You can download Labour's full proposals at http://www.labour.ie/download/pdf/inirelandsinterests.pdf
A Budget in Ireland's Interest
The deal concluded by Fianna Fáil with the EU and the IMF does not serve Ireland's national interest.
While providing Ireland with necessary funding, the deal transfers even more of the costs of the banking failure onto the shoulders of the Irish taxpayer, to the benefit of bank bondholders. Those who lent money to Irish banks to fuel the property boom are not forced to pay for their mistakes. Instead, Ireland has been offered a line of expensive credit with which to bail them out, and to run the state for the next three years, at punishing rates of interest. In addition, Fianna Fáil have caved in to pressure, and have agreed to €6 billion in budget adjustments in 2011.
Labour does not share the conservative consensus in Ireland, and in the European Commission, that a €6 billion adjustment is the right course of action. Ireland does have an unsustainable budget deficit, and tackling it will require hard decisions, but we have to make the right hard decisions. Imposing a €6 billion adjustment in 2011 poses an unacceptable risk to jobs and growth in Ireland. In a highly uncertain economic environment, this level of adjustment risks further stagnation to the Irish economy in 2011, with worsening human consequences. It is a risk that Ireland should not take.
Labour's proposals for Budget 2011 demonstrate how budget consolidation can be combined with a strategy for growth and job creation. By making some €5.0 billion in adjustments, and by recycling €500m into job creation, a net adjustment of €4.5 million can be made, while at the same time promoting employment.
Our proposals are based on our core commitment to fairness, which should be an essential element in budgetary strategy. To get through this crisis, we must come together as One Ireland. That means that everyone must contribute, but those who have the most must contribute the most.
Ireland needs reform. Rather than lurching from Budget to Budget, we must change the way we manage the nation's finances - reforming the way we manage public spending, more effective scrutinising of spending and a set of reform measures to ensure that we never find ourselves in a crisis like this again.
Labour's budget proposals, based on Jobs, Reform and Fairness, serve the interests of the Irish people - the real national interest.
REFORM & FAIRNESS MUST BE CENTRAL TO BALANCING BOOKS
Growth & Jobs
Any realistic assumption on growth for next year would put the chances of an expansion in the domestic economy at not much greater than 50-50. The EU Commission is forecasting GDP growth of less than 1%, half the government’s own forecast.
The Irish economy is not yet in recovery mode, so the application of draconian austerity ‘shock treatment’ runs the risk of causing long run damage.
As it is, shopkeepers are struggling to keep their doors open, and families find it increasingly challenging to keep paying their bills.
Our proposal for a fiscal effort of €4.5bn in 2011 strikes a balance between the need to put our public finances on the right track and leaving room for growth.
We do not accept that the EU-IMF deal is not up for re-negotiation, and we do not accept the conservative consensus that €6bn is a magic number that will solve all of our problems.
We believe that the IMF’s more holistic approach to supporting economic growth and burden sharing in the banking sector leaves scope for negotiating a fairer, more job-friendly deal. The burden of adjustment cannot fall on the shoulders of Irish taxpayers.
We had crazy borrowers in Irish banking and construction, but foolish lenders who lent money without caution to a recklessly unregulated Irish financial sector must also face up to their responsibilities. Europe must acknowledge this in any debt restructuring arrangement.
For months, the government argued that draconian cuts were necessary to ‘convince the markets’ that we were serious about balancing the books.
The more they argued, the higher went our bond yields to the point where we first had to step back from the market altogether, and then accept the need for external assistance.
The focus in recent times on cuts, to the exclusion of measures to support growth, has stymied debate on the dual sided debt sustainability equation. The Labour Party is committed to a twin-track approach – fair fiscal effort balanced by investment in infrastructure, growth and jobs.
As part of our 2011 budget package, we are proposing a dedicated jobs fund to support a suite of labour activation measures such as 1) tax back for full time study, 2) an earn & learn scheme, and 3) a Graduate & Apprentice Placement scheme.
Tax justice is an essential component of reform.
If we are truly ‘all in this together’ then everybody will have to make a contribution proportionate to their means.
The core of the Labour Party’s budget proposals is made up of measures that will ensure that very high income earners make a fair contribution by limiting their ability to shelter their incomes from tax.
Up to now, they have been aided and abetted by successive Fianna Fáil Finance Ministers in avoiding shouldering their fair share of the cost of running the country.
The four year plan, published last week, finally acknowledged the scale of the tax shelters used by high income individuals to minimise their tax bills. Several years too late, Fianna Fáil have finally realised that these tax shelters are a luxury we can no longer afford.
For people on lower incomes, who are also expecting to take a hit next Tuesday, these measures should be viewed as a down-payment on the fundamental top-down tax reform that the country needs.
In all the discussions of recent weeks, no mention has been made of the near 7,000
tax exiles who live in Ireland but do not make a fair contribution to income and other taxes.
While PAYE earners were immediately affected by the measures announced in last year’s budget, the clauses in the Finance Bill relating to tax exiles Measures will not bring in a single cent until the end of next year, and we are not even told what this contribution is expected to be. The Labour Party believes that this well heeled section of society should be asked to contribute €100m towards bringing down the deficit so that the entire burden is not forced on low-to-middle income earners.
Value for Money
The reform of spending, including delivery from the Croke Park Agreement, is something that must be achieved. We have at our disposal the human resources to develop a knowledge based ‘smart’ public service. The focus of public spending in this country must be on the delivery of quality frontline services to the citizens and taxpayers footing the bill.
On the capital side, Labour sharply reduced tendering prices now mean that much more can be done with less. However, the financial difficulties facing the country now mean that the exchequer cannot afford to directly fund the same quantum of capital spending as in recent years. The Labour Party proposes the establishment of a Strategic Investment Bank to offset reductions in direct exchequer funding of capital projects.