Ireland is now over four years in economic crisis. The government and the Troika believe that crisis consists of two elements – the state’s budget deficit and the banking crisis. The lack of growth in the economy, mass unemployment and soaring emigration numbers factor very low on the government and Troika’s priority list - as does the growing poverty, the decimated public services and the mushrooming mortgage crisis.
At the beginning of this crisis, Sinn Féin set out a 3-pronged approach to recovery:
At the heart of our economic policy is the simple acknowledgement that the deficit is not the cause of the economic crisis – it is the result. Treating the result of the crisis won’t bring about recovery. For that we have to look at the cause.
In October, we produced a jobs plan which contained a €13billion stimulus (and set out how that would be paid for) and a range of other measures to foster job retention and the creation of new jobs. This is a detailed plan which, implemented over 4 years, would have a hugely positive effect on job numbers, GDP growth and the deficit. It would also contribute to environmentally sustainable economic recovery.
This alternative budget, ‘Making the right choices’, is concentrated on the other elements of the crisis – the deficit, the European impact and the detrimental effect of partition on the island economy.
In this alternative budget, we set out the tax and savings measures we believe are the right choices to make a €3.5billion deficit adjustment in Budget 2013. We also set out the expenditure we would make to protect vulnerable groups from the harshness of deficit reduction. This is a priority for us. We believe that budgets should be about more than just deficit reduction. They should be about improving people’s lives.
What Sinn Féin offers is a consistency of approach. We would protect the interests of vulnerable groups, families and workers in our budgets – unlike the Labour Party, who make promises, but turn those pledges on their head as soon as they’re in government. Unlike Fine Gael, we won’t be directed by vested interests and wealthy lobby groups. And unlike Fianna Fáil, we won’t bring the state to economic ruination. These three parties have lost all credibility on the economic front and offer no hope or vision for the future.
The choices we make aren’t easy. To bring in any amount of tax, somebody has to pay it. To make savings in public spending, something must be cut. Some sectors would be hit by our budget proposals. However, most families and public services would be protected because we make the right choices to secure economic recovery.
In this alternative budget we set out a budget adjustment of€3.5billion. This comes from €2.758billion in new taxes after adjustments, a €220million tax carry-over and €1.044billion in savings. We also set out new expenditure of €338.68million on protecting children’s rights and protecting families. Our total amount of tax and savings exceed our adjustment target by€184million, to allow for a partial year effect in 2013.
A €3.5billion adjustment, according to the Department of Finance, will have the effect of reducing the deficit in 2013 to 7.5% of GDP, but it must be understood that this proposal does not take into account the positive effect our jobs plan,published in October, would have on GDP and government finances, if it was to be implemented alongside this deficit adjustment in 2013.
We are committed to reducing the deficit to 3% by at least 2016. Under the government’s plan, this €3.5billion adjustment will see the total amount of taxes and cuts in the state, since the crisis began, stand at €28.5billion. By the time they reach the 3% Stability and Growth target, it will have topped €34billion. It is our firm belief that the scale of this adjustment has been unnecessary and caused by an inability to see the cumulative negative impact of the type of measures introduced on employment and consumption. It has also increased because the new government, Fine Gael and Labour, decided to follow the old government, Fianna Fáil and the Greens’, bank strategy of unconditional bail-outs.
This budget offers us an opportunity to change course. Growth friendly measures, not cutting the capital budget, focusing on job creation, and putting private bank debt back in private hands, will bring us to the 3% target without causing the same degree of social and economic damage that the policies of Fianna Fáil, Fine Gael and Labour have.