Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 4 Mar 2009

Vol. 677 No. 1

Leaders’ Questions.

I welcome the fact that the Government has belatedly recognised the need for a new budget to deal with the difficulties in our public finances. This is a matter for which the Fine Gael Party has been calling for the past number of weeks. I recognise the belated acceptance of that.

Dealing with the public finances is only one element of what is at play here. It is becoming increasingly evident that the consequences of failure to deal with the public finances directly impacts on the lives, hopes, plans and dreams of many people who are now facing unemployment or who are unemployed. Today in Bausch and Lomb in Waterford many families are waiting for news in respect of their futures. The briefings that were given today to the members of the Opposition parties, including Deputies Bruton and Burton, clearly indicate that the Government will have to look for approximately €5 billion gross between income tax and spending cuts, which is a truly phenomenal amount at this stage of the year.

I understand that the unemployment figures are due to be published very shortly. I am sure the Taoiseach has been briefed on them. Will he indicate to the House, as he did on the last occasion, the numbers of unemployed at the end of February and whether they exceed the record level of unemployment of 327,800 in January? Will he comment on that?

As I said, on the basis of the Exchequer returns, the Government position in January was that we would take savings of €2 billion. It was agreed in the framework that was what we should do. On the basis of the February returns, this economic convulsion confirms that further measures are needed. We have made it clear that we have to work within the figures we submitted to the European Commission in terms of our determination to bring order to our public finances. Whatever measures are required or necessary will be taken by Government to achieve that because, as has been said, the prerequisite for a return to the economic fortunes of the country is the putting in order of our public finances, and it is also important from the point of view of our international creditability.

The live register figure, as the Deputy said, will be announced by the Central Statistics Office at 11 a.m. The figure is 354,400, which is an increase of 26,500, or 8%, on last month. Some 44,000 are receiving payment in respect of part of a week and the unemployment rate for February, therefore, is expected to be 10.4%.

These are truly shocking figures. With 354,000 unemployed, or an 8% increase since last month, we have never in the history of the State been in such a position. This is truly shocking.

I noticed that in the past ten days the chief executive of Allied Irish Banks apologised to the Irish people for bad loan situations. This morning the chairperson of IL&P apologised for mismanagement and mistakes made in IL&P. The Taoiseach's party has been in Government for 11 years. Does he accept responsibility for any of this, given his term as Minister for Finance and now as Taoiseach? As the Minister for Finance said, this is where the people wanted us to go. The Tánaiste, who is not present, said only last week that the public finances are under control. Some 354,000 people are out of work and €5 billion gross, between spending cuts and increases in taxation, is being sought this year. Does the Taoiseach accept responsibility for any of this or is he prepared to say he is sorry to the Irish people for the Government overseeing obscene wastage of public money on many projects over the years——

Deputies

Hear, hear.

——which has caused anger among the people.

The Taoiseach said in the House a number of weeks ago that he will do it his way. Clearly, his way is not working and he knows that. Last night in the House, the Minister for Finance asked other parties to come up with their ideas. If the Taoiseach wants to move out of that seat altogether, we will sort out this.

Deputies

Hear, hear.

However, when we put forward ideas, they have been scorned and thrown out by Fianna Fáil. I have given the Taoiseach four proposals previously and he need not give me the same answer again in respect of these. I said, first, the VAT increase should be reversed.

Deputies

Hear, hear.

Reversing that tax increase would increase confidence in spending here. Second, PRSI payments should be abolished for employers who take on new employees in 2009. As the Taoiseach knows, it costs €20,000 per job loss. Third, a loan guarantee scheme should be set up for small businesses in distress — this is critical. Thousands of people are affected and they have approached Deputies on all sides of the House to advise that they cannot get credit, that the recapitalisation has not worked and that they need such a scheme to have the confidence to invest in their businesses and to retain and create jobs.

Fourth, as I said a number of weeks ago, the Taoiseach should rewrite the national development programme, frontload it with the infrastructural projects that are labour intensive such as school buildings, primary care centres and improvements outside every town and village in the country. Such projects would not require major international tenders. The Government should reprioritise the programme and frontload it with those labour intensive projects that will give people jobs and respect and will allow them to pay tax. They will restore some sense of confidence and belief that at long last decisions are being taken that will go some way to restoring progress for the economy.

Does the Taoiseach accept any responsibility? Is he prepared to apologise for what he has done and for the Fianna Fáil mismanagement? Is he prepared to take on board constructive proposals designed to create and retain employment, and in addition to restore some confidence and give the people a sense of belief that somebody is in charge and making decisions in the best interests of the economy?

Deputies

Hear, hear.

And an apology also.

On the question of unemployment, of course one is very concerned and I am very concerned about the fact that unemployment has been rising so fast. It is up to 10.4% as of the February figure. We had unemployment back in the 1980s of more than 17%, but I do not want to make a debating point of that. Thankfully, there are still approximately 1.8 million people working in this economy.

That was also a Fianna Fáil creation. Some of us are here long enough to remember.

Allow the Taoiseach to finish.

We need to be mindful that we need to try to maintain as many jobs as possible in present circumstances. Any rise in unemployment, of course, is a very unwelcome development. It is clear that the depth of this recession and the impact it is having worldwide in markets in which we need to trade means demand is less now than was the case in the past. That is having its effect in the real economy and we are seeing that on a daily and weekly basis. We need to address that from a competitiveness point of view.

The second point the Deputy raised related to our own particular responsibility for this matter. First, I take full responsibility for all decisions I have taken throughout my career as a Minister and as Taoiseach. I want to make that point very clear. Second, at the time much of the critique that was coming from that side of the House related to the failure by Government to invest even greater amounts of money into public services.

Deputies

Hear, hear.

The third point I would make is that we brought in ten surpluses in 12 budgets during that period.

Where are they now?

That went towards reducing debt — halving the debt and thankfully——

Does the Taoiseach have any concept of humility?

(Interruptions).

The Deputies must let the Taoiseach finish.

The important point to make regarding——

The Fianna Fáil-led Government inherited the surplus.

(Interruptions).

Deputy Kenny was listened to in silence and the Taoiseach must get the same respect from the House.

It is very hard to listen to.

They can leave the House.

The important point to make regarding that matter is that basically the country has a strong balance sheet in terms of the relative low debt we have — although rising — but we have a very weak profit and loss account because our day-to-day expenditures well exceed our revenues. That is the issue we face. In the past increased public services were required as was increased capital investment, which was required to deal with the infrastructure deficit, a source of complaint by many on all sides of the House in terms of the growth that was being achieved in the economy. Employment creation was also high, some of which we are losing now. Even so, with more than 350,000 unemployed — every one of whom is too many as far as all of us are concerned — it represents 10% of the workforce when ten or 15 years ago it would have represented an unemployment rate of 20% and more. Our policies at that time were working for the economy. We are in a totally new situation now, as is every economy and country.

Tell us about the property bubble and the Government's failure to regulate the banks. Is it suffering from amnesia on that?

We want to be fair and honest. At the end of 2007 all economic forecasters in this country were talking about a minimum growth rate for 2008 of 2.5% and a maximum of 4%. So the idea that the economic convulsion, which has now beset the world economy and is affecting every country in the world, advanced economy and leading manufacturing economy in the world, was foreseeable in terms of its impact is not true. By the same token let me say that since the Government came into office on each occasion when it appeared there was a slippage in expenditure——

The Government disappeared.

In 2008 we came in on target for our expenditure. We have had a collapse in tax revenues both last year and continuing this year. That is having its impact in a way that we now need to address. On the basis of the Exchequer figures that appeared yesterday the Government made the immediate decision that we would bring forward a supplementary budget in the context of a wider stabilisation plan that is necessary so that we can outline to the people the likely political choices that need to be made by whatever Government is running the country in the coming years on the basis that we are in recession and the economy is contracting.

With regard to some of the measures the Deputy has proposed, in the coming weeks we need to consider the costs of some initiatives. I am sure parties will not only take up the opportunity of being briefed by the Department of Finance but will also seek costings for any ideas or proposals they believe would be appropriate at this time. Not only do we need to work out the costs and come up with the figure that meets the budgetary requirement, but we also need to work out the impact of those choices and ensure in the rather fragile economy we have today not only that the figures add up in terms of the mathematical issue but also assess the impact those choices will have and how they interact with each other. In other words, what is required is an overall budgetary framework that will make sense in the circumstances, which of course will in no way make it any less painful for the people in terms of implementing the decisions that are necessary.

To come to the four specific measures proposed by Deputy Kenny which have merit, I am sure, in terms of dealing with the budgetary situation it is highly unlikely that any of them meet the basic requirement of raising revenue. I agree we need to consider the demand side of the economy to establish if there is anything we can do not only to boost demand but at least to maintain demand at the lower level at which it is at the moment. However, the Deputy's suggestion of a loan guarantee scheme and the idea that any such proposals would raise revenue——

They are not intended to.

If on the Deputy's own admission they are not intended to raise revenue——

They are intended to create jobs.

——the impact of those proposals would be to widen the deficit rather than close it. This is the difficulty we all have.

(Interruptions).

Does the Taoiseach understand about job creation?

Let the Taoiseach finish.

Let me finish and then the Deputy can come back on the point. The simple point I am making is that I accept we need to try to maintain jobs to the greatest extent possible. We need to provide support for enterprise and in that context, measures such as these need to be considered. However they also need to be part of a wider more integrated package that will also deal with the budgetary problem. Therefore while putting forward four initiatives such as those which have their attractions and their own merit——

They are job creation measures.

——they will also need to fit with the fact that we need to raise revenues and also address the expenditure issues that arise.

Does the Taoiseach accept that they fit in?

(Interruptions).

I call Deputy Gilmore.

They are all leaders over there.

The Minister, Deputy Dempsey, is no leader anyway.

(Interruptions).

A man that spends small change on voting machines is no leader.

The Deputy should leave that aside now. I call Deputy Gilmore.

Arrogance personified.

This is Leaders' Questions and only Deputy Gilmore is in order.

The Taoiseach should not seek to minimise the impact of the job loss situation by relying on percentages. It is no comfort to people in Bausch & Lomb to feel that when they lose their jobs they represent a lower percentage of unemployment now than they would have in the 1980s. We have never had in excess of 350,000 unemployed. It is the highest number of people out of work in the State ever. It is 200,000 extra people out of work since the date of the last general election. Having 200,000 extra people out of work costs €4 billion to the public finances. That is the Government's problem. The problem in the public finances is directly related to the number of people losing their jobs and continuing to lose their jobs.

We cannot have information being provided to us on a piecemeal basis at this time. We have the level of unemployment today that we now know. We have the figures that were supplied to the Opposition finance spokespersons this morning, which as Deputy Kenny said suggest that approximately €5 billion now needs to be found. There are two additional pieces of information that I would like to get from the Taoiseach this morning. First, what is the Government's projection for the number of people who will be out of work by the end of the year? We need to see this on a total year basis. What is the Taoiseach's projection for that and what is the additional cost to the public purse of the additional people who will be out of work?

Second, for the first time, the Taoiseach this morning described what the Government will now do as the introduction of a supplementary budget. Will he tell us the date on which that supplementary budget will be introduced?

First, to answer Deputy Gilmore, in no way have I suggested that these figures are mere statistics. As I said at the weekend, behind every statistic, behind every job loss, is a person or family whose difficulties are made all the greater by losing their job than was the case in the past, with the anxiety and concern that it brings with it. That point is understood and well made by everybody and all of us in public life are cognisant of that.

Second, I was simply making that point that these figures, every one of which we would rather not have as we would rather see every one of those 354,000 people in work than not in work, represent 10.4% of, thankfully, a more enlarged workforce than was the case in the 1980s when we had these sorts of figures.

The third point I make in this regard concerns the problem of the loss of employment, which the Deputy raised. If we could reverse that, obviously our budgetary situation would improve because there would be more people contributing to the Exchequer. However, the loss of jobs is an outcome and a function of the fact demand for our goods and services at home and abroad is less than before, which is having its impact on the real economy. There are also competitiveness issues we have to address, some of which were not within our control. For example, the depreciation of sterling against the euro, which saw a 30% swing in three or four months, has a major effect, particularly for Irish-based industry whose main market is the UK, quite apart from the domestic market.

Therefore, to try to devise enterprise supports to assist industry to come through this most difficult and unique trading circumstances is a policy option we must also seek to address, as the Deputy said, in the overall context of bringing forward initiatives that will address the public finance position, which must be addressed. We must also seek, where possible, to provide assistance that would be appropriate and targeted to those areas of the economy that produce the wealth and the jobs, and maintain people in employment. There are viable but vulnerable companies but the circumstances with which they are now contending make it all the more difficult for them to continue to trade to the same extent, achieve the level of profits, attract the level of investment and create the number of jobs that was the case in the past. Those are my answers to the points raised on the employment front.

On the other question raised by the Deputy in regard to the date of the supplementary budget, I have made the point that the Government made a decision yesterday that by the end of the month we will make whatever decisions are necessary to ensure we, to the greatest extent possible, can provide a deficit position for this year of 9.5%, which does not exceed that figure the markets have factored in as part of our correction process over the coming years to bring order back to our public finances. It is a huge challenge, as has been said, and one that will require the full efforts of everyone in the House. I look forward to everyone constructively contributing to that debate. We will also have the social partners brought in to be briefed tomorrow to bring them up to date as to the impact of the February figures, and we look forward to hearing what they have to say.

The Government obviously has the bounden duty to address this issue quickly and to do so after giving full consideration not only to the impact of the figures, as best as one can gauge them in month two when facing into a situation this year which is difficult in any case, but we also have a duty to consider the impact the various policy initiatives being considered would have and how we come forward with an overall approach which, to the greatest extent possible, while it will not be able to eliminate further casualties on the jobs front during the course of this year, will seek to maximise that position.

Finally, the figures that were mentioned in regard to unemployment were somewhere in the region of 400,000. It appears clear that if the present rate of job loss were to continue, we are looking well beyond that, certainly in the region of 450,000 and more. We have to be cognisant of that as well.

That answers half of the question I asked. Some 450,000-plus unemployed is a really shocking prospect. What we have to do is not just address the problems in the public finances but address very urgently what can be done to get people back to work and, second, what can be done to provide education, training and meaningful occupation for people who are coming out of work. The prospect that we would have approaching 500,000 people unemployed in the country is a really frightening one which requires very urgent and serious consideration.

I am disappointed the Taoiseach has not told the House when the supplementary budget will be introduced because it is important we know that. I understand the optics of inviting the Opposition parties to make submissions, go in and be briefed, get costings and so forth. The Taoiseach has been in government for 12 years yet he is now asking the Opposition to come up with solutions in a matter of weeks. It would be helpful——

We thought Deputy Gilmore had the answers.

Let the Deputy finish.

It would be helpful if we knew how many weeks the Taoiseach had in mind. We should be told when the supplementary budget will be introduced. The Taoiseach should stop dancing around this.

One of the issues about which I am concerned is the extent to which the Taoiseach and the Government are on top of this. On the public finances, the Government has now had five different attempts at it. It had one in July, when it said it was €400 million; it had the October budget, when it said it was approximately €2 billion; it then had the announcement of further cuts in December; it had the further announcement of the levy and so on in February, which was for €2 billion; and now we have another budget. The Tánaiste last week told the country that the public finances were under control but within a week we have an announcement of a supplementary budget.

To be fair to the Tánaiste, she is not the only one. Exactly one month ago in this House when I asked the Taoiseach about the then unemployment figures, he stated: "To impose a further tax burden at this point in the cycle would depress demand even further". He went on to say it was not an option he wanted to consider. The difficulty we all have is that from month to month and from week to week the position of the Taoiseach and the Government in regard to the public finances appears to be shifting.

Of course it is shifting. Look at what is happening in the world.

That leaves us all with a sense that the Taoiseach is not on top of this. The extent to which information is being presented to us on a piecemeal basis is contributing to that degree of uncertainty. We have finally managed to extract from the Taoiseach the admission the Government will be introducing a supplementary budget. He has now told the House that in effect unemployment will be over 450,000 by the end of the year. What is the date or has the Taoiseach set a date yet for the supplementary budget?

I do not want to get involved in semantics on that except to say we will make whatever decisions are necessary to keep us within budget by the end of this month, and we will come to the House immediately thereafter and present our position. In the first week of April, we will have a supplementary budget brought to the House.

With regard to the question raised——

I hope it is not 1 April.

With regard to the question raised——

The date, 1 April, would suit this Government.

The Deputy should be serious. This is a serious situation.

The Government has been fooling around for long enough.

(Interruptions).

If the Taoiseach wants to——

Deputy Shatter has been interfering all morning long. It is not on.

The Chair has got very worked up this morning.

They should all resign.

Deputy Gilmore was listened to in respectful silence and so was Deputy Kenny. The same courtesy must be afforded in a democratic forum to the Taoiseach.

It never is by Deputy Shatter anyway. One need not worry about that.

It is like the stations of the cross. That is why they come one after the other.

That is the way it has to be.

It never is by Deputy Shatter anyway; a man of the utmost civility.

For goodness sake, allow the Taoiseach to reply.

(Interruptions).

Deputy Shatter, you are close——

The Government is not close enough. That is the problem. The country wants it out.

Deputy Shatter, you are on a yellow card now.

(Interruptions).

It wants them out.

A red card is what is needed now.

The Taoiseach, without interruption.

(Interruptions).

There are people outside this House whose lives are being destroyed by the Government.

For goodness sake, allow the Taoiseach reply to the question.

(Interruptions).

Be mature enough and let the Taoiseach reply.

Deputies

Hear, hear.

Thank you, a Cheann Comhairle. The initiatives the Government took to try to ensure that we would be successful in maintaining our expenditure within 2008 levels were opposed by the Opposition parties. The €2 billion raised in taxes in our budget was opposed by the Opposition parties. The €2 billion required in expenditure and which everybody in the social partnership——

The Government changed its mind. The Taoiseach got that wrong.

A Deputy

They backed down.

Let the Taoiseach finish, please.

The €2 billion required in expenditure, which the social partners agreed was the first step needed to help bring order back to our public finances, was opposed by the Opposition parties.

The Taoiseach got that wrong. It was opposed also by the social partners.

Therefore, when somebody talks about——

When will the Taoiseach say he got it wrong?

It is not possible for people to hear intelligibly if the Taoiseach is to be interrupted at every opportunity. Please let him finish what he has to say. It is as simple as that.

It is not possible to listen.

When we talk about the need to bring order to our public finances, which everybody agrees we must, the record will show that the Opposition agreed with that proposition in principle but opposed it in practice.

In the present context the four cornerstones of any policy needed to help deal with this situation, are, bringing order to our public finances, trying to get our banks to operate in a functioning manner in support of business and the wider economy, seeking to maintain employment and secure the maximum level of employment we can in this very difficult economic situation and protecting and upskilling those who lose their jobs. I do not believe anybody disagrees with that. That is the approach the Government is trying to take in respect of all these matters.

At this point we cannot give the Opposition a definite outline of how the full year picture will emerge, only to say, based on present trends, how we believe it will be. Every government is facing that dilemma and predicament. This is not a static situation. An economic convulsion is taking place in the world economy, as everybody knows. This country is not and will not be immune from that problem. A small open economy such as ours faces even greater turbulence than others because we do not have a domestic market that will consume some of the goods we produce.

We have a massive deficit.

If there is a global recession in all the markets in which we operate that has an impact in the real economy of this country. That is a predicament that every Minister of Finance and every Department of Finance must face. This Thursday, the European Central Bank, which has access to the data of all euro area banks in respect of the European economy, will revise its economic forecast, having made other forecasts two months ago. Similarly, the European Commission, a highly respected forecaster in this area, will make changes because the impact on the world economy, the European economy and every domestic economy is changing all the time. Therefore, nobody can say with definitive truth how long this recession will last, what its impact will be and how deep. We can only say that everybody agrees that, in terms of financial crisis and economic impact, this is the biggest challenge that has faced the world economy since 1929. That was 80 years ago.

That is not an argument to abdicate my responsibility as Taoiseach and Leader of this Government to come into this House and take whatever decisions are necessary however difficult they may be, knowing they will be painful for everybody. It is my responsibility to come into this House to make sure our international credibility as a modern economy is upheld and maintained by meeting the targets we must meet. That is our bounden responsibility.

We will look forward to any ideas that people in the Opposition wish to put into that debate. If they wish to stay away from it that is a matter for them but I do not believe that is their disposition. However, if it is, so be it. At the end of the day, the Government must make the necessary decisions and we will do so. We will do so in the full knowledge that what we are trying to achieve is stability in the public finance position and we will take on a challenge, the magnitude of which has not been faced in this country, in this political generation or the preceding one. We will take those decisions in the very best interests of the country, regardless of the immediate consequences.

The Government has refused to take responsibility.

It is an April Fools' budget.

(Interruptions).

Sin deireadh le ceisteanna ó Cheannairí.

I want to clarify an issue that has been thrown at the Tánaiste on an ongoing basis. The Tánaiste spoke in respect of control of our public expenditure and the quotes are there for anybody who wishes to read them. Perhaps it might be reported to give a full flavour of what the Tánaiste had to say on this matter. She said: "We have made a decision on the amount of expenditure that we are going to have within our budgetary framework and we must remain within that and that is going to be very difficult".

Sin deireadh le ceisteanna ó Cheannairí.

Will the Taoiseach say, in respect of some of the Independent Deputies some of whom have said they have particular programmes——

I am sorry, Deputy Kenny. The Taoiseach has not replied to Question No. 1.

That was just a general statement.

Top
Share