Sinn Féin launches its pre-budget submission for Budget 2011
Sinn Féin is the first party in Dail Eireann to launch their pre-budget submission.
A copy of the submission can be found here. The following are press statements from Finance Spokesperson Arthur Morgan TD, Sinn Féin Dáil leader Caoimhghín Ó Caoláin and Party President Gerry Adams.
Sinn Féin Finance Spokesperson Arthur Morgan TD today launched his party’s pre-budget submission in Dublin.
Deputy Morgan revealed plans to cut the deficit by over €4.5 billion and invest in a €2 billion jobs stimulus in 2011 while protecting frontline public services and those on low and middle incomes.
Sinn Féin proposes a range of taxation measures aimed at high earners, the abolition of wastages in public spending and the transfer of €7 billion from the National Pension Reserve Fund for a 3.5 year state wide investment programme to stimulate the economy and create jobs.
The document, entitled ‘There is a better way’, is fully costed and endorsed by independent economists.
Speaking at the launch today Deputy Morgan said:
“Included in Sinn Féin’s revenue raising proposals is a new 48% tax on incomes in excess of €100,000 raising €410 million, the standardising of all discretionary tax reliefs at the lower rate raising €1.1 billion, an income linked wealth tax of 1% on all assets worth more than €1 million excluding working farmland raising €1 billion and increases in Capital Gains Tax, Capital Acquisitions Tax and DIRT.
“We are also calling for the abolition of a number of tax exemptions including mortgage interest relief for landlords, property tax reliefs and income tax and PRSI exemptions for share options.
“We propose to cap Ministerial salaries at €100,000, TDs at €75,000 and Senators at €60,000. Similarly we call for a cap on the maximum salary in the public service at €100,000.
“All of our revenue raising proposals are aimed at those in our society who can afford to pay more and if implemented they would raise €5.266 million.
“With this Sinn Féin would put €595 million into a financial stimulus plan and use the remaining €4.671 billion to reduce the deficit.
“We would then take €7 billion from the National Pension Reserve Fund for a three and a half year state wide investment programme to stimulate the economy and create jobs, €2 billion to be spent on shovel ready projects in 2011.
“We would then reduce the remainder of the deficit through increased economic growth generated as a result of our economic stimulus plan. We are confident that the deficit can be reduced to the stability and growth pact level by 2016 in a progressive manner while growing the economy.”
Speaking at the launch of his party’s pre-budget proposals today Sinn Féin Dáil leader Caoimhghín Ó Caoláin announced a proposal for a state-wide investment programme using 7 billion euros transferred from the National Pension Reserve Fund.
Deputy Ó Caoláin said:
“In ‘There is a Better Way’ Sinn Féin presents an economic plan for real recovery beginning in 2011.
“The key to recovery is the provision of stimulus to get the economy moving again by protecting and creating jobs and ensuring that those on lower incomes are not pushed into poverty, thus further depressing the economy.
“We are proposing a state-wide investment programme using 7 billion euros transferred from the National Pension Reserve Fund. 2 billion would be spent on employment stimulus in 2011. Making tax credits refundable, restoring the Christmas social welfare bonus and removing the pay levy from those under the tax bracket would assist people on lower incomes and increase their disposable income at a time when more consumer spending is sorely needed.
“The Government refuses to directly address the jobs crisis, even though there are now over 450,000 people unemployed in this State. It is obsessed with a narrow view of fiscal rectitude because it has completely surrendered what remains of our economic sovereignty to the very forces in both the national and the international financial markets that caused the crash in the first place.
“Savage cuts are being imposed, ultimately, not to re-float the economy but to bail out the banks - with the bill for recapitalisation and NAMA coming to almost €90 billion.
“Fianna Fáil/Green Government decisions are not based on the needs of the Irish people but on the profit motive of international money-lenders.
“But there are choices to be made and a better way is possible. The deficit and the borrowing requirement can be reduced through revenue raising and saving and a stimulus package to promote growth and jobs.
“Our multi-annual plan has the potential to reduce the deficit earlier than 2016, between the increased funds we identify from an overhaul of the tax system and the financial return of our stimulus measures.
“Sinn Féin’s employment and financial stimulus package costs €7.595 billion and will create 160,000 jobs directly over the medium-term, tens of thousands more jobs indirectly and also save thousands of jobs.
“The full cost of our employment stimulus amounts to €7 billion. The financial stimulus of €595 million is accounted for in our tax and saving measures. The multiplier effect on GDP of creating 160,000 jobs would amount to 1.8%, according to ESRI figures. And this would be real GDP growth - not growth based on the profits of multinational companies based here.
“Our stimulus is about providing immediate and direct employment in key sectors such as infrastructure in the immediate term. But in the longer term, the impact of our stimulus plan would see the state’s competitiveness increase as we become a world leader in green energy, IT and research and development, in addition to having world class infrastructure to attract Foreign Direct Investment and support indigenous enterprise for longer-term employment creation. This sustainable, long-term employment would broaden the tax base and secure it.”
Speaking at the launch of Sinn Féin’s budget proposals today Party President Gerry Adams said Sinn Féin is providing a better, fairer way to deliver economic recovery.
Sinn Féin is proposing a €7 billion stimulus package to create jobs, alongside a plan to reduce the deficit over a more realistic six year timeframe while protecting low and middle income earners.
Mr. Adams said:
“Today Sinn Féin is setting out a detailed, fully costed pre-budget submission. In our economic plan for recovery Sinn Fein is proposing:
- A €7.6 billion package spread over 3.5 years to stimulate the economy - there can be no recovery without economic growth and getting Ireland back to work
- A six-year plan to reduce the deficit to within the Stablility and Growth Pact.
- We have identified over €1 billion in wasteful spending and over €4 billion through making the tax system fairer. Our tax and savings proposals are targeted at wealth in the state - they do not tax lower and middle income earners or cut spending from vulnerable and essential services.
“Sinn Féin’s proposals are a credible alternative to the cosy consensus for cuts which has put our economy in such crisis. This is about political choices. The government has made a political choice to go after people on social welfare and to cut €1billion from health care. We are setting out different political choices. Political choices based on growing the economy, cutting waste and fair taxation. Political choices based on creating jobs and protecting people who are vulnerable including those who are economically vulnerable - people on low and medium incomes.
“Fianna Fáil and the Green Party have brought the country close to economic ruin. They have introduced four successive budgets, as well as emergency measures in February 2009, which are all about cuts. This hasn’t worked. If cuts worked, the economy wouldn’t be in the state it is in now:
- 450,000 people are now out of work
- 100,000 more will have emigrated by next year
- Tax revenues have collapsed and there is a spiralling deficit
- The interest rates being paid by the Irish government on the international bond market are three times those paid by Germany.
“2014 is an entirely arbitrary timeframe and doesn’t include the recapitalisation plan for the banks of almost €50 billion or the €35 billion borrowing for NAMA. This amounts to €11,000 for every man, woman and child in the state.
“The 3% target cannot be met by 2014. The Government is planning to take too much money out of the economy in too short a time frame and from the wrong places. It is not providing enough of a stimulus to ensure that the economy grows. Added to the above is the absence of any future vision for the development of the economy and more importantly society.
“The government is supported in this overall approach by Fine Gael and Labour just as they were in the Lisbon referendum in 2009 and in the General Election in 2007 when they all promised even more tax cuts. I would call on all of the other parties to produce fully costed proposals.
“Sinn Féin is making a stand for working families the length and breadth of the country. And on 4th December we are calling on people to join us in a major mobilisation in Dublin in advance of the Budget. It is time for the people to make a stand.”
Discussion
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Comment by: Pope Epopt
Nov 2nd 2010 at 09:11
I’m not a member of SF, but fair play to them for clearly articulating an alternative to the standard slash-and-deflate policies of the three main parties.
I hope this finds it’s way into their election manifesto.
Comment by: Aine Quinn
Nov 2nd 2010 at 10:11
Am I dreaming? Did I just read budget proposals from a political party that actually gets the fact that cutting government spending while the private sector is in hock to the hilt and the country’s dependent on exports, actually drives up the government budget deficit and destroys the lives and well being of its citizens to no avail?
I no longer live in Ireland,so merely hoping that this gets on to SF’s manifesto wouldn’t do. My needs are more elementary. I want it on the manifesto of at least half the political parties of the planet.
Wee bit worried about how the Republic could pull off anything like this type of proposal, given the neo-colonial implications of Maastricht.
To counter this SF might need to be a little less ‘on their own’ and start forming alliances with Spanish, Greek and Italian people that are also going to be needing all the help they can get to take on the IMF, the European Central Bank and the monetary insanity horse(sh*t) they rode in on
Comment by: Pope Epopt
Nov 2nd 2010 at 10:11
Hi Aine,
You are right in thinking that if these policy were implemented it would bring Ireland into conflict with the EC and much of the EU elite. That, I assume, is deliberate.
Your second point is more important, however. Opposition to austerity fetishism can only be effectively countered with significant effort at the international level - because this is where the elite power resides. It is also one of the contradictions I find SF’s resolutely nationalist focus.
I believe there is space for forming a left European alliance based around Die Linke in Germany and the Nouveau Parti Anticapitaliste in France. Unfortunately in the US-Anglo sphere of influence in Europe all we have are small, divided left parties, but I hear there is some effort being made to unite these, at least for electoral purposes, here.
Incidentally, wouldn’t it be nice if your could vote in Irish elections, like most emigré citizens of European states?
Comment by: Roisin de Rossa
Nov 2nd 2010 at 13:11
The taxation part of this policy is quite decent for SF. But to be honest they should include assessments of the likely economic impact of these taxes. It could well be the case that the revenue raised is substantially lower than that calculated on the current baseline.
The stimulus package idea is more decent than those in the past but I think that they have attempted to gloss over the problems. Some of these are removed by the use of the pension reserve fund rather than taxation to fund the stimulus. On the other hand the economic benefit of the stimulus they proposed is very much questionable. The negative figures for benefit in years 5 and 6 are of concern (specifically that the negative figures increase at year 6 - over time clearly the stimulus would undermine the Irish economy according to the professor). I would tend to agree with his figures and this would reflect my reading of the situation reflected in a debate on another thread (but maybe not for exactly the same reasons). I think SF’s counterarguments are largely invalid as they would have been assumed in the multipliers he used to calculate the impact.
The worst aspect is the fact that SF are happy to work towards the neo-liberal 3% debt goal - I’m sure the powers that be will be glad to see the ’socialists’ in SF agree to a tough monetarist goal such as that. Maybe our national socialists should study the bad example of nationalist parties in places like Argentina to see an alternative that they can agree to.
Unfortunately despite its tax and spend tendencies, the party is well advanced on its way to the centre-right. It has, at least, agreed to the rules of the game set out by the ECB.
Comment by: krupskaya
Nov 2nd 2010 at 18:11
Aine, Pope
SF works closely in the European Parliament precisely with parties like Die Linke- it is in the same group as them. More importantly, it is willing to learn lessons from other countries (and mentioned Spanish stimulus exprience in the document). Ths stands in contrast to all other parties here whose ‘internationalism’ extends to no more then repeating the pats on the head it gets from IMF, OECD and others, while always claiming exceptionalism on any lessons to be learnt from elsewhere.
Roisin
DoF do not provide a detailed a model that would allow a breakdown of the impact of tax measures, just a gross amount, which SF reproduced.
On Professor Lane, his negative assumptions in later years are based on the idea that higher government spending will cause people to save more as they ‘know’ tax increases are coming. In fact the opposite has happeed in both directions here- pre-Recession fiscal expansion was met with increased private consumption, whereas slash&burn was met by sharply reduced consumption. Lane’s analysis is based on mathematical relationships of past events overlaid by incorrect assumptions like that above. SF was right to use him because he is authoritiative and provides a useful contribution.
The ‘neo-liberal debt goal’ is actually a deficit goal, which would take money out of the hands of bondholders and into those of the workers and poor of Ireland.
Comment by: roisin de rossa
Nov 3rd 2010 at 00:11
Krupskaya,
I don’t disagree with your attacks on Lane’s reasons. I don’t hold to ‘crowding out’ either but I do think that a stimulus would likely undermine longer-term growth due to the cushioning it would provide to wages. Irish growth is largely determined by exports and that means wage competition. That’s the rules of capitalism.
I don’t see how reducing debt will be to the benefit of Irish workers - if debt is reduced it will be at the cost of contracting the state and welfare services and increasing indirect taxation. That is unless you do something about the economic structure which you think is ‘unrealistic’.
Big business likes countries to keep debt low as the consequential monetary stability enables them to hold down wage inflation and make ever greater profits (far outstripping those made by holders of sovereign credit). That’s why the right-wing in Germany are desperately trying to legislate for fiscal discipline across the EU despite German banks holding large slices of that public debt.
Comment by: Aine Quinn
Nov 3rd 2010 at 01:11
“The ‘neo-liberal debt goal’ is actually a deficit goal, which would take money out of the hands of bondholders and into those of the workers and poor of Ireland.”
Huh?
My impression of neo-liberal monetary regimes and its debt goal is precisely the opposite hence, as Roisin, points out the obsession with fiscal discipline.
Ireland does not have fiscal sovereignty and is forced to accept the nonsense of a 3% debt ratio regardless of the sectoral balances in its economy.
Trying to maintain this ratio will, because of the automatic stabilisers, drive up the debt, blowing out the ratio and giving bondholders the excuse to demand more austerity measures which will blow out sovereign debt even more and they can laugh all the way to the bank.
Ireland can’t devalue the Euro, so wages and conditions for the poor have to go on the dubious premise that austerity and wage arbitrage will boost exports.
The problem is just about ever country on earth is trying to do the same thing, due to this global pattern of predatory finance aka neo-liberalism.
In the absence of trade relations with Mars, not every country on earth can be an exporter and so the policies are doomed for improving the living standards for most economies.
Never fear, the bondholders will be making out like bandits
Comment by: Michael Burke
Nov 3rd 2010 at 11:11
Roisin
You say you don’t hold with Lane’s ‘crowding out’ notions, but effectively repeat them, arguing that stimulus will support wages (heaven forbid!) and this will make exports uncompetitive. These are the nostrums borrowed from neo-liberalism and repeated here by our rulers ad nauseam.
They are false in the following respects:
* Exports are not the sole determinant of growth
Net exports rose €9.7bn 2007/09 as the fall in imports vastly outstripped the €7.4bn fall in gross exports. By contrast, the real driving force of the Depression is the slump in investment, down €19bn over the same period, of a total decline in GDP of €20.3bn. Private consumption also fell by €8.1bn.
* Wages are not the primary determinant of competitiveness
Real compensation of employees here grew at an annual average rate of 2.1% in 1992/06, compared to 0.9% for the Euro Area as a whole (the gap in nominal wage growth is even wider). Yet exports grew at an annual average rate of 11.9% compared to 6.3% for the Euro Area.
If wages were the primary determinant of competitiveness, this would not be possible. Thankfully, they aren’t. Investment is. Irish investment grew at an average 8.3% pace, compared to 2.1% for the Euro Area.
* Exports are not decisive either to jobs or to government finances
The export sector is a negligible tax payer and light employer. Fixing the jobs crisis and the fiscal crsis requires reinvigorating the domestic economy.
As for the deficit-reduction, this is an automatic function of investment-led growth and measures precisely aimed at boostng the incomes of workers and the poor, not a function of austerity measures, which actually lead to deficit widening.
High deficits lead to higher debt levels, and ever growing debt-servicing costs. Even if anyone were in favour of a constantly rising proportion of national income being handed over to bondholders, and I know of no-one who is, the limit is soon reached by the unwillingness of the lenders.
Therefore the debate turns on what political choices you make to achieve deficit-reduction and whether they work, or not. The government has chosen to clobber workers and the poor and cut investment and the deficit has widened. SF’s policy is to do the opposite, in all respects.