I move: "That the Bill be now read a Second Time."
I thank the House for the opportunity to present this important Bill. I have introduced much legislation both from the Opposition and Government benches over my time as a Member. Most legislation is focused on specific issues. This particular Bill, however, is actually informed by my five years in the Department of Public Expenditure and Reform when there was an extraordinary focus at that stage on measuring a much wounded economy. The mechanism our international partners required us to use was the standard measurement of gross domestic product, GDP. This became an overarching and important measure. If we did not reach the criteria set by our funders in reducing our deficit as a proportion of GDP, and if we did not raise the 3% deficit target within the specified timeline, our funding would have been withdrawn. It struck me right through that process that it was a sterile and an inadequate measure of the performance of the economy. It was necessary but, as a stand-alone instrument, it was shallow.
We in Ireland now stand at a moment of tremendous opportunity after a lost decade of economic retrenchment. Any Government over the coming several years will have an additional resource of at least €3 billion a year. With such funds available, delivering on our cherished dream of a fair and equal Ireland is for the first time in our history within our grasp. We in the Labour Party know our goals for the future of our country. We want a society in which every citizen, to the extent of her or his ability, is properly equipped to participate in the social, economic and cultural life of our nation. Although our perspectives and policies might differ, many Members will agree now is the time to be ambitious for our country and our people. There are not many Members now who would repeat the infamous declaration of Margaret Thatcher that there is no such thing as society.
It is all well and good to outline high aspirational levels of ambition. However, how will we decide to achieve those ambitions and what mechanisms will make the differences we want? We need goals but we need a plan and to prioritise. We also need the tools to measure the outcomes of society. This is true of all Governments and all political parties preparing manifestoes, regardless of one's politics or ideological view. Our common future will be shaped by the choices we make about employment, the environment and genuine equality of citizenship. It reaches into health care facilities, the elderly, young people, education and every other aspect of public life and administration. If we shape that future in a meaningful and real way, then we need to measure the impact of all our decisions.
That is what the Genuine Progress Indicators and National Distributional Accounts Bill 2017 is about. It is not about abandoning the traditional economic indicators of GDP, GNP, gross national product, or the new hybrid model, GNI*, gross national income (Star), after GNP itself was so criticised as a model for Ireland after a growth rate of 26%. I will not bore the House explaining how that is calculated. All of these are important because we need to measure our outputs. However, without sustainable growth, none of our ambitions can be realised. The Bill is about adding something new and fundamentally important to that mix and calculation. It is about agreeing formal independently assessed measurements for the impact of government policy on all the important factors which shape what is truly important, namely the quality of life of our people. There is no point in talking statistics if people's health services are inadequate, if their life expectancy or their life chances are not improving, or if the air we breathe, the water we drink and all the amenities we enjoy are not of a high standard. We have to start measuring these because they are just as important as any economic growth statistics.
The truth is that growth indicators do not tell us the full story. It is important to know GNP and GDP. If one takes those measurements in isolation, however, then we overvalue the production and consumption of goods because that is all they measure. In turn, we fail to measure how much that growth reflects on genuine improvements for our people. Measurements such as this can play tricks on us. For example, if a factory creates pollution but then contributes through it to economic growth, it is measured as a good thing. If one spends money fixing the pollution caused by the factory, that is further economic growth, which is measured as a good thing. However, in reality that is bizarre.
The economist Simon Kuznets created the concept of GDP in 1934 when he developed it as a tool for measuring economic growth. At the time he wrote to the US Congress:
The welfare of a nation can scarcely be inferred from a measurement of national income. Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long term. Goals for more growth should specify more growth of what.
That is an important question. What is it for and what does it contribute to the sum of our human good? It is because of arguments like these that more and more countries are turning to new measurements, not as alternatives but as real and important supplements to give a fuller and more accurate account of the well-being of their people.
I believe the role of genuine progress indicators, GPIs for short, will be to supplement the current measurements we have. Of course, when we get into the detail of these proposals, there will be plenty of scope for argument about what precisely we should measure and what parts of the economy we should give weight to, and we can debate that. These are important policy choices but making policy choices is what politics should be about. I look forward to the debate on the merits of the choices I have made in this Bill.
I do not have the opportunity, given the speaking time, to go through the Bill in any great detail and it is hoped we will do that in committee. However, there is a second and equally important part to this Bill that I want to highlight for the House, and that is the proposal that we measure and publish national distribution accounts. We all know the last couple of decades have been good for capital growth but less so for income growth. While the world has grown richer, income inequality has increased in most countries. Policymakers and economists internationally have seen that trend and it has undoubtedly been a matter of important focus and the cause of a lot of head-scratching as to how it has come about. The first step must be to measure it accurately and comprehensively.
At present, our national accounts focus on the macro totals that I know only too well. It is left to smaller-scale inequality studies to focus on the distribution of growth, and we do not do that in a particularly successful way. These studies, surveys and tax data are often not the most comprehensive way of doing this. As policymakers, we need accurate information to answer questions such as what fraction of economic growth at present accrues to the bottom half of the income level of the population, to the middle grouping or to the top 10%, and whether those distribution fractions are changing over time. Are the rich getting richer, are the poor getting poorer, is economic growth having an equal impact on everybody and how is it having that impact?
I am standing beside the former Minister for Social Protection, Deputy Burton. Our redistributive polices assisted greatly in equalising our society through tax transfers and public spending transfers, especially in the social welfare area, during our time of real economic difficulty. We had good redistributive mechanisms but the base level of income distribution in this country is very bad, and we need to know these things. We all have to agree about how this measurement should be done, but we do not fully and accurately have a mechanism for doing it right now.
This Bill seeks to address what I believe are two important deficiencies in our national statistics, and I will try to precis this in the short speaking time I have. We need to have an agreed and independently measured set of genuine progress indicators on health status, on education status, on income redistribution, on the quality of our environment, air and water, and on access to amenity, all of which are socially important. The Bill would confer a new statutory function on the Central Statistics Office and the National Economic and Social Council to do that work.
I should make clear that, in what follows, we in the Labour Party made our best effort to define what we believe are the issues that should be measured. However, as always in a legislative measure like this, we will be open to the views of every Member of this House. I genuinely believe this is a task that everybody should, could and will work collaboratively in achieving. We have defined "national distribution accounts" as meaning accounts that seek to measure the distribution of national income, including the distribution of economic growth, to compute growth rates for each quartile of income distribution. While I am sounding like an economist again, in essence, the point is the impact on each quartile of the population in terms of income, growth and policy decisions.
In the following sections of the Bill I have defined "genuine progress indicators" as meaning a measurement that supplements gross national income as a measure of economic growth, one that is designed to take full account of the well-being of the community by incorporating environmental and social factors which are not otherwise measured, and that integrates physical and monetary measures of human, social, environmental and economic well-being. While it sounds technical, it is simply a human societal measurement of the well-being of Ireland as a whole, as opposed to simply looking at economic growth in terms of extending production and consumption. I have added a table which provides examples, although they are simply indicative.
Under the heading "economic accounts" I would include measures such as gross national income, the balance of trade, disposable income in each household, expenditure, debt and whether household debt is rising or falling, Government business, student debt, employment, unemployment and underemployment, which is a huge issue because people are registered as employed but they are not getting a living wage. We would measure all of these things. In international statistics currently, while gross national product is a measurement of a country's performance, more countries include purchasing power parity as an equivalent. Gross national product divided by the population, giving GNP per capita, is a very crude measurement. What does it mean? On the other hand, purchasing parity comparators appear more relevant. For example, if a person in a country like Pakistan has $20,000 in income, that person's purchasing power is immeasurably different from a person with an income of $20,000 living in London in terms of the cost of food, rent, a taxi fare and so on. These are the real human impact measurements that we want to achieve.
I hope the Government will facilitate a very full debate on what I regard as one of the most important pieces of legislation I have had the privilege to introduce in the House. If we change the way we measure progress, we will actually change the way progress is achieved. I heartily recommend the Bill to the House.
