kinds of jobs and wanted to work; he cannot be treated like that.

Whatever we do, we need more investment when it comes to carers and a social conscience because, as was pointed out here last night, they are probably working for €2 per hour in some cases if one was to count it. They do not do it for money. They do it for love of their loved ones and next-of-kin. We should have an audit of the value they provide. They keep hospital beds free and people in their homes where they thrive and recover better and where they want to be. They should not be described as a resource because they are all human beings and good people who need to be supported, not squeezed.

Legislation is too restrictive. It has become restrictive over the past number of years for young people getting into the job market. I am sure the Ceann Comhairle will not mind my comparing us in terms of age. When we were young, we all tilled sugar beet. We could work with farmers when we were 12 or 13 years of age. It was the best training we ever got. Now a young person cannot work until he or she is 16 years of age, or possibly 18 years of age in some jobs, and they get no training. The former Tánaiste was berated here some time ago for talking about people sitting at home looking at computers but that is what they are doing. They are better off doing meaningful work outside, getting the grá for work and an understanding of how hard it is for their mothers and fathers to put food on the table, put them through education, give them clothes and have a reasonable standard of living. They can get experience and know the value of a euro rather than not being allowed to do it because of labour laws saying that they cannot do this or that. Even in family businesses there are huge restrictions on age and the hours a young person can work. Hard work never killed anyone. The ethos of work must be instilled in people from a very young age and we must have work over welfare, but it must be rewarding for people to go to work as well. We can have measures like family income supplement but we must have a fair day's pay for a fair day's work.

I think the National Employment Rights Authority, NERA, is still hovering around somewhere. NERA was set up in a blaze of glory with regional headquarters in Carlow and five regional offices with a plethora of people. I appealed to the Taoiseach at one time to put them out in support of employers. I am all for workers' rights but they were too zealous. I do not know where they are now but we can be sure they are all still in position. This is the problem. These agencies or quangos are never stood down. They are like noxious weeds. You need to spray them twice a year to keep them back. I mean the quangos, not the people. Quangoland took hold here. They must have given it 10-10-20 or nitrogen because it really took off. If any farmer could grow crops as quick as the quangos grew here, they would have been very successful indeed. We need to examine that as well because they are putting people off the road and out of business with all their visits instead of asking how they can help them. I have to include the Revenue Commissioners in this bracket as well because it needs to understand how difficult it is for people to keep their doors open. I am not saying anybody should evade tax, but they should be supported and Revenue should be more supportive and understanding. We see people named every so often and you find that half or maybe two-thirds of the money they have paid consists of fees and interest. That is obscene.

The role of the sheriff and how they threaten businesses, and how lucrative this area has become, with unregulated henchmen, must be investigated. It is a third force with people in balaclavas going around threatening people. We got rid of the Black and Tans but they are back. They are not Black and Tans but they are brown tans and they are as bad as the Black and Tans because they are terrorising people. We need balance and we need to rein in these quangos and the sheriff and have respect for employers, employees and all of our people from the cradle to the grave - and before the cradle, in light of the legislation I see coming forward next week. We need to be mindful of that as well. There is another Bill before the House this evening that seeks to ban hare coursing. That is an industry as well. We are going to have all these pieces of legislation that will ban all these things, yet we talk about how we want jobs. That activity is worth a fortune to our county. The national coursing finals bring in €6 million every year and small farmers and ordinary people have greyhounds. Everybody with a greyhound has to have a trainer and meet veterinary bills. It is an industry in itself, and we cannot just decide that this is-----

4:55 pm

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Ceann Comhairle; Kildare South, Ceann Comhairle)
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Perhaps we will save that for later on this evening. I thank the Deputy for his contribution and his wonderful analogies.

Photo of Stephen DonnellyStephen Donnelly (Wicklow, Social Democrats)
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I am very happy to have the opportunity to speak to the two Ministers about the summer economic statement. I read through it in some detail. There is undoubtedly some useful information in it. The more I read through it, the more I looked for balance, and I concluded that it is largely propaganda. The forecast figures are what they are but the framing of those figures and the framing of the decisions being put forward struck me as largely propaganda. There is good economic news and we should not be afraid to talk about it. Unemployment is falling, thank goodness, and the economy is growing on aggregate. These is no problem pointing these things out; they should be pointed out.

The statement largely attributes the good economic news to the Government, which I guess is understandable, although it is not true. The Government obviously deserves some credit for some of the things that have happened. However, the economic growth and employment figures are largely the result of external factors. This is not just my opinion. Economists have written about and analysed this. A weak euro, particularly relative to sterling and the US dollar, has been very useful. I would not say mass emigration has been very useful but it has obviously driven down unemployment. We have seen an increase in global trade coupled with a very large multinational sector. These are the things that have driven the economic growth, but they are not pointed out in the statement.

What is more important is the fact that the statement does not give us a balanced picture of what is going on economically. Unemployment in Waterford is actually on the rise. As we all know, long-term unemployment remains stubbornly high. The national broadband plan, which is something to which I have paid a lot of attention over the years, is being pushed out further and further, with announcements coming quite regularly. There is no question that many rural towns are still in decline. Youth unemployment is falling but it is still very high. None of these things are referenced and they are important economic facts for framing a debate about how we should invest future public moneys.

Socioeconomic analysis is also missing. One in nine children in Ireland lives in consistent daily poverty, which is relevant to how we invest future moneys. Deprivation rates have doubled for certain vulnerable groups such as lone parents. This is relevant to how we decide to invest our money. Waiting lists for operations now take years. I spoke in the House last week about how someone will wait two and a half years from GP to operating theatre for an orthopaedic operation. Something on which we probably all agree is that waiting lists for special needs assessments and interventions such as speech and language therapy for children now take years. These things are relevant to how we invest public money in future years. The statement should contain a proper, balanced socioeconomic analysis that shows the good, because there is no harm in showing the good, but that also shows the bad. Things like the housing and homelessness crisis are relevant to how we invest future moneys.

I put it to the Minister that it is this rose-tinted and unbalanced view that frames that Government's intention to reduce taxes and erode the tax base. If we were not aware of the social challenges, perhaps we could appropriately have a debate about eroding the tax base. If we did not know that children were waiting years for special needs assessments and about the level of youth unemployment, about the cuts to student funding for our third-level institutions year after year, which has seen them tumble down the global rankings, and the 60% cut to basic scientific research in our third-level institutions, a conversation about eroding the tax base would probably be sensible. If we did not know about the level of help that many SMEs need, we could have this conversation. Yes, things are growing in Dublin, and long may they continue to do so, but there are SMEs all over the country, be they in my constituency of Wicklow or elsewhere, that are hanging on by their fingertips.

They need investment and support but eroding the tax base diminishes our ability to provide that support. The Minister is a student of economics. The rationale given for eroding the tax base centres around marginal income tax rates. The statement says:

Income tax reform will be a key element in supporting employment growth. There is a strong economic rationale for a broad income tax base with low marginal rates that incentivise and reward work.

The Minister and I know that is not true. For that to be true, we would have to believe that the current marginal rates are stopping people working. The marginal rates affect those who earn over €36,000, €40,000 or €45,000. For this statement to be true, we would have to believe that there are thousands of people in our society who could get a job earning €40,000, €50,000 or €60,000 but are choosing not to because they do not like the marginal rate and if they see that marginal rate drop by one, two, three or four percentage points, they will then go to work. We all know that is simply not true. The marginal tax rate argument as an incentive to work is not true in our society. Perhaps if marginal tax rates were 80% or 90% it would be true. The idea that there is an army of people in Ireland who are employable but are choosing to live on social welfare rather than pay the marginal tax rate is not true. It does not stack up. The other argument I have heard put forward by the previous Government and by members of the Minister's party is that when they go abroad and talk to ex pats or people in professional services that we want in the country they tell them that Ireland's marginal tax rates are very high. They may say those things but for policy to be driven by that, we would have to believe that there are a load of people outside Ireland - ex pats or foreign nationals with high skills that we want to come here - who would love to come to Ireland because they love the culture, think Ireland has a great football team, excellent pubs, great schools, is a safe place and beautiful country, who really want to be there but because of the marginal tax rate they will not do it. I have not seen the evidence. Both the Minister and I have lived abroad. I have had many conversations with work colleagues and friends about where they will live and never once in years did the marginal tax rate come up. People might say that they will go and do development work in Zimbabwe, work in Norway, Ireland, the City in London or Australia. Never once did I hear anyone say that they wanted to go to Helsinki but because the marginal tax rate was too low they would go to Qatar instead. It just does not come up. I have no doubt that ex pats are telling Ministers they would love to pay less tax but for policy to be driven by that we have to believe something that is patently untrue. It comes at a big cost because reducing the marginal rates will not drive employment; it will diminish our ability to invest socially and economically. If we reduce tax rates, the greatest beneficiaries will be higher income people. The economic statement talks about targeting middle incomes but the reality is if the Government gets rid of USC the greatest cash benefactors will be higher income people. If higher income people get more money into their pockets they do one of two things with it. They either buy exports, like nicer cars or a nice television, or they save, neither of which boosts economic growth. In allowing that to happen we diminish our ability to do things that definitely boost economic growth. Investment in SMEs, broadband, high quality transport, education, children, public open spaces and the arts are things that we know absolutely boost economic growth. The Minister should think back to his days studying Solow growth models and endogenous growth models. Savings rates do not boost economic growth. The purchase of exports damages the balance of payments; it certainly does not boost economic growth. What boosts economic growth is investment in people, innovation, infrastructure and the means of production but that is not what we are doing. There is a false premise being used that if we reduce the marginal tax rate loads more people will work and there is simply no evidence to back that up other than anecdotal stories of Ministers being told that people would like to pay less tax.

It is also relevant that we are a low tax economy. The OECD, and the hybrid measure that IFAC uses, consistently show that the total revenue collected in Ireland as a percentage of GDP is significantly lower than the OECD, eurozone and EU averages. A few months ago, the OECD published its latest report on the tax wedge. We are now talking about the tax on labour - the tax paid by employees and employers in the 34 OECD countries. It found that we are close to the lowest amount on all of the case studies they used. On one of the case studies of a married couple with one earner and two children we are the lowest in the OECD. Of the four examples the OECD gave, we were in the lowest seven of the 34 OECD countries. That is the tax on labour so in aggregate we are a low tax economy. If one zooms in just on taxes on labour, we are a low tax economy. We are already very low, which suggests that the Government should use the several billion euro identified for tax cuts for productive social investment in communities, education and productive economic investment.

I agree that we need to put money back into people's pockets. The way to increase quality of living is not through eroding the tax base, it is through reducing the cost of living and systematically going after it. It is bubbling up in the Dáil. Fianna Fáil has quite rightly been pushing very hard on motor insurance costs and others are looking at other costs. The Minister for Children and Youth Affairs, Deputy Katherine Zappone, is looking at child care costs. The fact is that we are a really expensive country to live in. There are pinch points in one's life such as when one is paying for child care when costs are particularly high. It is not the experience in other countries. I will be tabling a motion on my proposal. I am not sure whether it is within the Minister's remit or the Taoiseach's. I suggest that we set up an expert group or an Oireachtas committee to address systematically the costs of living, including the cost of motor insurance, health insurance, energy costs, transport costs and child care costs. It is just too expensive to live here. If the Government pursues the cost of living rather than tax cuts, it will do two things. It will maintain our competitiveness, which tax cuts do not do because they push up prices, and it will increase standards of living. It will make it possible for people to live here because it is just too expensive to live here.

If we are going to invest we need to be very careful about where we invest. The summer economic statement provides an example of some very poor planning. The health care Estimate is coming in at an additional €500 million this year. I was quite taken by the sentence on page (i) of the summer economic statement which says "The demand for health care has also increased more rapidly than the capacity of the system to provide additional services." That is beautiful bureaucratic speak because health care demand is entirely predictable. The Government should hire a bunch of health care econometricians and they will tell it what the health care demand is. We should know - the problem is we do not - what the health care demand will be and we should be funding accordingly. That is not what has happened. What has happened is that this year the Government has said it wants an extra €500 million for health care. Let us think about that. The total budget space we will all be shouting at each other about in a few months is €1 billion. An awful lot of time will be given over in here, in the media and in households to discussing that. Half of that amount will just float through. It is not just €500 million for this year, which I did not realise when I was talking about it last week. It will add €500 million to the base. We are not just voting through an emergency €500 million to deal with stuff for this year, we are voting through an increase in the health care base of €500 million. We did the same thing last year and that got put into the base as well.

In the past few months, we have voted to increase the health care budget by 12%. We already had one of the highest spends on health care in the developed world. We must be much more careful about this. While I am advocating targeted investment in areas such as health care, including Cappagh Hospital, we must become much more rigorous about simply adding hundreds of millions of euro to such budgets.

Lastly, the summer economic statement is missing some critical information. It talks about the €11.3 billion fiscal space. What it does not say is how much of that is needed merely to maintain services as they are. This became quite a heated debating point during the election campaign, when the previous Government talked about €12.4 billion, but the funding for new measures was a small fraction of that. If it would be possible to get a view on the amount of funding available for new measures, it would be greatly appreciated.

5:15 pm

Photo of Eamon RyanEamon Ryan (Dublin Bay South, Green Party)
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I am happy to be able to give some thoughts on the summer economic statement. It is timely in the sense that we are in the middle of scoping work at the budget scrutiny committee and it is coming at a time when budgeting and the economic approach of the State are very much in the mind of a number of Deputies who are involved in that committee.

I would like to voice one thought, or, more precisely, a reflection, having read the document carefully yesterday. There was a comment that "The strong rebound of the Irish economy did not happen by accident; it is the direct consequence of determined policy implementation by the previous Government." There is only one point to flag, if I may, while I have the opportunity to do so. I do not dispute that the previous Government put in place policies that put us in a good position economically, but could we perhaps remember the late Brian Lenihan, who died five years ago almost this month? To a certain extent, we should be honest in admitting that there was a continuity in economic strategy and policy between that previous Government, the one I was involved in, and the subsequent one, which the Minister, Deputy Donohoe, was involved in. For a variety of reasons, the public does not believe it. They are not silly. They can see that there was a continuity in economic strategy and approach. However, we should be honest also so that we know what we are doing, how we operated and what we did. Much of the response was set out in the four-year plan which the then Minister, the late Deputy Lenihan, myself and other Deputies were involved in. If Brian Lenihan were here today, he would have been surprised at the extent of the turnaround. To be honest, in those darkest days in 2010, if anyone had said that in five or six years' time the economy would be growing at 7% per annum and unemployment would be coming down again, we would have been amazed. As a strategy, it has worked. I remember seeing the closing comments from Professor Alan Ahearne in the banking inquiry, as the Minister of State, Deputy Eoghan Murphy, will recall. I cannot remember the German academic whom Professor Ahearne cited, but he did cite international experts in looking at what happened in Ireland from the outside. We got ourselves into a very deep hole and in some ways we got ourselves out of it.

I suppose I should also add praise and recognition for the officials from the Departments of Finance and Public Expenditure and Reform, to whom I am not by nature close. In government I spent my time fighting with the Department of Finance officials and others, and I had a healthy combative arrangement, but they also worked hard in the national interest, particularly in the past eight or nine years, getting us out of that crisis and they deserve real recognition for the work they have done. If I were giving advice, which is surely our job here, it would be to the effect that there is a slight flaw in the character of the Department of Finance and Department of Public Expenditure and Reform in the sense that they do not have a great yearning for capital expenditure. They are nervous about the State making big investment decisions. One of the criticisms that could validly be made in the past five years or so of the approach to our economic recovery - it was one that was mentioned explicitly, among others, by the IMF and the European Commission - is that we over-cut on the capital side, and I think such criticism is correct. Politically, it is understandable because it is much easier to cut capital expenditure than to cut current expenditure in difficult circumstances, but I think we made a mistake. We over-cut on the capital expenditure side and we are seeing the consequences of it now. My central key point or argument, if I had been able to influence this before it was printed, would have been that while there has been, effectively, a €1 billion increase in the capital budget, it is not enough. In the allocation of resources, which is a budgeting issue, we should be putting more into the capital side. I will give a couple of examples of how that might be possible while still living within the budget rules under which we find ourselves. In the transport area, if we are looking back on that period in which we made the mistake of cutting the capital budget too much, one real, terrible mistake in my mind was not going ahead with the metro north project. It was sitting there ready to go. A €500 million EIB loan had been agreed; we would have got the cheapest deal possible. The contractors had spent years and millions of euro setting up the bidding process. It was the perfect counter-cyclical capital project. It would be nearly finished at this stage had we gone ahead with it in early 2011, when it was ready to go, but it was cut. We are playing catch-up on that now. It is funny that I find myself on the side of IBEC and the Dublin Chamber of Commerce, which does not happen often. The Dublin Chamber of Commerce made the key point that in the transport budget €1.3 billion is needed merely to maintain the existing assets, and we need a radical ramping up. The figures may be disputed. Also, to look at our own city, Dublin is the engine of the economy, as Mr. Derry Gray, the head of the Dublin Chamber of Commerce, stated here at a meeting last week. We have got to keep the engine working. Dublin is spending €150 million per annum. On a per capitabasis, Manchester is spending more than twice that and London is spending more than three times that, and that is what we are competing with. We are also living in a city which will suffer from gridlock, because the M50 will be gridlocked. We have a significant problem.We need an immediate ramping up of investment in short-term measures that we can take while we are waiting for the big public transport projects to start, including bus lanes, cycle lanes and critical infrastructure to make our city work, and that budgeting is not there. I see no commitment here to the scale of ramping-up that is required for such necessary transport investment.

Similarly, in housing, I agree with Deputy Donnelly. The critical economic approach we must adopt is to maintain our competitiveness and reduce the cost of living rather than going back to what we did in the early 2000s, which was merely to increase wages and put ourselves into an uncompetitive position, and the provision of housing is critical in that regard. It was interesting to listen to the debate at the Committee on Housing and Homelessness, where they were setting out how can we get around the European rules. There is a mechanism for us to go to a cost-rental form of social housing where there is a guaranteed future rental income that covers the cost of the construction, with which, I believe, we could go with a strong case to EUROSTAT or the European Commission stating that it should be allowed within the fiscal rules. It is long-term lending with a long-term revenue stream and, ultimately, it is a critical policy objective to improve competitiveness. I do not see that scale of investment being planned here.

Third, and critically, the economic statement does not refer to the point made in the stability programme update about the real risk for the State, fiscally and also from the point of view of competitiveness and reputation, from our failure to meet climate change targets. There is no strategic investment statement in terms of energy infrastructure and energy efficiency. For example, the Sustainable Energy Authority of Ireland states that we need a threefold increase in investment to improve the efficiency of our houses, which would also reduce the cost of living, which would make us more competitive and avoid fines. I would argue, critically, that there is a possibility of our raising funding from the European Investment Bank and the European Fund for Strategic Investments as revenue streams to help cover some of that cost.

My key criticism of the Department of Finance and the Department of Public Expenditure and Reform is that we do not have the necessary capital investment plans in place. If we are allocating resources in terms of either tax reductions or increased current spending, I would put more into capital expenditure, because our key economic challenge, although it is hard to believe six years on from the difficult times we went through, is that we are facing an economy in two or three years' time that will be at full capacity. The constraints that exist require us to invest in capital infrastructure. I am sure the Minister, Deputy Donohoe, has been arguing that because, as a former Minister for Transport, Tourism and Sport, he knows what I am talking about. Fair play to the Minister for reversing the decision on the metro north, because he recognised that we were not planning to invest at the scale or capacity we need. If we could change this, we should change it on the capital expenditure side.

In his speech earlier, the Minister for Finance dropped the Minister opposite, Deputy Donohoe, in it slightly, if I can say that. He recognised that the new process involves the publication next month by the Department of Public Expenditure and Reform of a mid-year expenditure report. I was very interested in that because of my involvement with the scoping committee for budget review. There was nothing in the speech given by the Minister, Deputy Donohoe, explaining what the mid-year expenditure report would involve.

I have consistently been highlighting an issue in the budget review committee and if that involves us just turning up at the end of July with an aggregate level of outlined expenditure for each Department, and we do not have time in committees to start getting into the real work we need to do, which is assessing the different options within each sectoral vote, we will not do what we need to, which is increasing the productivity of our current and capital spending. In a sense, we must put it to the sectoral committees and all sides of the House to say that we are all talk here about spending more here or there but we must rise to the challenge. The committees should have a set budget and they can agree or disagree as to whether another Department should get more or less. We should ask where those committees will make savings in order to facilitate the spending plans that they want. We should put the responsibility to the committees and the Parliament. That is instead of us giving a wish list with no responsibility to show where we would get savings or productivity gains. That is what we must do on the current side.

We cannot go back to 2003, 2004 or 2005, as if it were normal to just ramp up current expenditure year in, year out, without getting the commensurate productivity gains. That is one of the reasons the sectoral committees will have a real responsibility in this new budget process. There cannot be a free lunch for every spending plan and we must show how there could be savings within a departmental budget if figures are to balance.

The Minister for Finance mentioned the rainy day fund and that makes sense as we must promote counter-cyclical investment strategy. If we continue to see growth of 4% or 5%, with budget surpluses, we should be careful - as noted by Professor John FitzGerald the other day - that we do not just push into an inflationary environment. Economics are strange currently, as we have been printing money for the past ten years, but deflation is still around. It is very hard to analyse what is going on in the macroeconomic sense.

I have a suggestion, although it may not be possible to bring it about. I will throw it up as one option to be investigated. The European Fund for Strategic Investment - the Junckers fund - has €350 billion leveraged on a €15 billion European Commission pot put in at the start. As I recall, at the beginning the Commission stated that if a Government makes a collective investment in the overall fund, it may allow for extension of our fiscal space within the EU rules; it indicated it would form a credit within the fiscal space. Maybe if we are going with a rainy day fund, we should put it into the European Fund for Strategic Investment. I agree with Deputy Michael McGrath's comments in that there should be criteria for tapping into the fund. Perhaps in the European capital fund, we could get benefit through the fiscal rules. Perhaps that is a complete non-starter but I will put it out there.

During last year's budget submission, the Irish Business and Employers Confederation, IBEC, stated that it was critical of the Government having fiscal policy driven by availability of funds rather than meeting the strategic needs of the country. That still holds. It argues there is no strategic policy approach behind it other than whatever is the fiscal space and the numbers. That tends to be the finance approach to the world. We need some sort of strategic plan for the country that does not repeat our mistakes from the early 2000s. At that time, we set an investment plan and we did a spatial strategy afterwards that bore no resemblance to the former; we then ignored it anyway with decentralisation, etc.

In the 2017 review of capital funding, we should stitch in an obligation on the Minister, Deputy Coveney, to do a proper national planning framework. It is not just about the numbers of houses we build but where they are built, how they will be connected with transport and how they will be made really efficient. We should make a strategic decision that we are going green as a country because of its comparative and competitive advantages, including brand advantage. That strategic planning must come first. The economic and budget strategy should follow rather than just having numbers determining everything. I do not get a sense of that yet from this Government. On this side, we must be willing to help and put our views on the strategic approach. For me, it is going green, investing in capital and involving the Parliament to get real productivity savings on the current side. We must have the ability to change as part of the dialogue and process. In July, the sectoral committees must get straight into what are some of the options rather than just looking at headline figures.