Category: finance

Taoiseach’s ‘my way or the highway’ approach to budget cuts

28th October 2009

I never received an answer to my question to the Leader of the Seanad some weeks ago as to when and why the decision was made to move from a policy of securing savings of €4 billion in public spending through a combination of €2.5 billion in spending cuts and €1.5 billion in taxation measures to a position where the entire €4 billion is apparently to be achieved by way of cuts alone. Reports in today’s newspapers say the Taoiseach has put forward another version of his “my way or the highway” approach to the debate on the forthcoming budget with an indication that what he envisages will occur come hell or high water.

Will the Leader facilitate a debate on the fundamental issues associated with the desirability and advisability of instituting such radical spending cuts? The question is whether our economy will be able to withstand such deep cuts in public services and the associated impact for the entire economy. No other country in the OECD is engaging in these types of radical cuts as a matter of policy in the midst of a severe recession. The conventional wisdom has always been that governments should wait until the economy shows some signs of improvement before engaging in such draconian reductions in public spending. The Government apparently shared this view earlier in the year but it seems there has been a change of mind in the interim. No explanation has been given in this House or elsewhere as to whether such a decision was made and, if so, why or when it was taken. When I put this question to the Leader on a previous occasion he replied that we must wait to see what is done in the budget.

There must be a debate on how increases in taxation can contribute to making up the required saving of €4 billion in public expenditure. Why was the Commission on Taxation tasked with setting out the various options in this regard if its findings were to be jettisoned?

I am not saying that anybody in the Labour Party or elsewhere would feel particularly comfortable standing up and advocating tax increases. Nobody likes to do that, but it is part of the picture and we have to deal with the balance between cuts and taxation measures. It is simply not good enough to spend money and effort on these reports during a serious recession and do nothing. There is a need for serious public debate in places like this House. I second the proposal on the Order of Business that we have a debate here in advance of the budget on what ought to occur.

People in public office need to exercise judgment over public money

6th October 2009

The level of trust and confidence in politicians is at an all-time low. That is absolutely true. Any Member who is in contact with people - I am sure that is the case with all of my colleagues - must know that there is an unprecedented level of anger and frustration evident across all levels of society. The question of expenses is but one flashpoint. It is, however, a serious flashpoint. This matter arose earlier in the year in Britain and a debate on the fundamental issues involved came about as a result. That debate went to the very heart of the constitution, no less, of that country.

There is a serious issue with which we must deal. There is no substitute for people in public life exercising their own judgement in respect of both their actions and what they do with public money. If every single person in public life is not prepared to exercise judgment over what he or she is doing in respect of the use of public money, there is no hope with regard to the restoration of public trust and confidence in politics or the political system.

I asked the Leader of the Seanad a question in respect of that matter. The question to which I refer relates to the trust and confidence of the public in the debate in which we will be obliged to engage in the coming months with regard to the overall budgetary situation and the serious difficulties we face. I wish to ask a single, tight question. Has a Government decision been made in respect of the figure of €4 billion required to be obtained in savings in December’s budget? Has the Government decided to change the balance which it indicated would apply in respect of that €4 billion, namely, that there would be €2.5 billion in expenditure cuts and €1.5 billion in taxation measures? When was it decided that the entire €4 billion in savings would be obtained through public expenditure cuts? Was a decision made and when was it made?

Everyone has a view on the correct balance that should apply and we could engage in a debate on the matter. However, in the first instance I wish to know the answer to the question I have posed. As stated last week, during the summer the McCarthy report and the report of the Commission on Taxation were published. In my naivety, I had understood that these reports would form the basis for the debate in which we were going to engage this autumn. The McCarthy report contains much that I do not like but it sets out in stark terms where expenditure is being made and where there may be opportunities for savings. There is much with which I agree and much with which I disagree in the report. However, at least it is a written document. The Commission on Taxation’s report sets out the basis on which we might reform the tax system in the future.

We were, therefore, presented with the McCarthy report on expenditure and the commission report on taxation. I accept that matters are not that simple but at least these reports could provide us with some assistance. However, we have been informed that the report of the Commission on Taxation has been abandoned. In addition, and if we are to believe the newspapers, it appears that rather than going through the detail of the McCarthy report and engaging in the requisite debate, the Government intends to have one or two major whacks, as it were. In other words, it will have a go at either public service pay or social welfare payments. That is just not good enough because it contributes to the lack of trust. If the Government wants the Opposition to put forward proposals for discussion, why then is it not possible to engage in a debate on these reports, which were commissioned in our name, rather than merely jettisoning them?

Does the Government’s stance on McCarthy make sense?

23rd September 2009

Before we went away for the summer we were told three major reports would be published during the holiday period to which we should all pay attention, which we should all read, understand and be ready to debate when we returned to the House. They were the report on the outline of the legislation on NAMA which has been published, the report of the McCarthy commission and the report of the Commission on Taxation. These three important documents which were flagged at the start of the summer were to form the basis of the debate we would have in the Houses and the broader community on the future of the economy and the country generally.

It has been made clear to the people in the NAMA report how serious, fundamental and historic the exposure of taxpayers will be to the wrongdoing of others. Every time an issue was raised in the Houses about taxation or taxation policy we were told by Senator Dan Boyle and others that it was a matter for the Commission on Taxation. If I heard that once, I heard it 50 times in my two short years in the House. It is not just that the Taoiseach appears to have sidelined the report, rather it has been abandoned. The report of the commission has been jettisoned by the Government and we are now asked to accept that it will play no part in forming policy, but that the Government will pick one good proposal from it, namely, the proposal on carbon tax, and abandon the rest. When we ask whether it is a good idea to have a debate on taxation and public services, Senator Boyle will not be able to say the answer will be found in the report of the commission or that the report will form the basis of our discussion because it has been jettisoned.

Regarding the McCarthy report and what happened today: two things were said by Ministers about the report. The Minister for Finance, Deputy Brian Lenihan, said it would form a key part of budgetary strategy, while the Tánaiste said large parts of it did not make sense.

Can anybody explain which of those two positions is the Government’s? Does the report not make sense, as the Tánaiste has said? Should we take it seriously, as the Minister for Finance has suggested? At the start of the summer, the Minister, Deputy Brian Lenihan, said the Opposition would have nowhere to hide when the report was published. His own colleagues have spent the summer looking for somewhere to hide.

The Ministers, Deputies Ó Cuív and Cullen, do not like the report. The Tánaiste does not like it. When people come into the Gallery of this House, they wonder how Senators on the Government side very often make speeches that disagree with Government policy. I remind them that senior Ministers are making a laughing stock of their own Government. They are contributing further to what the Minister, Deputy Gormley, quite correctly described a couple of weeks ago when he bemoaned the complete breakdown in trust in this country’s Government.

Stop NAMA Protest - Wednesday 1pm

14th September 2009

Stop NAMAIf you are free this Wednesday 16th September please come along to Labour’s STOP NAMA Protest at 1pm outside Leinster House, Kildare Street, Dublin 2. We want as many people as possible to join Labour’s TDs, Senators and activists to oppose NAMA.

The Labour Party has been consistent in our opposition to the NAMA plan since it was first mooted by Fianna Fail. Our banking system has been brought to its knees by the rampant greed and speculation of our banks and developers. Together with Fianna Fail they make up a ‘toxic triangle’ that has destroyed our economy, sending Ireland into the deepest, and maybe even the longest, economic depression of any advanced economy since the Second World War.

There is the real danger under the NAMA plan that the government will end up paying grossly inflated prices for properties, placing a financial millstone around not just the current generation of taxpayers, but possible the next generation also.

I know that it is a working day and that not everyone will be available, but I am appealing to you to turn out on Wednesday. Let your family, friends and work colleagues know that it is on. Encourage them to turn out. Use word of mouth, email, text messages – whatever you can do.

Help us make this demonstration a success and it will greatly increase the pressure on Fianna Fail and the Green Party to abandon this plan. NAMA must be stopped.

Alex on Today FM

20th July 2009

Yesterday, I was a panellist on Sam Smyth’s Sunday Supplement on Today FM. Also on the show were Leo Varadkar TD and John McGuinness TD.

You can listen to the show in full by clicking here.

Labour raises concerns over snip plans on Children’s Ombudsman

16th July 2009

I would like to add my voice to concerns being raised by Emily Logan, Ombudsman for Children, regarding the Bord Snip recommendations to subsume her Office, along with others, into office of the Ombudsman.

Quite what the point of such a merger would be is not at all clear. According to the McCarthy Report, the move would save at best a couple of hundred thousand Euro. This is less than a drop in the ocean in terms of the €5.3b cuts that are outlined in the document.

The proposal would effectively abolish the distinct and independent nature of the Ombudsman for Children’s Office, the only agency expressly charged by law to listen to children and to advocate on their behalf.

McCarthy also seems to be suggesting that investigations by the new Ombudsman’s office would be carried out by staff at lower grades, which would almost certainly compromise its capacity to adequately deliver the service.

It is astounding that this proposal has emerged just weeks after the publication of the Ryan Report. While that report was universally greeted with shock and dismay, we are now being asked to reduce the level of protection and support we will be offering children.

Earlier this month, the Ombudsman for Children’s Office published its annual report highlighting a 10 per cent year-on-year increase in demand for the services of the agency. To merge the Ombudsman for Children’s Office with bodies that have no express powers or functions relating to children would be entirely wrong and mis-guided.

The Minister for Finance has referred to pressure from sectional interests in the context of the proposed cuts and savings. Children, however, are not a sectional interest.

More :: Read the McCarthy ‘An Bord Snip Nua’ report by clicking the links: Volume 1, Volume 2

Govt not entitled to seek congratulations after IMF report

13th July 2009

It is true that the reports from the IMF and the OECD are neither a ringing endorsement of the Government’s stewardship nor handy crib sheets for the Opposition to attack the Government. But the problem is that when the reports were published, particularly the IMF report, they were accompanied by the sort of press releases the Government issues at such times suggesting that they constitute a ringing endorsement of Government policy.

That was exactly what we got when the IMF report was published. In the Minister of State’s speech in the Seanad, he welcomed the opportunity to have this debate because it gives an opportunity to put on record the endorsement of the Government’s policies and the endorsement it provides for the action it is taking. It includes some endorsements of what the Government is doing but the extent to which we should fall to our knees and thank the Government for taking action in this unprecedented crisis is another matter. The Government is not entitled to come into this House and seek congratulations for doing the job it is paid by the people to do, for taking steps to turn around this crisis that is partly of their making.

I am adhering to the call for restraint in this debate by saying the crisis was only partly of the Government’s making but it was of its making to a considerable extent. This was pointed out in the IMF report, which the government is so quick to characterise as an endorsement of the Government’s position. The Minister asked that while we debate the IMF report, we refer to it, and I propose to do so. I do not intend to paraphrase the report at all but will quote directly from it lest I am accused, as others have been and as some have done, of spinning it.

I will talk about the future, because that is what we are all interested in, but we cannot look to the future unless we are honest about how we got to where we are. Senator MacSharry is a good colleague in this House who often uses the phrase: “We are where we are.” That covers a multitude. It is easy for a Minister or someone else to say it, but how did we get to where we are? This is part of the analysis required to see how we get away from where we are. In addition, it is not a matter of where we are in the sense of spreading the blame; it is about where the Government has brought us. We must reword that handy little catch-all phrase which is used mainly by Government spokespersons and apologists in an effort to dissuade us from considering how we got to the state we are in.

The IMF report states:

Dazzling growth and buoyant public revenues prompted tax reductions and expansion of public expenditures that have proved unsustainable. Various commentators and the IMF in its Article IV consultations did warn that the seemingly-unstoppable growth masked serious imbalances, including the fragility of public finances.

This is a direct quote and not an attempt to paraphrase or put a spin on anything. The report states that the IMF analysis “shows that after strong growth between 1987 and 2001, which earned Ireland the moniker of the ’Celtic Tiger,’ potential growth had steadily eroded”. Here, the IMF is telling the Government that growth had started to erode from 2001. This is the report the Government is so anxious to tell us constitutes an endorsement of its policies. The report goes on to state: “Analysis by OECD staff, consistent with the results from the Kalman-filtering approach, concludes that Ireland was perhaps the most overheated of all advanced economies.” I will not burden people with the detail of the Kalman filtering approach which is an econometric model. Again, these are the words of the IMF report itself.

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Govt financial records are public property

1st July 2009

It appears from reports yesterday that decisions relating to the budget and the economy generally are being postponed to the autumn and no decisions will be made by the Government until after the referendum on the Lisbon treaty in early October. The Taoiseach indicated in the Dáil yesterday that the Minister for Finance is only beginning the budgetary process at this stage. On that basis, it will take some months. I presume that the calls by a number of colleagues for detailed debate and the presentation by Opposition parties of their budgetary priorities will go off the agenda of the House given that the Government is only beginning the budgetary process and will not be in a position to present any of its proposals to either House until well into autumn. The calls by colleagues such as Senator John Hanafin and others, therefore, presumably cannot be met in those circumstances. If the Government is only getting going on its proposals, one can hardly expect the Opposition to put forward proposals until the Government at least indicates what it intends to do.

It would assist all the Opposition parties and the general public if the Government would come clean and publish all the information available to it regarding the budgetary position and proposals that have been made by expert groups retained by the Government for that purpose. What basis can there be for a delay in the publication by the Government of the documents prepared by Professor McCarthy’s committee? Why should there be a delay? They are public property. They are not the property of either the committee, because the Government has been given the report, or the Minister or Government. These are grave matters. One newspaper today describes our economy as being in an “historic slump” while others report the economy being in the “worst ever state”. What excuse can there be for the public and the Opposition parties not to be told or given all the information available to the Government? I have always believed this with regard to the banking situation as well, notwithstanding that some arguments can be made from time to time about confidentiality. However, those arguments have faded, particularly in the case of nationalised banks.

All of the information that is available to the Government is public property; it is the property of the people. The Government only holds that information in trust for the people and it should be published for the people. If the Government Senators seek any measure of consensus or co-operation from Opposition parties, they will have to come clean on the basic information that is known to the Government. If that detailed information is shared with us, we can have the type of meaningful debate the Irish public expects in this and the other House.

Gov should seek extra cash from Orders to pay aggravated damages to abuse victims

2nd June 2009

Before the Taoiseach meets the Religious Congregations, who ran the residential institutions, he must devise a strategy based on what ought now to be achieved for the benefit of the great number of men and women that have been abused and exploited in the systematic way so convincingly described in the Ryan Report.

A starting point for the Taoiseach’s discussions with the Congregations should be a demand by him that as a first step they will pay to the Redress Board the equivalent of 20% of the awards that have been and are yet to be made so that each recipient of redress will be paid by the Redress Board an additional payment equivalent to 20% of his or her award.

Although the Redress Board is empowered to award up to €60,000 (being 20% of the maximum award of €300,000) for aggravated damages, the Board has rarely made any award for aggravated damages.

The scheme for Redress which was published by Mr Justice Ryan’s Compensation Advisory Committee in January 2002 clearly contemplated that aggravated damages not exceeding 20% of the Redress awarded might be awarded by the Redress Board where the applicant has satisfied the board, that it is appropriate to do so having regard to the circumstances of the abuse suffered by the applicant. This principle that aggravated damages should be available seems to have been given very limited application in practice.

No new deal should be concluded with the Religious Congregations until the Oireachtas Committee on Public Accounts has heard evidence from Michael Woods TD, the then Secretary General of the Department of Education and Science and the representatives of the Residential Institutions about the extent of disclosure made to the Government in 2002 by the Religious Orders about the nature, severity and extent of abuse and exploitation in their institutions over many years past.

This time the deal must be fair and fully reflect the appalling injuries that have been documented by the Ryan Report.

A Fair Deal for a Fair City

28th May 2009

Dublin ManifestoYesterday saw the launch of Labour’s Manifesto for Dublin on the Millennium Bridge. I joined Deputy Leader Joan Burton, Dublin Central by-election candidate Ivana Bacik and some of the many Labour Councillors to launch what I believe, is a new vision for Dublin.

This city of ours has enormous potential. A quarter of the Irish population live in the capital. Tourists continue to flock to the city and in the sunshine of today, it can be a cultural mecca.

Yet, the city has suffered under the 15 years of Fianna Fáil-led governments with bad planning, bad resources and right now, a bad unemployment problem. Our plan for the city, like the rest of our campiagn, is about jobs, jobs, jobs.

We must get our city back working again. Something as simple as stimulating and supporting small and medium enterprises in the city can be the precursor to an increase in employment. Labour also proposes that a council apprenticeship scheme be set up, which not only will retrain and upskill workers, but contribute to the work of the four local authorities in upkeeping the city and county.

Dublin Manifesto 2But the manifesto also addresses some issues which will serve to improve the lives of Dubliners. As a cyclist, I find the city’s streets a nightmare at times. Labour proposes to prioritise safe, uninteruppted 24-hour cycle lanes that will increase safety.

We will also reverse the current cuts to Dublin Bus services.

This manifesto seeks to address two fundamental matters in Dublin: to get Dubliners back to work; and to improve the lives of all Dubliners, right across the city. Labour councillors have worked hard in order to improve this city, but for a real difference we need to change nationally. A strong Labour in the Dáil can only be better for our capital city.

More :: Read ‘A Fair Deal for a Fair City’ by clicking here (PDF)

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