Sinn Féin Economic analysis proving correct
Sinn Féin spokesperson on Finance Caoimhghín Ó Caoláin TD has said that the incoming Government had a responsibility to act to protect workers and homeowners from the adverse economic developments that are now taking place, including increasing inflation and interest rate hikes. Deputy Ó Caoláin also said today that the incoming Government must address the fact that the exchequer is now vulnerable to a sharp contraction in revenue due to the extent to which it is now dependent on construction and consumption. He set out four key Sinn Féin demands for government action.
Deputy Ó Caoláin said, "We are now facing into an unstable economic situation of the outgoing government's own making. Instead of bedding down the economic prosperity of recent years it allowed it to continue to develop in an unsustainable manner for selfish short term political gains.
"In the last 12 months Sinn Féin was the only party which sought to highlight the vulnerabilities in the Irish economy. We presented the electorate with an honest picture of the economy and did not engage in auction politics based on a false economic premise.
"Sinn Féin highlighted the:
- Overdependence of the economy on the construction sector.
- Overdependence of the exchequer on revenue related to property and consumption.
- Rising Consumer Price Index inflation and inflated property prices.
- Rising interest rates and record levels of personal indebtedness
"Sinn Féin warned that the Government was leaving the state exposed to a sharp contraction in revenue due to its overdependence on high levels of revenue from property and consumption that were simply not going to last. When others promised tax cuts in the run up to the general election we pointed out that the more you reduce income tax, the more dependent the Government becomes on these other more insecure sources of tax revenue. We warned that the Government then becomes increasingly more vulnerable to a sudden and sharp contraction in revenue which would have serious implications for its ability to deliver public services. The other parties ignored the evidence that, even then, the slow down in the property market that could precipitate this had begun.
"In our Pre-Budget Submission 2007 we highlighted the fact that the Central Bank had estimated that house prices were overvalued by at least 14% amounting to a minimum overvaluation of around €58,000 in the Dublin region. The Government was also aware of all these dangerous developments. It sat on its hands as house prices rose beyond the reach of many over the last decade. It now has a responsibility to protect those home owners who find themselves in an extremely vulnerable position as interest rates continue to rise.
"In our analysis of the most recent social partnership deal Towards 2016 Sinn Féin warned that the wage increases offered under the deal would, within a short time, be wiped out by inflation. This has now happened and trade unions are rightly demanding action to protect the standards of living of workers.
"Sinn Féin is demanding that the incoming Government
- Take action to ensure alternative employment opportunities are in place for those currently employed in the construction sector and whose jobs may disappear in the years ahead.
- Introduce increases in mortgage interest relief to help protect vulnerable homeowners, in particular those on average and lower incomes.
- Commence an immediate review of the taxation system to redress the current overdependence of the exchequer on revenue related to property and consumption and ensure that the state continues to have the revenue necessary to maintain and improve public services and social protections.
- In order to protect the standard of living of workers and address rising consumer price inflation, reduce/abolish regressive stealth charges and taxes which hit those on low incomes hardest." ENDS