Sinn Féin - On Your Side

Morgan – young people, low paid and working families targeted in unfair budget

9 December, 2009

Sinn Féin Economic spokesperson Arthur Morgan TD responding to today’s budget from Fianna Fáil and the Greens said:

“There is not a fair budget. While Minister Lenihan speaks of rediscovering our optimism, there is no hope offered for those who most need it, there is no job creation strategy to stimulate the economy. The government did not take the tough decisions today. Instead they went after young people, those on low incomes and working families. Instead of forcing those barely surviving to live on less, those who can afford to pay more should have been asked to do so. Their stimulus measures are half-hearted – a couple of hundred million for the unemployed, verses €54 billion for banks.

“Young people are experiencing the highest rates of unemployment and young couples who bought homes and started families in the last couple of years are suffering the most from negative equity and cuts to child benefit. Now their dole payments are being cut to encourage them to take up courses and jobs, which don’t exist.

“Had the government taken even one tough decision – introducing a third tax rate for people earning more than €100,000 a year, introducing a wealth tax, standardising tax reliefs and capping higher end civil servants’ pay – they could have protected those on low incomes many times over and could have introduced an economic stimulus package to get Ireland back to work. Everything they have cut today will drive the economy deeper into recession.

“Sinn Féin is opposed to today’s budget because it is totally unfair and will drive the economy into further recession. It is wrong to cut social welfare. It is wrong to cut the pay of public sector workers on the average wage by €1,500. It is wrong to cut child benefit. We are opposed to today’s budget because there is an alternative that will work. It is possible to get the economy back on the road to recovery but it will require a radically different approach.

“The Minister has repeatedly told us that the worst is over, that we have turned the corner. The questions is – who exactly is the worst over for? It’s not the half million people who are out of work. It is not young people who were cynically targeted by the government today.

“With this Budget the Government has the ordinary worker and the unemployed upside down trying to shake out the last few pennies from their pockets. This budget will drive people into poverty into the arms of moneylenders and the offices of the SVP.

“The government did not take one tough decision today. Instead they went after young people, those on low incomes and working families.” ENDS

Arthur Morgan response to Budget 2010
Check against delivery

Opening remarks:
The worst is over. The worst is over. I have listened to the Minister repeat these words across the media, almost mantra like, for the last 24 hours and I’ve had enough. Because Minister I would like to know who exactly is the worst over for.

Because it’s not the half million people who are out of work – people who are living through the worst every single day of the week and trying to do the best by their children. People who are struggling for hope.

I wonder minister do you ever talk to real people – have you spoken to any young couples in towns like Youghal, Clonmel or Waterford, who have both lost their jobs and are now terrified about losing their home. Have you spoken to parents across rural Ireland from An Daingain to West Donegal who are preparing once again to send their children to foreign shores. Have you spoken to parents worried that their young son is sinking into despair.

Where is the hope for them, when will the worst end for them Minister.

I listen to you tell us it is too complicated to bring in a higher rate of tax for people earning more than €2000 a week, it is too complicated to remove the PRSI ceiling, it is too complicated to standardise tax reliefs. I guarantee you that there are many people out there this evening – widow women, people on disability payments, people who lost their job - who wish that it was more complicated to take money from them. Who wish there was some scheme to protect their €204 a week or their christmas bonus. If the Minister had done any of the complicated things he could have protected those on lower incomes hundreds of times over.

But that is not what this goverment is about. There is not one iota of fairness in this budget, there is no hope offered for those who most need it, there is only more of the same – protect those at the top and everyone else should just get on with it.

Nobody should be fooled – the politics of Charlie McCreevy is alive and well in this government – they just aren’t quite as blatant about it.

Well minister I want to tell you that enough is enough. People don’t want to be patronised, they don’t want meaningless platitude, they don’t want false hope. They want answers. They want real jobs for real pay.

Can we blame young people if they are cynical and disillusioned with the political system? Can we blame them if they see no future in this country? Young people are experiencing the highest rates of unemployment and young couples who bought homes and started families in the last couple of years are suffering the most from negative equity and cuts to child benefit. Now their dole payments are being cut to encourage them to take up courses and jobs which don’t exist. No young person want to sit at home in their parents house on the dole. They want to work. They want to use the skills they have learnt. Targeting young people in this way is a recipe for social unrest.

Young people will look at politicians in this house and ask “What right have they to throw away my future?” They deserve better than this budget. They deserve jobs, education and fair incomes. They are our future.

We said argued that those who can afford to pay more should be asked to do so – this budget does the opposite. It is targeting those who cannot afford to live on less. As a result of this budget some people will be forced to choose between food and heating, and to make things even worse the government is putting up the price of heating fuel.

They have the ordinary worker and the unemployed upside down trying to shake out the last few pennies from their pockets. They are intent on driving people into poverty p into the arms of moneylenders and the offices of the SVP

The Minister is deluded and he is trying to delude himself
Funding for primary schools has been slashed by 27%.

Funding for disadvantage
In a budget which targeted cuts at disadvantaged communities, funding for educational disadvantaged is to be cut by 62%. And the drugs taskforce funding is to be cut by 11%. These cuts shows us that it is the poor who are being made to pay the highest price for Fianna Fáil’s recklessness.

Local Gov fund
The 11% reduction in the local government grant will have serious implications for provision of local services. Service charges and rates will be forced up

PRSI changes in 2011
The proposed changes in the PRSI system to come in 2011 will see any progressivity taken out of the system

Minister, this savage Budget is the economic equivalent of kicking an injured man when he is down. The Irish economy is on the floor and along come the boot boys of Fianna Fáil to give it another good going over. This Budget will cause poverty and deflation, driving our economy into deeper recession.

And all because of the selfishness and short-sightedness of Fianna Fáil and their pathetic so-called partners in the Green Party.

The huge Budget deficit is a result of the Irish economic recession, a recession caused by your disastrous policies and gross mismanagement. The deficit is the symptom not the cause. You have chosen to treat the symptom in the most brutal fashion while doing nothing about the cause. This recession is as much one of ideas, as it is of resources.

Over the last two years you’ve dragged us to the edge of economic doom and today you pushed us off.

I have one hope for this budget. And that is that it will serve as a wake up call for the Irish people. Over the course of the last 12 months, we as a people have witnessed this government committing a series of con jobs, from the levies and social welfare cuts in April, to the €54 billion NAMA rip off. The government has been helped by the media, and Fine Gael and Labour, in convincing people that the savagery of this budget is necessary.

Well it is not. There was another way. Of course we could never expect Fianna Fáil to take us the fair route considering they caused the problems in the first place.

This budget was a chance. It was an opportunity to show some vision. Even now it’s not too late to put Ireland on the road to recovery. It is not beyond us financially to stimulate this economy.

A programme for jobs, an investment in people, a commitment to protect the most vulnerable as we turn things around is all possible. Sinn Féin has shown that it is possible. Our pre-budget Submission, The Road to Recovery, carefully considered by us and by like-minded economists, and costed by the Department of Finance, proved that there was an alternative to what you have done here today Minister. A way in which to raise money through bringing fairness to an unfair and unequal taxation system, through cutting state subsidies to the private sector and through ending the greed amongst high earners fostered and encouraged by this government.

Today you have shown us that Fianna Fáil and the Greens are still wedded to the fiscal policies of Charlie McCreevey. To save €4 billion from the deficit, the government has shown itself willing to further impoverish low-income families. The cuts to social welfare will deepen inequality in Ireland, already one of the most unequal states in the OECD. The cuts to education make a laughing stock of our so-called knowledge economy. You tell me Minister how we build a knowledge economy in damp and freezing prefabs and with inadequate IT equipment. The cuts to health, and I make no exaggeration when I say this, will be the difference between life and death for thousands of people.

A charge for medical card prescriptions is despicable. It attacks the principle of free health care for those most in need and, though the charge may seem low, the worst hit will be those most dependent on medication. And of course, once introduced, it will be increased year on year.

Minister you are Robin Hood in reverse. You’ve taken from the poor to give to the rich. And worse, you’ve made absolutely sure that recovery will take longer than it should because you’ve hit the lifeblood of the economy. You’ve hit the spenders, in an economy reliant on consumption taxes. You’ve hit the education system, the building blocks for a turnaround. For a party that has long prided itself on its alleged ability to manage the economy you’ve outed yourself today.

Had you made even one tough decision - introducing a third tax rate, standardising tax reliefs, capping higher-end civil servants’ pay – you would have saved yourself and the state a lot of tough decisions next year. You’ve done nobody any favours by going after the easy targets in this budget. Your half-hearted gestures of pay cuts for yourself and the rest of the highest earners do not go anywhere near far enough in terms of what you should be contributing to get the economy up and running. It is your high wages that contributed to the deficit – not those in social welfare. You’re failure to see this has only delayed and made worse the inevitable.

It is essential that we develop a fair taxation system in this state. We will have to review the billions that are spent on tax expenditures. We will have to put an end to the state propping up private banks, an end to this government’s schemes for socialising debt and privatising profit.

And we will have to address the economic insanity of partition and the damage it is doing to the potential of both parts of this island.

Fianna Fáil and the Greens have shown themselves completely incapable of tackling any of these issues and God knows, you’ve had more than enough chances.

The sad reality is that I have very little faith in Fine Gael and Labour being able to handle the state’s affairs any better. Both parties have wholeheartedly bought into the government’s analysis of the economy and provided their own proposals for cutting social welfare, public spending and workers’ pay. All of this can be expected from Fine Gael on any given day, but Labour have again lurched to the right, obviously bracing themselves to get into bed with Fine Gael. It would seem from reading Labour’s pre-budget submission that they are pro-jobs but anti-workers. Perhaps the Labour leadership is attracted by the bright lights of IBECs annual conference, leaving their former trade union comrades in the dark in these hard times when real struggle will be required.

Every citizen in this state should be aware that replacing Fianna Fáil and the Greens with Fine Gael and Labour will make no difference to economic recovery. Fine Gael and Labour would implement the same policies in a different package, with the same bad results for the economy.

While the establishment parties close ranks and display a disturbing uniformity in their policies, we are the ONLY party that stands up for working people, whether they are in jobs or not. We are unique because we are the ONLY party with an alternative analysis of the situation. We address the problems in the economy with the aim of eventually reducing the deficit. The other parties set out proposals to reduce the deficit without ever dealing with the problems of the economy.

It is with this sentiment Minister, that I analyse what you have delievered to the House and to the country. I will look at the areas where you chose to slash and burn and explain how it could have been done differently and the better result it would have delivered. I hope the people at home will listen and decide from the contributions made here today who they would rather have had bringing a budget to this chamber.

No trust
Minister, when you introduced the emergency budget in April last, you stated that the economy would need to adjust a further €4 billion over the course of 2010 and you would set out how that figure would be raised and saved in this budget, which you have done. The elephant in the room is that in April, that €4 billion figure was planned as an adjustment to a much smaller deficit of approximately €20 billion. The fall in tax revenue over the last seven months means the deficit is wider now and yet you are still maintaining that that €4 billion figure is necessary. And Fine Gael and Labour agree with you.

I have a question – why? Why is €4 billion the figure needed and why should we believe you? You’ve got it wrong up to now. The European Commission has already had to extend the period for economic recovery offered to your goverenment by a year. Your plan has unravelled before it is even started.

Sinn Féin did not set about raising €4 billion in our pre-Budget submission in October. We sat down and worked out how the tax system could be made fairer and how much was needed for a stimulus package. We believe a stimulus package and an investment in the Irish economy would not only recover confidence at home but also abroad. The government can repeat ad nauseum that it believes international investors are responding well to its plans of slashing spending, but in reality what international investors can see is a government sinking beneath the waves.. The Department of Finance’s forecasts are adjusting downwards by the month as are Exchequer returns. This doesn’t inspire confidence. The rest of the world is responding to economic woe with ambititous stimulus plans. This government and Fine Gael and Labour’s response is to return to the constrictive right wing economic policies of the 80s. You are determined to make this situation worse and see us waste more years before recovery begins.

Our pre-Budget proposals raise over €7.5 billion. Our figures were designed to stimulate the economy, not to deflate it. Our tax raising measures were aimed at the high earners to ensure they did not hit the spending power of the middle and lower earners.

That thinking is conspicously absent in the government’s strategy for fiscal adjustment and it is telling. Every measure taken over the last 12 months has further contracted the economy. This budget will be no different.

You have taken €4 billion out of the economy Minister, in the most damaging way. The scenario that will be played out in 2010 will be more job losses, further falls in property prices and decreasing revenue returns, and we know that all this will happen because we have seen it happen throughout history. The Minister knows this will happen too, so his budget today can only be seen in one light – he is delaying recovery because he wants to protect the golden circle in this state for 12 months longer and maybe more. He is also determined to protect those in the silver circle – the high earning households. That is why he has taken these harsh and vicious measures, such as cuts to social welfare.

Social welfare
There is a fundamental principle that divides Sinn Féin from other parties in this state. We see social welfare as a right, not a luxury payment that can be cut at will depending on the economic climate. Families depend on it for their food and survival.

In approaching this budget, there was a lot of talk about the need to reduce the social welfare bill. The government and some media commentators have acted shamefully towards the social provisions of this state. Not once, in all the talk about the social welfare bill, was reference made to the possibility of reducing social welfare spend by keeping people in jobs and creating new jobs. Instead the focus was on rates, and the argument was made by Fianna Fáil, the Green Party, other establishment parties and some in the media that €204 per week is too much to live on. Too much. What kind of people think it is acceptable to take money off someone on €200 a week but not from someone on over €2,000 a week?

We do have problems in our social welfare system. There is definitely fraud. There is definitely ridiculously complicated administration involved. The system is in fact a bureacratic nightmare. All of this has increased under this government’s watch. There is no area their incompetent hands have not reached into and ruined.

But the way to deal with all the problems in social welfare that end up costing the state extra money, is to deal with the problems. Not to cut rates.

Cutting social welfare payments will have a detrimental effect on the economy and society. Social welfare payments are always returned back into the economy. They are not saved or invested abroad. They are spent on rent, mortgages, food, utilities and other essentials. Cutting welfare expenditure is a false economy and one that will ultimately only cause misery for those on the receiving end of the policy. We do not accept the argument of deflation for welfare cuts. The fall in the cost price index this year includes mortgage interest.

A number of items have not come down in price, they have in fact increased and they disproportionately target the less well off. Bus fares, childcare, primary and secondary school education, doctor fees, dental fees, hospital services and insurance costs have all gone up. These costs make a lie of the argument that people on social welfare and low wages can afford to live on less.

We have already seen the effects of cuts made to social welfare payments this Christmas. The loss of the Christmas bonus, a double payment which effected 1.3 million people, is money that would have been spent in our shops on Santy presents and Christmas food. The government’s Scrooge measures will come back to haunt it when it is counting its VAT pennies at the end of this month. It will also have an effect on the retail sector possibly increasing the number of job losses there and adding more people onto social welfare queues.

Grading the rate of Job seekers allowance by age further to the measures taken in the Supplementary Budget 2009 is an abuse of power by the Government and shows just how out of touch Lenihan and his finance squad really are. The proposal to reduce the rate of Social Welfare to €100 and €150 a week for those between ages 20 and 24, A CUT OF 25% undermines the main focus for economic recovery: getting Ireland back to work. Discriminating against young adults in relation to their welfare entitlements is grossly unfair. It is necessary to frame this in realistic terms, rather than from the ‘top-down budgeting’ perspective: young people are finishing college after 3/4/5 years of education, there is a freeze on public sector employment, little if any employment in the private sector and they have most likely accumulated debt during the course of their studies. Many of these young adults are on the margins and may not have qualified for a local authority grant and, as such, would have accrued debts through student loans. Now, they come out of college and are expected to live off €150 a week.

The remaining cuts are equally punitive.

If there was any justice in this world every single member of that side of the house would lose their jobs in the next election and have to live on what they have inflicted on people here today.

Child benefit
Equally, the measures you have taken on child benefit will do nothing to fix the economy. They are further evidence of a sticking plaster approach displaying this government’s inability to leave any social provision protected from its grubby claws.

Child benefit is a universal payment made to every child in this state in recognition that every child is born equal and that this state provides children literally with nothing after they turn six weeks old. That’s when free health care for children in this state ends – six weeks old. And then they are left without childcare, without the financial ability in many cases for their parents to stay at home, without a fully functional education system. You have attacked every single child in this state today Minister.

Public sector pay bill
The cuts to the public sector pay bill offer another unimaginative approach to fixing this recession. In our pre-Budget proposals we identified savings in the public sector pay bill. We identified those savings by capping the pay of individuals earning over €100,000.

You tell me Minister, how can we as a state afford to pay any civil servant in excess of €100,000 a year when, as Mary Harney told us on the Week in Politics recently, we have the IMF breathing down our necks because of the mess the public finances are in? These people need to get real. Brendan Drumm, if you take into account his bonus last year, received €450 grand for helping to run the health service into the ground. That is 19 times higher than the basic salary of a civil servant of €24 grand.

But your government and Fine Gael and Labour believe that the canteen worker, the usher, the office worker, should all bear the pain of this recession in equal measure to Brendan Drumm. Fine Gael and Labour have actually provided you with solutions for this. Well over the last number of years Drumm and his ilk have taken a lot more from the public pay bill and thereby contributed a lot more to the deficit than any average public sector worker.

Your cuts do not recognise this madness. Instead they look at pay across the board and slash it across the board. You’re cuts of a further 5% on top of the pension levy on people earning below €30,000 is a pay cut of €1,500 per year. For those on €70,000 it is €4,500. What is the long term achievement here? You’ve taken spending power from a group we need spending to turn the economy around. You want people to live on 2004 wages wth 2009 costs. You’ve achieved the agenda of Colm McCarthy and Co. of driving down the standard of living and the rights of the majority but you’ve done little for economic recovery.

Taxation measures
As I stated earlier, Sinn Féin’s pre-Budget proposals succeed in raising and saving in excess of €7.5 billion, a good deal of which came from simply bringing more fairness to the taxation system.

There are some paltry measures here Minister. The tax on exiles does not go far enough. The raising of the effective tax rate goes someway but not far enough.

But it is not enough. There are no wealth taxes. No third rate. No abolishment of the PRSI ceiling. And I wonder what the benefit of the universal contribution at its low rate will be for high earners. There has been a great deal of PR conducted by the government and its minions in relation to why taxation is an untouchable.

There is still a great deal of inequality in the taxation system. On the one hand you tell us that we cannot afford to raise tax. Yet, you’re going around telling all and sundry that we are still a low tax economy and that has been this government’s greatest achievment.

This is nothing to be proud of. We have a €22 billion deficit and the government is still refusing to create a fair taxation system. We need to stimulate the economy and to do that we need revenue. Taxation cannot continue to be the untouchable and you cannot continue to go around lauding our low tax economy as being job creation friendly. Here are the facts. Low taxes at the top are not stimulating the economy and at the bottom we are actually not low tax for the bulk of PAYE workers. The bottom percentage rate of income tax is low but there is a huge degree of stealth taxation and a lack of service provision that makes Ireland, for this group, a high tax economy. They are the group that cannot be touched for more tax. But the government is determined to have it both ways – high taxes at the bottom, low taxes at the top – it is not sustainable.

This government will soon have no option but to address the inefficiencies in the tax system. The Commission on Taxation has identified 245 tax reliefs that between them pay back out almost as much as is taken in income tax. Many of these reliefs are abused by high earners.

There is no sophistication in the system. We have two tax bands. Most other countries have between three to five. Are we incapable of developing a fair and progressive taxation system or is it a lack of political will to make sure those at the top pay their fair share? The government claims that there is progressivity. There is no progressivity in our tax system after €75,000. If anything, you can progressively pay less tax the higher up the earning scale you go and the better your access to a good tax accountant is.

The sad reality is that eventually when the government is forced into reversing the inequalities it itself wrote into the tax code, the public finances will have spiralled out of control. And I predict it will be the lower earners who the government looks to to raise tax first.

Carbon tax
The carbon tax will not bring fairness to the system. A carbon tax if it is to work effectively should be revenue neutral. This government is using it to raise revenue. The Green party appear to have lost much of their thinking capacity but surely even they realise Fianna Fáil has only committed itself to this measure as a way of plugging the financial hole. Fianna Fáil is no more interested in saving the world than it is in saving the economy.

Fine Gael and Labour both include the carbon tax as a revenue raiser in their budgets. This tax will in all likelihood have the effect of inflicting more fuel poverty on the vulnerable. And we will be no closer to achieving our Kyoto targets.

Excise duty
Minister, I welcome the initiative on excise duty, which I hope will save some jobs, though a considerable number have already been lost in the retail trade. It is an inescapable fact, there has been a huge loss of excise duty and VAT as a result of partition on this island. There is a considerable market of some six million people across Ireland. Since the Good Friday Agreement, trade between North and South has steadily increased. Progress towards creating a truly all-Ireland economy is being made through the newly developed All Ireland Energy Market; Tourism Ireland; and through InterTrade Ireland which since 2003 has benefited over 1,300 businesses and created hundreds of jobs.

However, much more needs to be done. An all-island economy is an imperative.

Differences in VAT, Corporation Tax, Excise Duties and Currency create barriers to economic development on both sides of the border, and cost millions in tax revenue. The removal of such impediments will create efficiencies, employment, wealth and opportunity across this island. Sinn Féin proposes an All Ireland Economic Committee from the Dáil and the Assembly tasked with harmonizing taxes across this island; A joint north south Ministerial approach to promote our international food brand; An all-Ireland agricultural body to implement all standards that safeguard the reputation of Irish agricultural produce.

Absence of stimulus
The stimulus in this budget is a joke. It is a couple of hundred million. The government has put €54 billion into banks. The government has ensured we will be back here again next year in an even worse position.

There is no easy way out of this recession. The government’s way is to slash spending. Our way is to save and create jobs, and protect the most vulnerable. Our way is better for the economy and better for people. The only jobs you create with this budget Minister is jobs in debt collecting agencies.

Sinn Fein’s pre-Budget proposed a stimulus costing approximately €4 billion, roughly 2.5% of projected GDP in 2010. The €54 Billion allowed to NAMA is approximately 33% of GDP. Our stimulus is equivalent to the investment made in Anglo-Irish bank. Our proposals have the potential to save over 100,000 jobs in 2010 and create over 100,000 more, as well as better position the economy to increase jobs in 2011. According to trade union estimates, the cumulative cost of new and continuing unemployment over the next two years could reach €10 billion. If we spend in 2010, we could see positive growth in the Exchequer in 2011. If we do not, we will just see further contraction.

There are currently 425,000 people on the live register. This number is likely to grow and there is no government strategy to deal with it. The government claims that saving the banks will fix the economy. Proving them wrong will be cold comfort to the many people who have lost their jobs, who face this Christmas in debt, in poverty and with the prospect of the very small payments made to them by the state, being cut. Emigration is already on the rise. This year was the first in a long time that saw emigration outpace immigration.

Sinn Féin believes that there is a better way forward, we do not have to return to the 1980s. Our suggestions are immediate, and if invested in, should see a return to the Exchequer by way of saved social welfare payments and tax, in 2010.

We have both raised money for our costed proposals and propose transferring money from the National Pension Reserve Fund (€2 billion), which should be accessed in this exceptional period of need. Our rationale regarding use of the NPRF is simple. At this point in time, the state cannot afford to keep money in reserve for future pensioners when the current generation of pensioners are being asked to live in poverty. We would access this money now to help the state recover and when we have recovered, we would begin saving for the future again and implement a new system of decent universal pension provision that does not see billions spent on the private pension industry while state dependent pensioners suffer.

Our proposals include establishing a jobs retention fund available to SMEs worth €600 million. We want to reduce the cost of doing business by freezing the cost of state-controlled services for one year.

We want to use the public sector and direct public employment to kickstart the economy. The National Development Plan has to be completely redrawn to focus on the more labour intensive and necessary infrastructure, such as schools, hospitals, energy efficiency in homes and public transport provision. This infrastructure will improve the state and provide jobs in construction, architecture, engineering and all the other trades. We also want to build the state childcare and pre-education sector through both fully-trained accredited childcare workers, infrastructure provisions and state subsidies for employees in this sector.

Minister, just like with the taxation system, the need for a stimulus must be addressed. I do not have any faith in your government’s ability to address it. I fear that you and others like you will have run this state into the ground before anyone with vision is in that office to turn things around.

Sinn Féin has set out its vision. We may have a while to go before a general election and I’m sure there’s a lot more damage Fianna Fáil and the Green’s can do before then, but my party will continue to set out an alternative. As I said at the beginning, I hope this Budget serves the purpose of waking up the Irish people. You may be afraid to put yourself before the Irish people any time soon, but they have long memories.

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