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Sinn Féin seeks real recovery and a fair way forward – Ó Caoláin

27 October, 2010 - by Caoimhghín Ó Caoláin TD


Speaking in the Dáil debate on the Economy today, Sinn Féin Dáil leader Caoimhghín Ó Caoláin said savage cuts in Budget 2011 would prevent recovery and that a better, fairer approach is possible.

He said:

“Sinn Féin stands as the real opposition in this debate.

“Deputy John Gormley’s call for talks between party leaders and all that followed served one very useful purpose – it cleared away the smokescreen of false party rivalry and exposed the alignment that exists in Irish politics.

“It is now very clear that Fianna Fáil, the Green Party, Fine Gael and the Labour Party stand together in their economic approach. They form a Consensus for Cuts.

“Sinn Féin stands apart from that Consensus for Cuts – but we do not stand alone.

“The Irish Congress of Trade Unions and its constituent unions, the community and voluntary sector, the ESRI and a range of economists have warned against the strategy of attempting to cut the budget deficit to 3% by 2014.

“Sinn Féin joins with those seeking real recovery and a fair way forward. We are convinced that there is a better way.

“We recognise that the deficit caused by the disastrous policies of the government has to be reduced. But the plan to reduce it by 2014 by imposing savage cuts to frontline services and social supports will be hugely damaging. It will further deflate the economy and worsen the recession.

“Furthermore, the approach the Government is taking in its four-year plan of frontline and capital spending cuts as well as flat, regressive taxes, is the same approach they have taken up to now – and it has not worked. Deepening the cuts will only compound the problem.

“We need a different strategy and a longer timeframe. We want a realistic deficit reduction strategy based on fair taxation system that ensures the wealthy pay their share, investing in jobs which will increase State revenue and reduce the social welfare bill and eliminating wasteful public spending.

“Our approach is based on the reality that there is wealth in this State and that 1% of the population control 20% of that wealth. If that inequality had been addressed a decade ago we would not now be in recession.

“It is possible to reduce the deficit to 3% over a longer time-frame, provide real stimulus for jobs in the short-term, raise revenue from wealth, eliminate wasteful public spending and ensure the delivery of public services, while protecting those on low income.” ENDS

Full text of Deputy Ó Caoláin’s speech follows:

27.10.10


Dáil debate on the Economy 27.10.10
Caoimhghín Ó Caoláin TD, Sinn Féin Dáil leader

Sinn Féin stands as the real opposition in this debate.

Deputy John Gormley’s call for talks between party leaders and all that followed served one very useful purpose – it cleared away the smokescreen of false party rivalry and exposed the alignment that exists in Irish politics.

It is now very clear that Fianna Fáil, the Green Party, Fine Gael and the Labour Party stand together in their economic approach. They form a Consensus for Cuts.

Sinn Féin stands apart from that Consensus for Cuts – but we do not stand alone.

The Irish Congress of Trade Unions and its constituent unions, the community and voluntary sector, the ESRI and a range of economists have warned against the strategy of attempting to cut the budget deficit to 3% by 2014.

Sinn Féin joins with those seeking real recovery and a fair way forward. We are convinced that there is a better way.

We recognise that the deficit caused by the disastrous policies of the government has to be reduced. But the plan to reduce it by 2014 by imposing savage cuts to frontline services and social supports will be hugely damaging. It will further deflate the economy and worsen the recession.

Furthermore, the approach the Government is taking in its four-year plan of frontline and capital spending cuts as well as flat, regressive taxes, is the same approach they have taken up to now – and it has not worked. Deepening the cuts will only compound the problem.

We need a different strategy and a longer timeframe. We want a realistic deficit reduction strategy based on:
- A fair taxation system that ensures the wealthy pay their share
- Investing in jobs which will increase State revenue and reduce the social welfare bill
- Eliminating wasteful public spending.


Our approach is based on the reality that there is wealth in this State and that 1% of the population control 20% of that wealth. If that inequality had been addressed a decade ago we would not now be in recession.

It is possible to reduce the deficit to 3% over a longer time-frame, provide real stimulus for jobs in the short-term, raise revenue from wealth, eliminate wasteful public spending and ensure the delivery of public services, while protecting those on low income.

The Minister for Health & Children has threatened cuts to our public health services of between €600 million and €1 billion. Our health services are facing devastation if this is allowed to proceed. I have no doubt that cuts to services on this scale, especially as they affect our public acute hospitals, will cost lives.

In Sinn Féin’s Pre-Budget submission we identify €600 million that can be saved in the health system without affecting patient care. Take the drugs bill for example. Tackling profiteering, waste and over-prescription and increasing the use of generic drugs can make huge savings. But what is the Government’s approach? Target the patients such as those on the medical card who have had prescription charges imposed on them.

The report of the Comptroller & Auditor General earlier this year on the National Treatment Purchase Fund exposed the waste that is involved there. It stated that of the procedures performed in public hospitals, in some cases the patient was treated privately in the same hospital where he or she had been on a public waiting list.

Even more extraordinary – and surely a conflict of interest – is that in 8.5% of treatments arranged by the NTPF the consultant referring and treating the patient is the same. So in other words you have a situation in a public hospital where a specialist can refer a patient under the NTPF to himself, thus ensuring the consultant a higher rate of remuneration for the work because it is being done so-called ‘privately’ – even though the State pays the bill. This surely exposes the folly and waste that is the NTPF.

In a reply to a Dáil Question received from the HSE last week I was told that to date a total of 296 hospital consultants have been written to by Clinical Directors/Hospital Managers regarding the need for them to address excessive levels of private practice.

These excessive levels are of course in breach of their contract. And this is only the number of consultants that hospital managements have detected. Here is another indication of the massive waste of public money involved in the two-tier public-private hospital system.

In another reply to me the HSE admits that in Carlow it is paying rent of €1,000 per day to a private landlord for a primary care centre rather than develop the centre rent-free on an existing HSE site in the town. And the reason? Purely ideological. It is because developing the centre on HSE premises would not be in line with the Government’s policy of developing all new primary care centres through public-private partnerships – even if these cost more than the fully public method.

Elimination of waste and delivery of equity and efficiency can go hand and hand and Sinn Féin has demonstrated that.

We will set out our proposals in detail in our pre-Budget submission next week and my colleague Deputy Arthur Morgan will refer to them further in his contribution to this debate.

The enormity of what has been done to this economy by the reckless policies of the past decade and a half is difficult to grasp. Yet the stark reality is that Fianna Fáil and the Greens have brought the country close to economic ruin since 2007, their so-called solutions having made the situation worse. They have introduced four successive budgets, as well as emergency measures in February 2009, and the result is as follows:

· 450,000 people are now out of work.
· 100,000 more will have emigrated by next year.
· Tax revenues have collapsed.
· Almost €90 billion between recapitalisation and NAMA has been promised to bail out the banks.
· The interest rates being paid by the Irish government on the international bond market are three times those paid by Germany.

This Government is planning a budget in December that will attack people on low incomes and devastate vital public services. The Government has decided that someone who earns €300,000 a year contributes enough but a person on the miminum wage, or someone who has lost their job and is receiving €196 a week, must survive on less. They have signed up to a four-year timeframe for deficit reduction which they know they cannot meet and which the IMF, OECD and ESRI know they won’t meet. And Fine Gael and Labour have once again followed the government’s lead – just as they did in the General Election in 2007 when they too offered to cut taxes and just as they did in the Lisbon referendum in 2009 when they promised there would be jobs if people voted yes to Lisbon.

This is not just a question of the 3% by 2014 target being too short in time – it is also about how the Government proposes to go about reaching that target. They are preparing a slash and burn approach to the economy that will cause untold damage. It will attack the least well off but it will also attack the overall economy and delay recovery.

The Consensus for Cuts parties are determined to plough on, tying this State’s future to a formula brokered with the EU Central Bank, regardless of the consequences.

It is no co-incidence that these are the same parties who campaigned for a ‘Yes’ vote in the second Lisbon Treaty referendum, having refused to implement the people’s decision to reject that Treaty when first put to them. In Lisbon 2 they urged the people to ‘Vote ‘Yes’ for Jobs’.

“Where are the jobs?” we ask as we contemplate the reality of over 450,000 people on the dole queues and emigration on the rise.

Those young people forced to emigrate, the hundreds of thousands unemployed and the people struggling on low incomes are ill-served by the capitulation of the so-called main opposition parties.

‘Slash and burn and all will be well by 2014’ - this is the new mantra and anyone who doesn’t accept it is being labelled as economically insane.

Sinn Féin was labelled as economically illiterate in 2007.

Had our policies been taken on board in 2007, and before it, we would not now be in the depths of this recession.

Alone among the political parties in this Dáil we did not call for tax cuts.

We called for Government housing policy to be based on the need for decent housing for all the people – not a policy of inflating the property bubble.

We called for wealth to be shared on the basis of a fair taxation system.

We called for the banks to serve the economy and the customer and for the unbridled greed of financial institutions to be curbed by Government.

Fianna Fáil-led Governments pursued exactly the opposite policies - driven by greed and totally devoid of any real vision for the future of the Irish people.

When we spoke of a Golden Circle we were derided. But such a Golden Circle existed and what we have found out since shows that we and others actually under-estimated the extent of the corruption and the avarice at the top of the ladder in this economy.

The so-called regulators were in collusion with the bankers and developers. Government ministers and top civil servants allowed it all to go on unhindered. The elite executives at the top end of the public service and the semi-states were awarded massive salaries and perks on a par with the high-flyers in the private sector. Auditing and accountancy firms played their part and profited handsomely by it.

But what has changed? In many ways, very little, and I will give one concrete example.

Loan valuation for NAMA is being carried out by Ernst and Young. Last April here in the Dáil I raised this issue with the Minister for Finance.

Ernst & Young was the auditing firm for Anglo Irish Bank when accounts were published in February 2009. That report effectively gave Anglo Irish Bank a clean bill of health, yet we now know that the 2008 year-end figures included cash that had been transferred from Permanent TSB.

We know that directors’ loans were concealed and loans were given to shareholders to buy more shares. Loans were also given to directors, senior executive members of Anglo Irish Bank, to buy more shares yet none of those matters was exposed in the end-of-year accounts presented by Ernst & Young.

KPMG is now audit co-ordinator for NAMA. KPMG audited Irish Nationwide. Its 2008 results, announced in April 2009 showed a pre-tax profit of €300 million after having set aside €500 million for bad debts. In April it was confirmed that Irish Nationwide required €2.6 billion in funds from the Exchequer, a mere 11 months after KPMG gave it a clean bill of health.

I asked the Minister for Finance at that time how did it come about that these firms got the top contracts regarding NAMA given the questionable role they played in presenting figures allegedly as facts when we now know they were nothing of the kind. I asked if those auditing and accountancy firms were being investigated for their specific roles in what some would suggest was an orchestrated cover up of the facts on those financial institutions.

The Minister replied that the questions raised by me were legitimate and that he would ask NAMA to examine what I said about the professional advice. He said the matters to which I referred are serious and will require investigation both by the accountancy bodies and the banking inquiry. Where stand those investigations now?

If the situation were not so serious it would be amusing to listen to the Taoiseach and his Ministers talking about the need for us to preserve our economic sovereignty.

Whenever we in Sinn Féin pointed to the erosion of economic sovereignty as a result of successive EU treaties we were ridiculed. But successive Governments here have abandoned economic sovereignty and have allowed international bond-holders and the European Central Bank to determine how many euros go into the pockets of the least well off in our society.

And, make no mistake, it comes down to that. Tied to a doctrine of fiscal rectitude, this Government in the last budget took €8.50 per week out of the pockets of people caring for elderly, ill or disabled relatives in the home. It cut assistance for the young unemployed in half. It took the Christmas bonus from social welfare recipients as well as cutting welfare payments across the board.

Recently the ratings agency Fitch called for more evictions in Ireland as this would enhance the reputation of the banks. This is what we had with landlord rule under the Union Jack yet it is only one step removed from what the Government is doing to the least well off. And it plans far worse in the next four budgets.

As I put it to the Minister for Finance last week, international bond-holders are now more important than the Irish people in the consideration of this Government. In May the Minister indicated he could not say who they are but I have a list of 80 possible suspects.

These include Alliance Global Investors France SA, Barclays Wealth Managers France, BlueBay Asset Management Ltd, BNP Paribas Asset Management, Brown, Shipley & Co Ltd, Crédit Suisse Asset Management, Deutsche Asset Management Investmentgesellschaft, European Credit Management Ltd, Frankfurt - Trust Investment, W&W Asset Management and WGZ Asset Bank Luxembourg.

I understand this list of 80 contains Anglo Irish Bank bondholders and the composite figure of the face value of the bonds they hold exceeds €4 billion. These are the people who should have taken the hit from the collapse of Anglo-Irish Bank, not ordinary taxpayers. But the Minister replied that many of these are also subscribers to Irish government bonds and we rely on them for the Government’s massive borrowings.

Also appearing on that list of Anglo-Irish bondholders is Goldman Sachs. – the same Goldman Sachs that advises the Government on its approach to bond-holders. Perhaps the next time Mr. Peter Sutherland, chairman of Goldman Sachs International, descends on us from the clouds to give his advice, the reporters from RTÉ and the Irish Times might ask him about this conflict of interest. In the meantime the Minister might like to address it here in his contribution.

The fact is that bond-holders invested in a bank, not a state. They should have read the disclaimer at the bottom of the bank ads – the value of your investment may go down as well as up.

The budget plan this Government is now working on has nothing to do with deficit reduction. Every cent that is cut from frontline services next year will be redirected at least ten times into the Government’s bank bailout.

If spending cuts could fix the deficit problem we would not now have a growing deficit. But we’ve already had three years of spending cuts and what’s happened – the deficit has grown.

The Government, with the support of Fine Gael and Labour, are planning a savage 4-year time frame to fix the deficit problem. We in Sinn Féin are setting out a six-year approach which could actually see the economy recover sooner.

The Consensus for Cuts believes that to grow a little, you must cut a lot. We believe that to grow at all you must invest.

The relationship between jobs and the deficit is a clear one – more people in work brings more tax in and saves on welfare payments going out. Cutting spending puts people out of work, brings the tax take down and welfare spending up – it doesn’t take a genius to work it out.

Cutting social welfare is a false economy and one that ultimately only causes misery for those on the receiving end of the policy. People on social welfare spend every cent of their income in the local economy – cut their welfare and you inflict cuts on the local economy.

Rather than targeting welfare the Government should be targeting wealth. It has been estimated that there are some 33,000 millionaires in this State. They have been the main beneficiaries of about €20 billion in tax breaks from Fianna Fáil-led Governments since 2005. These include tax relief on pensions, a myriad of property tax reliefs; reliefs on private nursing homes and hospitals; capital allowances; the PRSI ceiling; and a whole range of others.

Dr Michael Collins, a member of the Commission on Taxation, reiterated the view on October 17th this year that there are still 110 of these tax breaks in place, costing the public purse €11 billion per annum.
Even if this millionaire section of the Irish people paid just a 1% wealth tax, the Irish government could take in €1.2 billion in 2011 and every year thereafter.

Now is a time when parties of the left should be joining with trade unionists, community and voluntary organisations and other progressive voices in demanding an alternative way forward. We are calling for

· The abandonment of the unrealistic and damaging target of 3% deficit reduction by 2014
· Revenue saving and raising based on fairness and efficiency
· Stimulus measures to protect and create jobs
· Protection of vital frontline public services including health, education and social supports.

There needs to be a Consensus for Real Recovery not a conspiracy of political parties against the people.

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