Seanad debates

Friday, 5 December 2008

11:00 am

Photo of Dan BoyleDan Boyle (Green Party)

It is a publication that has a particular political bend but it is also one that is recognised as getting the fundamentals of economic indicators right. It is framed in a number of sections, part of which is an overview of the global economy. It is a fairly gloomy assessment. It states that for the next few years, the elements that have brought about the worst economic global shock in 80 years will persist but that there is light at the end of the tunnel. Another section details from where part of that recovery will come. There is an extensive section on green technology and promoting a green economy as one of the weapons that will be used to bring about economic recovery. I am fairly confident this is a message the Government has already taken to heart and that future policy announcements will reflect this. If one thing is sure in terms of both a national and international global recovery, business as usual and the old approach to economics is not what will be successful. We need to do things differently and we need to do different things.

The Economist world review, which is contained in each of their annual publications, is an overview of the world economies on a paragraph by paragraph basis. If one reads the European and American sections, it indicates the scale of the problem we have to overcome as an open economy that exports the vast bulk of its goods and services. It also points out that the majority of the economies of Europe, the countries that collectively make up the euro zone, are now in recession, as was confirmed yesterday and was one of the reasons the European Central Bank brought about its largest ever cut in its lending rate of three quarters of a base point. This is a point Opposition parties need to ponder in particular. It is an issue that affects all other countries, particularly our trading partners. The policies we need to have in place, which I believe the Government is putting in place, need to reflect this reality.

If one considers our largest trading partners such as the UK and the United States, they are listed among those countries that will have either zero or negative growth in the coming year. It is a similar story with other large economies in Europe such as France, Germany and Italy, as well as countries such as Estonia, the Baltic nation which was described as one of the success stories of the modern economy. Ironically, one of the few countries that will be experiencing economic growth in the next year is Hungary, a country that has just had to be rescued by the International Monetary Fund. I suspect it is because of that infusion of funds that it will experience some level of growth.

The question we need to ask ourselves in general terms is what are the strengths we can build on. Unlike the 1980s, we are a stronger and more diverse economy in terms of the goods and services we provide and those with which we trade. We have gained in terms of potential and levels of confidence. I agree with Senator O'Toole that one of the biggest factors towards maintaining economic strength and building on economic potential is to use the confidence we built, which we never really had in the national economy until the last ten years but which was one of the biggest successes of the Celtic tiger. There is a danger that in talking down the economy, we are bringing about a degree of wish fulfilment, which could be the biggest loss of all. It is not the indicators of economic growth such as inflation, interest rates or unemployment that will be the key factors. It will be the loss of confidence, either individually or collectively, that will slow down and stunt our ability to bring about economic recovery.

There is a responsibility on all of us in political life to make sure the path ahead is built on that confidence in particular. I would be a glass half full person and I would be confident we can get through this. On the other hand, there is a need for a degree of honesty as regards where we are economically in both national and international terms. This is a situation that has not been experienced for 80 years and it is one that has come suddenly in terms of the severity of the shock. As a result, the policy initiatives that have had to be put in place have been severe in their action as well as in terms of their hopeful ramifications. From here on, once the difficult decisions are made, we can recover. However, we must be honest that there are more difficult decisions ahead , particularly in regard to the public sector. I agree with other speakers, particularly Senator MacSharry, that that way ahead must be based on what has been successful in the past during periods of economic prosperity, particularly in regard to the use of the social partnership model.

The most honest we can be with the people and those who are in charge of operating within the Irish economy is by explaining that this is a process that will be prolonged, particularly in terms of what was experienced in the past number of years. We are talking about a two to three year period of adjustment both nationally and internationally. This will require patience, policies that are predicated on social justice to ensure those who have least in our society are most protected and, on the other side of the social justice coin, that those who have achieved most in an era of economic prosperity are those who contribute most in terms of maintaining public services, which is all we are discussing at present.

This is the most important point we must get across in the public debate on our immediate future. Every additional cent we spend in terms of trying to add on and improve public services in the coming years will be borrowed money. The scale of borrowing we have put in place for the next three years is €35 billion, most of which will go on necessary capital and infrastructure spending, but quite a large proportion of which — necessarily large due to the situation in which we find ourselves — will go to fund current expenditure and public services. Until we get the balance right in terms of taxes and control of public expenditure, it is an imbalance that could lead us down a road that many of us wanted to leave behind 20 to 25 years ago. It is important we are aware of that danger and that we try to avert it as far as possible.

The calls that have been made with regard to patriotism may have been misunderstood and perhaps overplayed but the reality is we are in a situation that requires a collective effort in terms of pointing a way ahead to bring about recovery in the soonest possible time. It requires the willingness to take a level of economic pain among those who have the ability to do so. I am confident the Government can frame policies that will allow those who have least in our societies not to feel that effect but there is also a responsibility that we have ongoing debate to make sure those promises are lived up to and that the potential that exists in this economy can once again be realised in the short term.

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