I move:
"That Dáil Éireann, having regard to the mistakenly planned current budget deficit in 1995, the out of control public spending, the lack of prudent financial planning, the lack of any coherent medium or long term economic strategy, the panic decisions of the Government as announced on Thursday, 8 June 1995 and the ad hoc policy announcements of Ministers, and in the light of the recent damning Annual OECD Survey on the Irish economy, condemns the Minister for Finance in particular for his imprudent mismanagement of the public finances and the economy and calls on the Government to implement the coherent and prudent fiscal, monetary and economic policies of Fianna Fáil-led Governments since 1987.”
I wish to share my time with Deputy Bertie Ahern. It is difficult to hide from the truth. Good economic management is difficult but it was abandoned when this Government came to power in December 1994. Sound economic, fiscal and monetary management was the order of the day. Unfortunately mismanagement is now the order of the day and there is no hiding from this inescapable truth.
When the Fianna Fáil administration left office in 1994 we had the first balanced current budget deficit in 27 years, the lowest inflation and interest rates for decades, a steady rise in employment, increased economic growth and a National Development Plan which would channel billions of pounds into the economy by the end of the decade. Whatever our critics may say about us, any independently minded person would agree that Fianna Fáil-led administrations since 1987 have proved to be successful in turning the economy around from the disastrous situation in the mid-1980s.
A few months ago the incoming rainbow Government promised firm management of the public finances. In his budget speech on 8 February 1995 the Minister for Finance said:
We will need firm discipline and strict adherence to our commitments if we are to meet the targets which we have set for ourselves in the policy document —A Government of Renewal.
Four months later on 8 June the Government suffered a panic attack and the Minister for Finance announced cutbacks. It appears to have come about as a result of the recently published OECD survey on the economy. When a person is a couple of stones overweight he does not need a dietician to inform him of this unwelcome fact. Is it that the Minister for Finance and the Government have been asleep for the last six months and need the OECD to tell them what Opposition Deputies have been saying, independent analysts and commentators constantly repeating and the world and its mother shouting from the rooftops.
What new circumstances arose last Thursday, four months to the day from the date of the budget, which were not known to the Government when framing the budget? No exceptional international economic events occurred. Nothing of an exceptional nature occurred in our economy. If the board of directors of a commercial company behaved in this fashion the shareholders would be justified in looking for their removal.
The OECD survey states:
Despite its good performance the Irish economy continues to face high levels of public debt and unemployment ... tighter control on public expenditure appears to be necessary in order to sustain progress in reducing the debt to GDP ratio as specified in the Maastricht Treaty and to make room for a further reduction in the tax burden.
The survey has confirmed and legitimised all the recent statements made by me and my Fianna Fáil colleagues on the downturn in control of the level of public spending. There is a 10 per cent plus increase in expenditure this year over 1994 when one excludes the tax amnesty and compares like with like.
While it may be true of politicians the world over, Irish politicians seem hell bent on setting their faces against the lessons of the past. While one could be excused for forgetting economic mistakes made 40 years ago it is beyond belief that a Government would not have learned from the daft economic and financial policies pursued here in the 1970s and 1980s.
There was nothing wrong with attempting the policy experiment of current budget deficits in the 1970s. As an economic option it is a tool to be used at appropriate times in economic development or in the lifetime of an economic cycle. It is important to state the foregoing because I have been critical of the policy of current budget deficits since becoming a Member of the House in 1977. My criticism has been based on the blindingly obvious: current budget deficits are an incorrect policy option for an open economy. This is not to say that the option cannot be used. However, it should only be used in exceptional circumstances. The lesson we should have learned from that experiment is that in a small open economy current budget deficits create massive long term headaches and mountainous international indebtedness. Very few long term sustainable jobs are created by indulging in such a policy.
Having achieved a current budget deficit in 1994 I would have thought no sane Government would go back down the other road. I and my party Leader pointed this out when the budget was introduced and in repeated statements over the past few months. I do not regard my view of current budget deficits as either left-wing or right-wing, just pragmatic. Surely if it is proven beyond any shadow of a doubt that a certain policy option does not work in an Irish context, reason compels it to be abandoned.
Whereas it is easy to make decisions to increase spending, all Governments know the exceptional pain and political difficulties associated with taking corrective measures. It has taken over a quarter of a century to return to a position of paying for current expenditure out of current income. Whatever justification there may be in occasionally planning for a current budget deficit, there was no such justification in January 1995. Any junior certificate student taking the business organisation paper in the 1995 examination knows that you do not put more money into an economy which has experienced the growth rates Ireland has in the 1990s. Any amateur economist sitting on a bar stool knows that simple fact. We do not need Central Bank reports, stockbrokers' analyses, business journalists or Opposition politicians to spell out the blindingly obvious. Any Government should adopt a prudent approach to its first budget and provide for the rainy day which invariably comes around.
There has been a sea change in the thinking of socialist parties worldwide. The traditional socialist view of spend and spend again has been abandoned from Australia to Central Europe but Irish left wing parties are living in the past and refuse to accept that. This left wing dominated Government is not prepared to accept the changed economic thinking of recent times and has adopted the attitude that others are wrong and it is right. They are supported in this by some media commentators who find it impossible to burn their 1960s socialist clothes.
The ink was hardly dry on the Minister for Finance's Budget Statement when the Minister for Social Welfare announced an extra £140 million in expenditure. Apparently the Government believed some fancy creative accounting would explain this expenditure away and no analyst would realise it was additional expenditure. Not long after, and to keep the delegates at the Democratic Left conference happy, the Government announced a major change in the law relating to service charges. When one strips away the verbiage surrounding the decision the Government effectively said "if you do not feel like paying these service charges then do not bother because we will not pursue you further anyway". What kind of signal was this to give to the electorate and the international markets?
It is patently obvious the Minister for Finance is being ignored by his colleagues. There is no point in him ringing up journalists in the middle of the night to tell them he will get tough on spending. This happened some months ago and the Minister got the headlines he wanted in the morning papers. However, there is little point in closing the stable door after the horse has bolted.
Ministers have been unable to resist the temptation to give in to pressure groups and some have announced their willingness to do certain things without any recourse to the overall budgetary position, and least of all, any recognition to the existence of the Minister for Finance. The Minister for Education has succeeded in transferring responsibility for early retirement for teachers to the Minister for Finance and lately I have detected that the blame is being shifted to the officials in the Department of Finance. It should be remembered that Ministers, not officials, make policy decisions and it is not correct or ethical to shift the blame to officials in any Department. If collective Cabinet responsibility is to mean anything in this era of openness, transparency and accountability Ministers must be prepared to defend the actions of their colleagues and not indulge in "slieveenish" cop-outs.
On the imminent Tinakilly think out, I send my sympathies to all Ministers and, in particular, to the Minister for Social Welfare, Deputy De Rossa. This supposed champion of the under-privileged and disadvantaged showed his true colours in giving them a 2.5 per cent increase in the budget. I look forward with some eagerness to see how the champion of old age pensioners will square his ideologies with his new found responsibilities. He was somewhat testy on last night's "Questions and Answers" programme. He will have to learn to grin a bit more and bear it better.
The Government is not following any clear strategy. The Minister for Finance is being ignored and last week's headlines were not about his efforts but about those of the Taoiseach. The headlines screamed "Taoiseach to order tough curbs on spending". In interviews associated with those decisions the Minister for Finance said the Government was engaged in minor adjustments only. Yesterday morning one of the headlines stated "Another £70 million in cutbacks on cards". Yet within hours, in an interview, the Tánaiste and Minister for Foreign Affairs stated this was not correct.
History seems to be repeating itself. I recall similar confusion in the FitzGerald-led Coalition Government of 1982-87. The then Minister for Finance, Deputy Dukes, was publicly humiliated by the then Tánaiste, Deputy Spring, who left his hospital bed to inform the Taoiseach of the day that the line of the Minister for Finance was not Government policy. The clear difference in strategy between the rainbow partners is disturbing and signals there are clear divisions on economic strategy. Perhaps it was inevitable that a Government comprised of parties of the far left and far right would display such confusion. It is this type of muddled analysis which dug the Irish economy deeper into the mire during the period 1982-87.
This administration is finding out that government is about making choices, making tough decisions and sticking by them. I remind the House and at least one newspaper that Fianna Fáil is now in Opposition. It is the job of the Government, not of the Opposition, to prioritise its spending. On the formation of the Government my party leader, Deputy Bertie Ahern, said that when Fianna Fáil returns to power he expects the economy to be in as good a shape as it was when it left office. Given the record of the Rainbow Coalition Government over the past six months obviously he will be disappointed.