"That Dáil Éireann:
notes with concern that:
Ireland has suffered the longest and deepest recession of any Eurozone country because of reckless domestic management of the economy;
investment, consumption, employment and living standards continued to decline in the first quarter of this year;
the seasonally adjusted numbers of the live register rose by a further 5,800 in June and the actual number claiming now exceeds 450,000 for the first time ever;
the Government plans to cut a further €14 billion from investment spending between 2011-2014 compared with the original commitments in the National Development Plan;
the estimated taxpayer losses from the Government's banking strategy has reached €25 billion and is rising, even as it has failed to restore credit availability to industry; and
market confidence in the Government's economic plan is declining, as evidenced by the rising gap between Irish and German borrowing costs;
calls on the Government to:
recognise that its economic plan is failing to undo the loss of international financial market confidence in Ireland;
put jobs and industry growth at the centre of its economic strategy;
review its banking strategy to limit the taxpayers' exposure and to focus resources on supporting new lending to viable businesses;
delay further cuts to investment spending until employment starts to recover; and
restructure and re-capitalise the semi-State utilities in order to raise the necessary commercial funding to accelerate investments in water, high speed broadband and clean energy."
I wish to share time with Deputies Perry, Clune, Sheahan and Bannon.
Up to ten years ago, Ireland had an economic model that was the envy of the world based on high productivity growth, high export performance and sound public finances. Employment was being created at a rate of 50,000 jobs per year and people rightly looked to Ireland's economy as a model for other countries to follow. The sad truth is the model was destroyed in a few short years after we joined the eurozone. It was destroyed by Governments that simply did not understand or take seriously their responsibility to protect that model when they were committing the Irish people to behave more like Germany in economic management as members of the eurozone rather than to behave according to the McCreevy approach of, "If I have it, I'll spend it".
At a time like this we must examine what has happened to our economy. Within two years our national income has declined by 28%. No other economy has experienced such a decline. Nothing like that has been witnessed anywhere in the world since the 1930s. Investment has fallen by 101%, which is an unprecedented collapse. Up until recently, the Taoiseach was telling us this was due to international factors, that no one could have predicted what was happening and that he was acting on best advice. All that has been blown out of the water by two reports published by independent commentators — the Governor of the Central Bank and two experts from the IMF. We now know this was an entirely home-made crisis and 75% of the decline was due to bad decisions at home. From 2006 onwards it was not possible for Ireland to have, as the Central Bank and the Government wished to believe, a soft landing, yet as recently as May 2010 the Taoiseach was telling the people there would have been a soft landing if it had not been for the international crisis.
The extent to which the Government had become out of touch with the economic realities is truly mind-boggling. The toll of this crisis is to be found in the 300,000 people who have lost their jobs and 150,000 people who have emigrated over the past two years, not in economic statistics. This tsunami on employment is affecting young people most of all with 90% of jobs lost by people under the age of 35 and 60% by people under 25. They have carried the brunt of the employment collapse. We would have looked to them to build our economic fortunes in the future. They are well educated and they were bristling ideas as they left college. If they are lucky now, they will be able to seek work overseas. Many others have been caught in the property trap and they are in negative equity and struggling in the face of increasing threat to their jobs.
Today's announcement with more information about the Government's banking policy rubs salt in the wound for people. Many Members on this side of the House are not surprised to find that NAMA in its amended business plan has revised by 80% the projected profit it hoped to make. It was to be €5 billion but now it is down to €1 billion, yet officials have only examined 20% of the loans it will take on. They are saying their hoped-for profits from this operation will be down 80%. What will this be like when the full extent of the loans is made known?
Every month the Government parties come into the House looking for another €2 billion to put into Anglo Irish Bank. They are projecting we may have to put €25 billion into Anglo Irish Bank and Irish Nationwide Building Society, which will never lend again. It is an unfathomable amount. This is being done because the Government has insisted from the outset that the bank guarantee would be spread too wide and now the Governor of the Central Bank has confirmed that the guarantee was drawn up on a foolish basis. It was too broad. He acknowledged a guarantee was needed but, by including all the bondholders — people who were committed to and locked into the banks — the Government has imposed huge losses on the taxpayer. We are seeing those huge losses in Anglo Irish Bank. That is the consequence of what was done.
While all the losses cannot be avoided, many of them could have been. Having put €25 billion into failed banks that will never lend again, what are the Government parties doing about the 250,000 people in negative equity, those who are struggling to repay their mortgage and the 30,000 mortgage holders unable to repay? They have almost nothing to say to all those who are on their knees struggling with this deep financial problem. They are telling the banks they should not abuse the small group on tracker mortgages and they have said nothing about the solution. There is no mention of examining equity swaps or write-downs over time or systems that will genuinely relieve the burden for these people. The IMF is even telling us the banks are in a position to tackle this problem of certain of the most distressed loans but the Government does not recognise that.
According to today's announcement, the taxpayer will be asked to put money more into the mortgage interest supplement scheme, which will go directly to the banks. The taxpayer, therefore, is the only entity making a contribution to this problem that is not good enough. That is not a response. We will have to wait longer and there may be a response later in the year. We look forward to the thinking that may come out of this process but the Minister of State can surely recognise the dramatic contrast between the Government's emergency response to the needs of investors in banks such as bondholders and subordinated bondholders to whom we have offered a total guarantee and those at the other end of the spectrum. The same applies to its economic policy, which is all about repeating the two mistakes that got us into the crisis.
One was pampering the banks and jumping to their every need to allow them to expand credit at a crazy pace. The other was, as the text books describe it, procyclical budgets. The Minister and the Department of Finance insisted on pouring fuel on an economy that was already overheating. The solutions the Government tells us we must now follow are exactly the same. There must be more procyclical budgets, although this time it is sucking the life out of an economy that is already on its knees, and we must continue to pander to the needs of the banks, which are themselves on the verge of insolvency in some cases.
Surely Members on the Government side of the House must see that the policies that got us into this hole are not sufficient to get us out of it. There must be a credible employment strategy if we are to confront this problem. The core of our problem is the 300,000 people who are unemployed, most of whom are men. Over 85% of the people who have lost their jobs are men, most of them young men. If we do not respond to their problems, we will see a huge long-term unemployment problem scar our country again. Consider the sectors from which these unemployed come. Of these 200,000 males, 130,000 came from the construction sector while 40,000 come from the manufacturing sector. A total of 170,000 have come from sectors where there is no immediate prospect of re-employment. There must be an adequate response to this. An employment strategy must surely be the core response, but that is not in the Government's thinking.
There is scepticism about economic planning. In the good times people such as Mr. Charlie McCreevy dismissed economic planning as public servants trying to poke their noses into areas where it would be better if they stayed out. However, consider what that political culture created for us. It created a situation where the Minister was spending money because he had it, encouraging banks to lend at breakneck speeds and the property bubble was being pumped up by tax credits. What was happening in the real economy? It was being destroyed. Our competitiveness ranking fell from fifth to 22nd. The cost of employment in this country, which had been low and was progressively improving, suddenly deteriorated by 25% against Germany and 35% against all our competitors. Almost every indicator from the National Competitiveness Council moved into the amber or red zone. It ranks 130 indicators and 75% are either in amber or red. Why was there not a plan or joined-up thinking in the Government which acknowledged that if we want the type of economy that has been a success, that is, an export-led economy, competitiveness cannot go down the drain on every indicator, including the cost of electricity, waste, transport, rates and waste disposal?
There was a need for coherent thinking but that was discarded by the political culture of that time. It is not hard to understand how the Central Bank and the Financial Regulator proved unequal to confronting the arrogant swagger of these bankers, who thought they knew how to run the world and that they could walk on water. The culture of the time was that these were the Titans. They were the people one wanted to be close to so one could invite them to one's fund-raising functions; they were people to admire, as if they were creators of something worthwhile. These were not great entrepreneurs creating enterprises that built business but people who dealt in speculative investments. However, they became the titans of this country. They were cosy in their relationship with the Government, and that filtered through to the Central Bank, whose Governor was always appointed from within the Government circle, the Secretary General of the Department of Finance. It was an internal, cosy arrangement.
At the root of that was a political culture that was simply flawed. We have a political culture that must be broken down. It is one which claims that the Dáil should not scrutinise budgets and that the Government knows best. The Government will not set targets, will not accept scrutiny and will not offer alternatives. It puts hacks on boards and will not let the Dáil scrutinise them or question whether they are competent.
The scale of the employment crisis in this country demands a huge strategic response, which makes jobs the top priority. We have a strategy to do that. It is an innovative strategy which involves investing in the arteries of economic success, that is, electricity, broadband, water and other areas that will make us distinctive. It means investing in those young people who will otherwise end up in Frankfurt, Sydney, London or New York and ensure we do not lose them. It involves making bold strides in reforming our public service so we can deliver more with less. That is the demand at present.
What we are getting from the Government is a slow bicycle race that will not confront our problems. It pretends everything can be solved by just shrinking our fiscal problems and solving the problems of the banks. That alone will not work. This debate is about acknowledging that we need a much broader strategy if we are to confront the scale of the crisis, and calling on the Government, at this late stage, to embrace that.