Martin Mansergh (Fianna Fail)

Social partnership was conceived of as an alternative to Thatcherism, neoliberalism and the concept that there was no such thing as society. Well-developed models existed in Austria, Germany and Sweden. Although we are often accused of being close to the Anglo-American model in this case we adopted and in some respects led the European model. Of course, no one should pretend social partnership is the sole cause of the tremendous burst of prosperity in the past 20 years. Its origin in 1987 was based on two crucial initiatives, namely, to get the fiscal situation under control and, allied to that, social partnership, which got the key groups in society to buy into a collective strategy.

The critics of social partnership say it is just a wage deal, which is nonsense. While wage determination is important, social partnership has put it into a much broader context. This has allowed for the making of palatable decisions which, if taken in isolation, would not have been palatable. In 1987, I remember reading an article written by, I believe Patrick Honohan, outlining why the economic policies of the Fine Gael and Labour Party coalition Government of the 1980s had failed. It was mainly because they had failed to get public service wages under control. Relationships with the trade unions were very bad, despite the Labour Party being in Government during that period. This was a new and better formula, not just for wage determination, but also for agreeing not only broad economic and social strategy, but also specific development initiatives also.

We can often forget that social partnership is a very important conflict and problem-resolution mechanism. When an agreement is made for two or three years, as has been the case, or even for ten years it is not possible to foresee every issue that might crop up even within six months. Issues may arise for which no provision is made in the programme. With social partnership, the social partners have immediate access to Government and can discuss a problem that may arise. How often have we seen in industrial disputes that could have been seriously damaging to the economy, the spirit of social partnership applied and the use of mechanisms, some of which go back to the late 1940s? The basic machinery works.

Francis Fukuyama is most famous for The End of History, which brings a smile to people's faces. He also wrote a very important book and article outlining that the success of societies and economies has a great deal to do with the degree of cohesion and consensus within the society, rather than continual painful stand-offs and confrontations. Social partnership has enabled this country to achieve a very high degree of social cohesion and consensus, probably to a greater extent than exists in most countries, which gives us a very important economic advantage.

While I will not dwell on the matter, it was right for the Minister of State to report some of the principal achievements of the past 20 years of which while social partnership is not the sole cause, it is nonetheless a key ingredient. The near doubling of employment is obviously one such achievement. We have been able to reduce taxation so that instead of being a highly-taxed country we have, overall, a fairly competitive system of taxation. We have managed to improve our public finances radically. In 1987, as it was then measured, our debt to GNP ratio was such that the debt represented 127% of GNP. Today depending on the measure used — I accept it is not comparing like with like — the general Government deficit is between 25% and 30% and heading downwards.

We have also managed to increase the level of social and infrastructural expenditure enormously. By comparison with today, we had, when social partnership was first advocated, no money to spend on infrastructure. There was no money to put into the rail or roads networks. We were barely ticking over. I accept we had put money into telecommunications and we had built the DART. However, at that time matters were progressing very slowly.

Very few countries are in our present fortunate situation where the public finances are improving, employment is growing, social spending is increasing substantially in advance of the rate of inflation, and we have a competitive taxation system. As can be read in the financial pages of the newspapers, many finance ministers around Europe state, as their predecessors in the 1980s had said, that this could not be done. Their belief was that it was necessary to increase taxation in order to increase expenditure. However, this is not true. If an economy is run properly, as we have done in the past 20 years and particularly in the past ten years when we have collected the fruits of it, it is not necessary to increase taxation.

Social partnership is sometimes challenged on the grounds that it is anti-democratic. However, I disagree. Democracy is not an exclusive monopoly of Senators and Deputies. It involves the broadest possible participation of society at large. Clearly, democratic institutions have prime importance. However, there is no monopoly on it. I do not agree that it is inappropriate for employers, farmers and unions to be involved in these decisions. Social partnership is a very healthy addition to the democratic process rather than a detraction from it. I am glad that Senator Coghlan had a broadly positive view of it.