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IMF proposals for Irish economy will made a bad situation worse - Morgan

3 July, 2009

Speaking ahead of this afternoon’s Dáil debate on the International Monetary Fund (IMF) report on the Irish economy Sinn Féin Economic Spokesperson Arthur Morgan said, ‘whilst the reports substantive historic analysis of how the government, the banks and the developers brought Ireland into recession is broadly correct, the IMF’s recommendations going forward will make a very bad situation worse.

Deputy Morgan said:

“Fianna Fáil led governments were warned for years in advance of the recession that measures needed to be taken to curb the dangerous over-inflation in the housing market and the dangerous over dependence of the exchequer on taxes generated from consumption and construction.

“For years Sinn Féin doggedly put forward alternative equitable economic models that would have substantially cushioned the blow for Ireland from the global financial crisis. Fianna Fáil’s Charlie McCreevy, Bertie Ahern and Brian Cowen chose instead to treat the economy like a cash cow to the benefit of their developer and financier friends. And the people are now picking up the tab.

“Sinn Féin opposed the reduction in capital gains taxes which made it more profitable to speculate in property than to run a business, we opposed tax breaks that favoured investors over those trying to secure their first family home, we asked the government to explain why it was allowing the banks to over-lend to first time buyers (including through the provision of 100% mortgages) we supported the introduction of a tax on second homes that would have curbed the escalation of house prices and the development of a bubble.   

“Throughout my time as Sinn Féin’s housing Spokesperson between 2002 and 2007 I vigorously pursued those issues in the Dáil. Time and time again Fianna Fáil Ministers dismissed this, claiming that there would be a soft landing in the property sector. In equal measure Sinn Féin has for years questioned the sustainability of the existing tax system. Fianna Fáil bought the 2007 election on economic promises that they could not deliver. They either lied to the people at that time or were so economically illiterate they did not see the crash coming.

“And let’s call a spade a spade, either reason makes Fianna Fáil unfit for government.

“However there is much in the IMF report that Sinn Féin strongly disagrees with and we do so in the context of noting the global agenda that the IMF like the World Bank represents. The reality is that the policies of the IMF and the World Bank have locked third world nations into a vicious cycle of borrowing and repayment of loans and interest on loans that can never be paid. To make matters worse, these countries are forced to adopt economic policies that force further reductions in social spending.

“There is much in the IMF report that is in agreement with the government’s current policies, for example the inequitable slashing of Ireland’s public finances and the government’s black hole approach to bailing out developers and bad banks. This report, like the IMF agenda, is a damning indictment of the low taxation – low public spend ideology of western governments that have dominated global economic decisions since the 1980s.

“Both the IMF and government now advocate saddling future generations with unprecedented debt. Undermining Ireland’s social and economic future is not a recovery plan; it’s a perpetuation of bad policy and inept decision making.

“Yes public expenditure needs to be reduced and the economy needs to be stimulated but it is the method and ideology by which government approaches this job of work that will determine how fast or how slow Ireland’s economy can be turned around and how long it will take the state to pay off its borrowings.

“Sinn Féin’s ‘Getting Ireland back to Work’ and public finance documents published in advance of the April Budget contain solid strategic policy proposals on taxation justice, efficiencies in public spending and how we can retain and create jobs. We will publish our proposals for rectify Ireland’s banking system in advance of the NAMA legislation due before the Oireachtas at the end of this month.

“Sinn Féin had the right solutions in the good times and we have the right solutions now for the bad times.” ENDS

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