Budget 2012

Dec
2011
06

Economy


Austerity is not working and everybody knows it. Everybody outside the Chamber certainly feels it, yet it is the only medicine that has been dished out by the Government today. What a pitiful disappointment for the tens of thousands of people who voted for the Government parties in the hope that they would represent something different. Far from being a crusading Minister coming to deliver something radical, the Minister, Deputy Howlin, is merely responsible for more of the same. He said his guiding principles for this delivery were fairness, jobs and reform, which is unfortunate, as these are precisely the three areas where the Government has fallen down. The only positive is that we will not have to listen to the Government parties bleating that this is all the fault of Fianna Fáil. This budget was its doing and it has chosen to continue the policies of its predecessors and to make ordinary people pay.

The points have been made and these announcements have been an absolute kick to people on social welfare. It is probably one of the most cynical exercises to pretend that core payments have been protected in order to provide a shield for the unleashing of a vicious attack on living standards of the most vulnerable in society. We now know the Minister, Deputy Howlin, is an equal opportunities butcher. The people in receipt of disability allowance will no doubt feel very proud that they are not being discriminated against and they can share the €4,500 cut that able-bodied colleagues received last year, with the reduction by €88 per week in disability allowance. It is €22 per week to those on disability between 21 and 24 and it is absolutely despicable.

When this is combined with cuts in gas and electricity, fuel allowances, rent supplement, one parent family payments and the benefit which the Labour Party indicated it would not cut – child benefit – it amounts to an absolute scandal. Listening to the Minister telling us that “The ageing population is already placing demands on essential health and personal social services”, are we to say “shame on them”? Is that the appreciation we give them for years of service to this State? They can share in cutbacks of €150 million to €300 million outlined by the Minister, Deputy Howlin. It is a bit ironic to hear a Labour Party Minister outlining these cutbacks while at the same time standing over the biggest expenditure hikes in interest on national debt. The interest went up in the past couple of years by €2.9 billion but will rise by €6.8 billion in 2012.

In other words, all the hardship and austerity is to pay the interest on money borrowed to bail out banks and fund the fiscal deficit. The Taoiseach told us we were not responsible for this last night and the United Left Alliance agrees. We will take that argument to its conclusion and if we are not responsible for it, we should not pay for it as the price is pulverising domestic demand and making the overall position worse. We know this because the Government is only doing what the shower who went before did. Some €21.7 billion has already been taken from the economy in cuts and by the end of next year, that will have a cumulative impact of €58 billion taken from the economy, an average of almost 9% of GDP per annum. To simply undo the damage of Government cuts, we would need a growth rate of 3.5% over the next four years, and the Government is not even predicting that rate.

There can be no economic recovery without people to work. It is a total indictment of the Government that the only concrete proposals for jobs relate to job losses. It is interesting that the Minister pinpointed a moneyspinner of €104 million from the reduction in redundancy rebates to employers, and the Government is clearly expecting quite a few people to lose their jobs in order for that level of savings to be generated. The Government is standing over 23,500 job losses in the public sector, with 6,000 next year. These will be nurses, teachers, council workers, gardaí, staff in social welfare offices and people at the coal face in delivering public services. There is no doubt that this will lead to an absolute catastrophe which will far outweigh any vague commitments to encouraging private investment to deliver jobs.

We should see the assault on the public sector in the context of the OECD report, which has already shown that with fewer numbers and resources, our public service delivers a fine level of service. What will be the impact of cuts and job losses? We saw the uproar last year caused by the impact of health cuts in many regional hospitals but there are plans to cut another €500 million from that. The Government is to cut a system already pared to the bone. The Rotunda hospital has 800 daily visitors, with one midwife to every 47 patients, despite the recommended safety level being one for every 33 patients. How can cutting health staff possibly improve our health service? It cannot.

One of the most embarrassing aspects for the Labour Party must be education. We were told by the Labour Party before the election that investment in education is the most important type we can make in our own future, and that it is central to our longer-term economic recovery. It is not something that can wait for the recovery to happen. The Labour Party does not seem to share this belief and participated in a pre-election stunt; not only has it failed to reverse the increases in college fees etc., but it has increased those fees by another €250. Postgraduate students are already meant to cope on a pittance of a maintenance grant equating to approximately €40, and they will see that axed. There is also the scandal of the school transport primary charge being doubled to €100 per student. How is that going to deliver a knowledge-based economy? I have no idea, but it certainly is not.

What we have in the proposal outlined by the Minister, Deputy Howlin, is the reality of upside-down economics. He talks about the need to create jobs but the only concrete proposals are to axe them. Where are the jobs going to come from? We have had an effective strike of private capital in this country in recent years, with a reduction in private sector investment of €33 billion. Despite the fact that the Government has failed to touch the Holy Grail of corporation tax, we have seen multinationals shed thousands of jobs this year. The reality is that the only way out of the crisis is a State-led programme of public works that would immediately put 150,000 to work on fixing our water infrastructure and delivering on our commitments in terms of hospitals and schools. Instead the Government’s answer is to axe the capital budget, viable projects such as metro north and many other worthy projects that could put people to work straight away and generate a stimulus in economic activity that is so badly needed.
When we step back and look at what the budget will achieve, one could ask whether it will make this country a better place or improve public services. The answer is “No, it will not” on both counts. What it will do is stand over a further transfer of wealth into the hands of those at the top of society while at the same time inflicting unrelenting hardship on the backs of ordinary people.

The Minister, Deputy Howlin, is fond of telling us that we are not being practical and that we must live in the real world. The Labour Party was not set up to be practical. Historically, its role in society was outlined as being one which would transform the lives of working people, not one that would prop up the Fine Gael Party time and time again. Its founder, James Connolly, made the point that the moral is not to be practical in politics because to be practical means that one has schooled oneself to think along the lines and in the grooves of those who rob one. That is effectively what the Labour Party has done today. It is an absolute scandal and James Connolly would be turning in his grave.