Neither Fine Gael nor Fianna Fáil can deliver a fair recovery

Posted: April 27, 2015 in Economy, Fianna Fail, Fine Gael, Sinn Féin

Spring is in the air, the season of rebirth and rejuvenation. Michael Noonan is hoping that this week’s statement will generate a little spring like renewal in the fortunes of the Government parties as they set their sights on the general election.

Finance officials are busy downplaying the prospect of any detail in the Ministers address. But at the very least we will get a sense of the Governments economic and fiscal intentions for Budget 2016.

As the big day approaches commentators are busy offering advice on what the Spring Statement should and shouldn’t contain. They are seeking not only to predict but also to frame the debate within which the statement will be read and interpreted.

It is a frame of two sides, or so the commentators would have us believe.

In one corner we have the forces of fiscal rectitude urging caution and restraint. They want Noonan to meet and exceed the deficit targets. They are warning against any breach of the expenditure benchmark. Their gospel is wage restraint, fiscal responsibility and modest investment.

In the other corner we have the forces of electoral populism seeking to cling on to as many back bench seats as possible. They want Noonan to help them get re-elected even if it means riding roughshod over the deficit and expenditure targets. Their gospel is give the vested interests what they want irrespective of the national interest.

Knowing Michael Noonan he will probably seek to chart a canny course between the two – promising tax cuts and spending increases in a desperate attempt stave off the electoral bloodbath that is to come. This might just get Fine Gael past polling day, but for Labour the damage is already done.

In the end, however, Noonan will have to choose which of his masters to satisfy – the European Commission or the electorate. And we all know how that one will play out.

The EU targets will be met irrespective of the social and economic cost. The two tier recovery will remain in place. And the 60:40 society which has become a feature of our State over recent decades will be embedded even further.

A minority getting the benefits of the recovery while the majority continue to struggle to make ends meet.

Of course there is a third side to this debate – not that you would know it from the mainstream commentary. It starts from a completely different premise to that of the mandarins in Government buildings and the bureaucrats in Berlaymont.

That premise is very simple – namely that a recovery is only real if it benefits those worst affected by the recession – if it is a fair recovery. And the measures of a fair recovery are not arbitrary deficit and expenditure targets but the quality of people’s lives, their access to well-paid secure employment and high quality public services.

Delivering this kind of a recovery requires a completely different social and economic model from that advocated by Michael Noonan, or indeed Joan Burton or Micheál Martin.

This alternative argues that the state has a key role to play in ensuring a fair recovery. It counterposes a five point plan for a fair recovery to Enda Kenny’s failed five point plan for a two tier recovery.

POINT 1: To achieve a fair recovery Government must have the resources to invest. This means not only growing the economy but increasing the tax take as a percentage of GDP towards the EU average.

How this is done in terms of time frame and specific revenue raising proposals is a matter for public debate. But we can-not address the deficits in our health, education, housing, water, childcare and community infrastructure when our tax take resembles that of Bulgaria and Romania.

POINT 2: Spending targets must be socially, economically and fiscally responsible. This means re-negotiating the existing EU expenditure rules.

This is not an argument for reckless spending but rather for strategic investment. Successive governments have failed to invest in our social and economic infrastructure. This failure has social and economic costs.

The austerity dogma of the EUs fiscal rules must be replaced with a more sustainable approach that balances fiscal responsibility with the need for Government to meet the social and economic wellbeing of its people.

POINT 3: Well-paid secure employment is not just good for workers but good for the economy. This means eradicating in work poverty.

We need robust legal protections to combat low pay and precarious hours. We need the right to collective bargaining. But we must also invest in the capacity of indigenous businesses to thrive, increasing their profitability and their ability to create more and better jobs.

POINT 4: High quality universal public services reduce social and economic inequality and create a fairer society. This means a greater focus on the social wage.

Our public sector is too small, too residual and underfunded. While there are clearly excesses at the top there are also deficits in staff numbers and pay. We need to see the public sector as a social good for all and invest in it accordingly.

POINT 5: At almost 120% of GDP our public debt is not sustainable. This means we need to secure a better deal with respect to the portion of the national debt related to the banking crisis.

We must reopen the issue of the promissory notes. We must apply to the European Stability Mechanism for retrospective recapitalisation of the pillar banks. This is not just a matter of economic need but of social justice.

The alternative to the austerity consensus of Fine Gael, Labour and Fianna Fail is a new model of social and economic development. It is a model that places equality at its heart. It seeks to give Government the capacity to invest in a fair recovery and to transform society in a way that benefits all.

You won’t hear that in Michael Noonan’s Spring Statement  or indeed in Micheál Martins Ard Fheis address. That’s why neither Fine Gael nor Fianna Fail can deliver a fair recovery.

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