I wish to share time with Deputy Gabrielle McFadden. I welcome the spring economic statement which was made jointly here by the Minister for Finance and the Minister for Public Expenditure and Reform. It told us that in the October budget there will be between €1.2 billion and €1.5 billion available to reduce tax for low and middle income earners and improve our public services. It also told us that the economy will grow by another 4% this year, that unemployment will continue to fall, that full employment will be achieved within three years and that the taxpayer will now get back all of the money the State put into the Bank of Ireland, Allied Irish Bank and Permanent TSB. What a contrast that good news is to the economic disaster which faced the Government formed by Fine Gael and Labour just over four years ago on 9 March 2011. Four years ago, the Government was faced with solving the worst recession in living memory. At the depth of that recession, the Irish economy shrunk by over 6% in one year alone. Last year, the Irish economy grew by nearly 5% and, this year, it is forecast to grow by another 4%. That rate of growth is double the forecast for the rest of the eurozone and will be well ahead of the growth forecast for Germany, France, the United Kingdom and the United States of America. By any standard, it is a remarkable turnaround in our economic fortunes.
The turnaround is real and is reflected where it matters most, in new jobs. Four years ago, unemployment was at 15% and heading for 500,000. Today, it is dropping under 10% and expected to be under 9% by the end of the year with full employment by 2018. In 2010, the budget deficit was over 14%. We were spending €10 for every €7 we took in. As a State, we were unable to borrow. We were locked out of the money markets with Irish ten year bonds reaching 15% at peak. Today, the deficit is heading for 2.3%, which is well within our limits, and we can borrow again on the open markets for less than 1%. Four years ago, we had, in effect, lost our economic sovereignty and were in the hands of the international receivers - the IMF, EU and ECB. Our international reputation was in tatters, we were regarded as one of the PIIGS and made peripheral in every sense in Europe. What a dramatic turnaround there has been in the last four years. It is hard to think of any economy anywhere in the developed world which has made such an emphatic recovery in such a short period of time.
In the course of the debate in the House and in recent media commentary on the economy, I have heard the opinion that the recovery has nothing to do with the Government. I heard that it was all going to happen anyway and that some magnanimity by the ECB, the Fed or the tooth fairy was always going to set us right. Why, I wonder, did those who now hold that opinion keep the good news to themselves for so long? Why did they not share this wisdom with us four years ago? It would certainly have been reassuring for pensioners who four years ago worried how a bankrupt state could continue to pay their pensions. It would have been comforting for the worker who had lost a job and wondered if she would ever work again. It would have been comforting for the businessman who worried about when the next customer would cross his threshold or the parents who were saying goodbye to emigrating children and wondering if they would ever have the opportunity to come back. Of course, they did not share this retrospective optimism with us then because while they hold this opinion now, they were leading the chorus of pessimism and negativity for most of the time the crisis had to be addressed. Many of those who now say that recovery was inevitable, were loudest in proclaiming that we would not get out of the bailout by the end of 2013, that we would need a second bailout, that we would not succeed in renegotiating the terms of the bailout, including the interest rate, that we would not get a deal on the promissory note and that exiting the bailout without a precautionary programme was a mistake.
I can understand why Opposition politicians would want for political reasons to talk down the prospects for recovery, but they were not alone. There were many independent commentators who simply did not believe that this level of recovery could be achieved in such a short period of time. I select one in particular because of the respect and regard I have for the institute involved. I refer to the Nevin Institute for which I have particular regard. It published an economic outlook on 10 April 2013, which is just two years ago. It forecast growth of just 1% and 1.2% for 2013 and 2014, respectively. It predicated that unemployment would remain at 14.7% in 2013 and increase to 15% in 2014 and 2015. It did not expect the Government to reach the 3% Maastricht target by 2015. How much more wrong could it have been? It was not alone. Indeed, one of my own abiding memories of that difficult period was the challenge of convincing people that we could succeed and that we would recover. I recall making a speech to the 2012 Labour Party conference when I predicated that there would be two more difficult budgets, following which the economy would recover and that we would succeed in that recovery. I recall also making a speech at a Labour Party event in mid-2013 when I suggested that we should aim to achieve full employment by the then-modest target of 2020. I am glad that target has now been revised to 2018. Unfortunately, there were few takers back then for such optimism outside our own most loyal ranks. I can understand why. The work which had to be done and the difficult decisions which had to be made had a huge impact on people and were sometimes deeply unpopular.
The credit for our country's recovery must go above all to the people. Their sacrifice, hard work and co-operation made the recovery possible. Among them were the trade unions who worked the Croke Park agreement and agreed the Haddington Road replacement. No other representative body in the State came into Government Buildings and agreed a reduction in their own members' conditions in the broader interests of the country. There was, of course, a political cost. My own party, the Labour Party, in particular paid a high price at last year's local and European elections. I too paid a political price, but speaking personally I believe it was worth it to see now in the spring statement the great economic recovery that has been achieved and the foundation that has been set for the future of the country. It may have been difficult, but we did the right thing. Imagine where we would be if we had remained in a bailout. We can only look to the situation in Greece in that regard. Imagine where the country would be if we had taken Sinn Féin's advice and defaulted. It would take another 20 years to recover. Imagine we had taken the route argued for in some of the more hawkish opinions that budgetary adjustment alone would achieve the recovery.
We insisted that there had to be a jobs and growth strategy. Imagine where we would be if public services had been cut even more, if compulsory redundancies had been implemented in the public service or if basic social welfare payments had been cut and wages reduced in order to pursue a particular version of competitiveness. The route we took was the fairest and most balanced possible and it has resulted in a recovered, growing, job-generating economy.
The work is not complete because an economy only exists to serve society and not the other way around. Unemployment is still around 10%, which is far too high, and we have to keep the focus on jobs. Recovery is still at risk and must not be squandered. The greatest risks to recovery are political choices, that is, political choices which are made in these buildings and the choices we will make as citizens when we next go to our polling stations.
Jobs themselves are not sufficient. Any old job is not enough. If our society is based on the belief that people must work for a living, then people must also be able to make a living from work. This problem is not unique to Ireland. Far too many people at work do not earn enough to pay the bills, buy a house or raise a family. Throughout the world there is a growing inequality in income. Some corporate chiefs take home 200 or 300 times the income of their lowest paid workers. This is simply not sustainable and must be addressed by governments and international bodies such as the EU and the OECD. I commend in particular the work of the Minister of State, Deputy Nash, in bringing forward the Low Pay Commission and his efforts to bring forward the legislation on collective bargaining.
Among those who have been most affected by the reduction in earnings are the young. This generation came onto the labour market as the recession hit. It has been affected by fewer job opportunities due to the recession, lower earning opportunities and difficulty in accessing affordable housing. As we chart the next phase of recovery, the social dividend of recovery, we must pay particular attention to the needs of this generation. I therefore ask the Minister for Public Expenditure and Reform, in his discussions with the trade unions on pay, to pay particular attention to the reduced pay of those who entered the public service, in particular professions such as teaching, in recent years.
We must also address the need to increase the supply of housing. As a result of the collapse in the building industry, the level of residential construction has also fallen. Currently even the most optimistic projections for house completions up to 2017 are showing figures of less than 20,000 per year. This level is behind the demographic need for housing, which is put at about 25,000 per year. I believe the real need is probably higher than that as a result of pent up demand. I welcome the Government's publication of a construction strategy and, in particular, the announcement by the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, of the biggest public housing programme introduced in this country since the 1980s. However, we need to do more in this area to ensure that affordable housing is available for those who need it.
We also need to look at some longer-term issues such as population growth. Within the next two decades, the population of this island will increase to more than 8 million. This will be back to the level at the time of the Famine. This poses considerable challenges for us in terms of housing provision, employment and public services. Issues need to be addressed, particularly in the planning area. It is also one of the reasons the Government is right to invest in the provision and delivery of water services. We need to provide for that growing population.
I wish to mention another issue, but I will mention it only briefly because I am conscious of the time. There is an election in Britain next week which will have implications for us. It may have implications for Britain's relationship with the European Union. That is of considerable interest to us. It may also add to the momentum towards Scottish independence, which will have very considerable implications for the set of relationships between the different countries on these islands. It will have particular implications for Northern Ireland. The time has come, as we look at our economic future, for us to look at the economy not just in terms of the State but to look at it in terms of the whole island. There is a logic about economic development on this island being done on an all-island basis. We should probably return to this subject and have a deeper discussion on it at a later stage.
