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Cut-backs Not the Answer to Economic Woes - Morgan

8 July, 2008

Responding to the announcement by the Taoiseach Brian Cowen and Finance Minister Brian Lenihan of cutbacks designed to save €440 million Sinn Féin's Economic Affairs spokesperson Arthur Morgan TD said that while value for money must be achieved in all public sending and wastage and inefficiency must be ended, cut-backs are not the answer to the state's current economic and fiscal woes.

Morgan said that the cuts would have to be studied carefully, saying that there is mounting evidence that unannounced cut backs are already impacting on health and education services.

Morgan said, "Value for money must always be an objective when public money is being spent. There should be no room for wastage or inefficiencies, either in times of recession or in times of boom. The measures announced today will have to be studied carefully - if they involve genuine ending of wastage, of course they are to be welcomed.

"However the measures to end wastage and inefficiencies should have been introduced years ago - that they didn't act on these before now is just further evidence of how the Government has wasted public money over the past decade.

"While the Government is saying that recruitment freezes will not affect frontline services this has not been the experience in the past. We are very concerned that we are not getting the full picture today - there is mounting evidence across many services including health and education of cuts that are already beginning to hurt the most vulnerable. There is also every reason to expect, based on reports that Minister for Finance Brian Lenihan has given each Department targets for spending cuts, that serious cuts will be introduced in December's budget.

"What is happening today is merely the Government trying to create the impression that they are dealing with the economic difficulties which we are now facing. The Government has announced that it will achieve €440 million by way of the measures announced today. Faced with a shortfall in public finances in the year to date of €1.45 billion, (projected to reach €3billion by the end of the year) proposals to save €440 million do not give us confidence that the Government is grappling with these difficulties. Clearly we will have to wait until December's budget to see how exactly the government intends to deal with the revenue shortfall.

"The solution to the decline in public finances must be based on an understanding of why there has been such a dramatic decline in public finances. Neither Cowen nor Lenihan have stated publicly that they accept that mistakes have been made in the management of the public finances.

"Income and other taxes were cut to levels which are not sustainable causing the Exchequer to become precariously over dependent on revenue related to construction and consumption. This was done in spite of repeated warning about the dangers inherent in such a policy. This is the reason that this state is now experiencing a spectacular collapse in public finances.

"The answer to this situation is not cutbacks or increasing stealth taxes and charges. Increasing stealth charges and taxes will further damage the economic situation by pushing up the cost of living. Public spending cuts that will undermine our public services and hurt the most vulnerable should not be the first thing that the Government turns to at this time of tightening public finances. Quality public services are recognised as being necessary to the achievement of competitiveness - therefore they are key to our future economic recovery.

"If the state requires extra revenue to fund essential public services then that revenue must be raised in a fair, transparent and accountable manner with the burden falling on those who can afford to pay.

"What we need from the Government is for them to outline the measures that it will introduce in the short-term to stabilise the economy, to put forward a medium term recovery plan and for the planning to start now for a longer term re-orientation of the economy that ensures that in future the economy is built on solid foundations and that future economic prosperity is used to eliminate economic inequalities." ENDS

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