Joan Burton: those struggling will be focus of next stage of Irish revival

‘This Government has restored the economic sovereignty lost by the previous administration’

Joan Burton: “my focus will principally be on those who have had to endure stagnant incomes over a prolonged period and haven’t seen recovery in their own lives”

Joan Burton: “my focus will principally be on those who have had to endure stagnant incomes over a prolonged period and haven’t seen recovery in their own lives”

 

All the evidence points towards a remarkable turnaround in Ireland’s economic outlook. I know that statement doesn’t fit in with the public’s current mood towards the Government.

Political mood is one thing. Hard evidence is another.

Ireland’s revival is real. In 2014, the economy grew at a thumping rate; jobs were added month by month on a scale that surprised even the most optimistic commentators. Meanwhile, the budget deficit continues to shrink, as did borrowing costs.

All this utterly contradicts the doomsday predictions that suggested the sky was about to fall. Among the horrors forecast were runaway inflation, a deathly debt spiral, double-dip or even triple-dip recessions, and a collapse of international investment. All these prophesies were wrong.

In the coming months, the Labour Party will mount a fightback against this kind of politics. We will begin to roll out an agenda that will build on what has been achieved while recognising the genuine threats that do arise in a moribund euro zone and with the uncertain outlook in Greece.

My focus will principally be on those who have had to endure stagnant incomes over a prolonged period and haven’t seen recovery in their own lives.

The successful economic policies implemented by this Government have encouraged businesses to invest and helped tens of thousands of people to return to work.

Not every person has yet benefited. Many families and individuals are still struggling from the impact of the crash. These people will be the focus of the next stage of the Irish revival.

The Opposition will pretend not to see it, because they don’t want to acknowledge that the Government has overseen this nascent revival in the first place.

During my last Leaders’ Questions of 2014, I noted how seldom Opposition TDs had used the valuable time slots they command in the Dáil to raise economic topics.

It doesn’t surprise me, because what has passed for economic debate in this country of late has been dominated by two flawed viewpoints.

Fiscal conservatives argue that Ireland should have implemented a further €2 billion consolidation in the recent budget. The hard left takes the alternative view that all the measures taken to date were unnecessary, despite the economic crisis that engulfed this country.

Both are wrong.

Long-term view

Budget 2015 is underpinned by cautious economic growth assumptions, reducing the deficit to 2.7 per cent next year as a staging post towards achieving a balanced budget.

At the same time, the progress made to date means we have been able to free up resources to begin the process of restoring living standards.

The tax reductions and spending increases in Budget 2015 amount to just over €1 billion. This modest stimulus will increase economic growth by about 0.3 per cent and employment by 0.2 per cent next year.

While these fractions may sound small, they translate into 10,000 more people at work than if the €2 billion consolidation had been implemented.

That we were able to make these choices demonstrates that this Government has restored the economic sovereignty lost by the previous administration.

It couldn’t have been done without the sacrifices of the Irish people, but those sacrifices have paved the way for the fastest growth in the euro zone this year, allowing the Government to start the process of restoring living standards.

The recent budget represents a return to more normal times compared to the crisis which had gripped the Irish economy since 2008.

In normal times, when a shock hits an economy and corrective measures are necessary to bring the public finances to a safe position, a balance can be struck between the pace of adjustment and the effect this will have on growth and jobs.

Because of the previous administration’s decision to socialise the debts of the banking system via the bank guarantee, Ireland lost the economic sovereignty to pursue such an approach.

A brutal adjustment was required and this deepened the crisis in terms of lost output and lost jobs.

The alternative of sovereign default, as advocated by Sinn Féin and the hard left, would have forced Ireland to close the gap between revenue and expenditure in one fell swoop, which would have been even more brutal. Measures to close this gap would have devastated public services – closing hospitals, schools and slashing social welfare.

The troika programme provided the time and space to bring order to the public finances at a more measured pace.

Labour and Fine Gael in Government were able to protect core social welfare rates and avoid additional income tax increases.

Targeting relief

Now that the reviving economy has released additional resources, we are targeting relief to low and middle-earners as well as releasing substantial funds for housing, schools and broadband.

At the same time, the deficit is being reduced towards a position of balance at an appropriate speed. With the economic outlook in Europe still very uncertain, this is a sensible approach.

So we are achieving two things: the ongoing repair of our public finances and instigating social as well as economic revival.

It sets a benchmark for Labour’s approach for the future. This year and in subsequent budgets, we will continue this strategy of building a social and economic revival, allocating additional resources to targeted increases in public spending while reforming tax policy to encourage employment growth and preserving the progressivity of the tax system.

In 2015 the economy will be centre stage and Labour will mark out its own distinct approach, a sensible path between the undue austerity advocated by fiscal conservatives and the economic hara-kiri of Sinn Féin and the ultra left.

Joan Burton is Tánaiste and leader of the Labour Party

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.