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Finance Bill implements one of the most disastrous Budgets ever – Ó Caoláin

26 November, 2008 - by Caoimhghín Ó Caoláin TD


Speaking on the Finance Bill in the Dáil this evening Sinn Féin Dáil Leader the Bill implements one of the most disastrous Budgets ever imposed on the Irish people. Deputy Ó Caoláin criticised the Government's over reliance on the construction sector and called on them to bring forward a strategy to get construction workers back into employment or education.

Deputy Ó Caoláin said, "This Finance Bill implements one of the most disastrous Budgets ever imposed on the Irish people. It seems that as the Taoiseach and his Ministers returned from their summer holidays they witnessed with growing panic the massive recession facing the Irish economy. The fundamentally flawed economic decisions of the past decade were coming back to haunt them. The chickens were coming home to roost. And the Taoiseach and his Ministers started to run around like headless chickens.

"Their panic reaction was to bring the Budget forward to 14 October. It was a rush job and like all rush jobs it quickly fell apart. Within days key decisions like the axing of the automatic medical card entitlement for over 70s were altered - but not withdrawn. We had the unprecedented sight of Cabinet members and backbenchers apologising to the public for decisions that they stood up and applauded in this chamber.

"But make no mistake, the savage Budget announced on 14 October remained and remains a savage Budget and its worst effects have yet to be felt.

"The Government failed to accept that the over-reliance on the construction sector was not sustainable and could not continue indefinitely and consequently failed to put in place a strategy to deal with the anticipated contraction of the construction sector or the needs of those dependent on that sector for their employment.

"An estimated 30,000 plus construction workers have lost their jobs to date in 2008. The lack of alternative employment is resulting in workers who lost their jobs emigrating in search of work.

"The Government still has not brought forward a strategy to get these workers back in to employment and/or training. It has allowed the social security entitlements of many construction workers to be undermined by failing to take action as unscrupulous employers coerced workers into registering as self employed.

"To increase our competitiveness and aid economic recovery the Government should frontload infrastructure projects that can employ workers from the construction sector, including transport, schools, crèches, hospital and primary care development.

"In particular we want to see a State Housing Infrastructure Plan, designed to address both housing need and unemployment in the construction sector." ENDS

Full text of Deputy Ó Caoláin's contribution follows:

Finance Bill 2008

Caoimhghín Ó Caoláin TD, Sinn Féin Dái leader

This Finance Bill implements one of the most disastrous Budgets ever imposed on the Irish people. It seems that as the Taoiseach and his Ministers returned from their summer holidays they witnessed with growing panic the massive recession facing the Irish economy. The fundamentally flawed economic decisions of the past decade were coming back to haunt them. The chickens were coming home to roost. And the Taoiseach and his Ministers started to run around like headless chickens.

Their panic reaction was to bring the Budget forward to 14 October. It was a rush job and like all rush jobs it quickly fell apart. Within days key decisions like the axing of the automatic medical card entitlement for over 70s were altered - but not withdrawn. We had the unprecedented sight of Cabinet members and backbenchers apologising to the public for decisions that they stood up and applauded in this chamber.

But make no mistake, the savage Budget announced on 14 October remained and remains a savage Budget and its worst effects have yet to be felt.

An ill-considered Budget has been followed by further ill-considered measures in this Finance Bill. Low income families are being hit with the 1% levy on all incomes above €18,305. That figure is far too low and we in Sinn Féin have called for the 1% levy to be applied to incomes in excess of €38,000. We call for the threshold for the 3% levy - which we welcome - to be lowered to €200,100.

It is typical of the wrong-headedness of this Government that they refused to introduce such a levy on higher incomes during the Celtic Tiger years and to devote the revenue raised to address inequality. Now they are doing it out of budgetary necessity while at the same time penalising low income families with a 1% levy.

Low income families are also penalised by the VAT increase to 21.5%. They will be disproportionately affected by the rise in prices. And here we have another example of the Government's perfect timing. VAT goes up by .5% to 21.5% on this side of the Border and is reduced by 2.5% to 15% in the Six Counties.

The VAT gap thus created along with underlying cross-border price differences is already having a very damaging effect on the retail sector and employment in the Border counties within this jurisdiction. As usual the Government made decisions without giving a thought to the effect on such vulnerable local economies. Their failure to harmonise the economy on an all-Ireland basis is a long-term failure with real consequences for real people and it must be addressed.

At Taoiseach's Questions today the Taoiseach tried to misrepresent the view of Sinn Féin, reiterated throughout the Celtic Tiger years, that the Government had made the economy dangerously over-reliant on inflated property prices and had depended too much on construction for employment. He deliberately misinterpreted this as hostility on our part to construction.

For the Taoiseach's benefit and for the benefit of others let me spell it out again. The basis for sustainable growth was laid by Irish workers in the 1990s. Fianna Fáil-led governments from 1997 had the resources to invest in sound infrastructure, to develop public services that were both equitable and efficient, to foster industry that provided employment and raised revenue through exports, to create an enhanced society as well as a prosperous economy.

What did they do instead? They saw a growing economy and they decided with their friends the developers and the speculators and the bankers to reap the rewards through ruthlessly exploiting the increased demand for housing and commercial property. They created a massive property bubble and a perilous over-dependence on construction for employment.

Now the bubble has burst. Construction employment has collapsed and so has Government revenue. Families are mortgaged beyond their means and many are losing their homes. Negative equity is rife and the full consequences for individuals, families, companies and financial institutions have yet to be seen. All of this was predictable. We in Sinn Féin were among those constantly highlighting the folly and the injustice of Government economic policy.

We identified clearly how the economy was allowed to become grossly over-dependent on the construction sector accounting for over 20% of the State's GDP and employing one in every eight workers at its peak. An over-inflated construction sector masked a steady flow of job losses, particularly in provincial towns.

The Government failed to accept that the over-reliance on the construction sector was not sustainable and could not continue indefinitely and consequently failed to put in place a strategy to deal with the anticipated contraction of the construction sector or the needs of those dependent on that sector for their employment.

An estimated 30,000 plus construction workers have lost their jobs to date in 2008. The lack of alternative employment is resulting in workers who lost their jobs emigrating in search of work.

The Government still has not brought forward a strategy to get these workers back in to employment and/or training. It has allowed the social security entitlements of many construction workers to be undermined by failing to take action as unscrupulous employers coerced workers into registering as self employed.

50.3% of those who lost their jobs in the construction sector in the year to the end of June were under the age of 25 while 23% of those under the age of 25 still employed in the construction sector at the end of June did not have a Leaving Certificate qualification.

The collapse in construction is a critical factor in the current recession which has spawned this regressive Finance Bill. But rather than simply criticise the Bill and the Budget Sinn Féin has put forward progressive proposals for recovery.

These proposals are based on need to make sure that a controlled reduction in dependency on the construction sector includes measures to ensure continued employment opportunities in construction as well as measures to enable workers from this sector to access alternative employment.

To increase our competitiveness and aid economic recovery the Government should frontload infrastructure projects that can employ workers from the construction sector, including transport, schools, crèches, hospital and primary care development.

In particular we want to see a State Housing Infrastructure Plan, designed to address both housing need and unemployment in the construction sector. This would include:

- The construction of the required social housing by local authorities on a targeted basis over 5 years

- The completion of currently stalled regeneration projects in local authority housing estates and complexes

- A programme of upgrading of local authority dwellings, with special emphasis on housing for older people

- A social housing maintenance programme, equipping local authorities to ensure that their housing stock is kept in good repair

- A home heating programme to ensure that local authority tenants, especially older people, have sufficient and energy efficient heating in their homes

- A home insulation programme to conserve energy and reduce energy costs for householders

- A home adaptation programme to carry out essential works to adapt homes for the use of people with disabilities, in tandem with reform of the Disabled Persons' Housing Grant.

There should be specific training and upskilling courses for alternative industries to construction to be made available through FÁS and the state's universities and DITs. We need to see special retraining for construction workers so they can work in the energy saving and renewable energy sectors. The Government should introduce a specific back-to-education scheme for construction sector workers under the age of 25 who did not complete second-level education. Measures to allow apprentices to complete apprenticeships that were curtailed due to the recession in construction should also be introduced.

The Government should use either this Finance Bill or the Social Welfare Bill to address the predicament of construction sector workers who were pushed into becoming self-employed by their employers and who consequently do not have adequate social insurance contributions to access social welfare entitlements. Their contributions for the last five years should be considered rather than the normal governing contribution period of two years.

The debate on the banks has not focussed on the situation faced by hard-pressed mortgage holders who have lost their jobs. There should be a mortgage support package for such families. The Minister still has time to address their needs in Committee Stage of this Finance Bill.

These are just some measures that could help address growing unemployment and begin to revive the economy. We have placed them in the form of a motion in the name of the Sinn Féin Deputies on the Order Paper. The Finance Bill before us, in contrast, is devoid of any strategy to get our economy out of recession.

There is also an air of unreality about the Bill in that the near collapse of the banking system is not addressed. The Government guarantee scheme for the banks is fundamentally flawed and provides scant protection for taxpayers. Are we soon to see the international corporate vultures allowed in to feast on the Irish banks? Or are they to be recapitalised by the State at the expense of more cutbacks in vital public services?

This is a regressive Bill. There is nothing to help struggling small and medium-sized businesses which are starved of capital. In contrast the Bill retains tax breaks for the burgeoning private health industry which is profiting at the expense of the public health system.

Sinn Féin rejects this Bill.

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