The 2009 budget is the toughest on working people and families for a quarter century.

It is death by a thousand cuts with stealth taxes and charges adding up to a big hit on low and middle income families in particular.

A 1% levy is being introduced on all earners. The same rate will apply to someone on €100,000 a year as on the minimum wage. This will cost an ordinary family on €40,000 a year €8 a week or €400 a year.

People dependent on social welfare payments will have to get by with minimal increases and, in some cases, new restrictions. Over 70s are due to lose their automatic right to a medical card.

The increase in the threshold for the drugs refund scheme, brining it up €100 will be particularly severe for pensioners who face regular drugs bills.

The increase of €2 in the fuel allowance is an insult to pensioners who are facing the real prospect of fuel poverty this winter.

The decision to end Child Benefit at 18 will also have serious implications for children of low income families at school or university.

Not a single back-to-work measure was included in the 2009. This is a slap in the face for the many families across Dublin 15 who have lost a breadwinner in recent months.

Hard-pressed families across Dublin 15 who were already feeling the pinch are being left to carry the can for the Government’s past mistakes.


Joan's Budget Speech:

This is a tough budget for middle class and working families, just like the Government promised.

Middle class and working families havn’t just taken a hit. Middle class families They have been mugged by the Minister.

Make no mistake the coping classes, the PAYE sector, are the Minister’s main targets today. While this budget will eat into the income of the average PAYE family, the ultra wealthy, the tax exiles, those who made a killing from the Celtic Tiger will take relatively little pain.

This budget reeks of panic measures. The Minister lacks a clear and coherent strategy for economic recovery in the medium term.

The Minister should have delivered a recovery plan, for putting the 80,000 people who have lost their jobs back to work, training or education. We want these fellow citizens of ours back at work, not on the dole.

What a Bonfire of the Vanities we have witnessed today. Very little has been spared.

Into the bonfire goes the National Development Plan and many of our ambitions for a proper transport system.
Into the bonfire goes the FF manifesto
Into the bonfire goes much of Fianna Fail’s commitment to a Fair Society and social justice.
This Government has driven the Irish Economy into the ditch.

Today we have our first full view of the wreckage and our first full opportunity to estimate the cost of repair. Believe me the wreckage is not a pretty sight. And the repair bill will leave every taxpayer gasping.

No doubt Ministers will congratulate themselves on their tough love approach. But will Brian Cowen be able to look in the eye a family whose livelihood has been destroyed by his economic mismanagement and say to them, Bill Clinton style, that he feels their pain?

Like hell he does.

The people on the Government benches will feel very little pain from the measures announced today.

They are too well cushioned for that.
For years we have heard incessant talk about soft and hard landings. The Taoiseach assured us time and again we would have a 'soft landing'.

Minister Lenihan is the Taoiseach’s trusted pilot. But Minister Lenihan doesn’t know the territory, he’s carrying tons of excess baggage. There is a heavy fog, its pitch dark outside and he hasn’t a clue where to make any sort of landing, hard or soft.

So we have a Budget that compounds the very conditions it was meant to address.

It does nothing to stem the hemorrhage of jobs, it abandons a long held policy of no borrowing for current spending, it puts important capital projects like public transport on the long finger at the very time we should be preparing the country to take advantage of any recovery.

Everywhere you look, the economic news is troubling.

It took Ministers a long long time to come to terms with that cold reality.
But for many of our people it isn't really news at all because they have been paying the price for months even if the Taoiseach failed to notice.

80,000 workers have lost their jobs since January 1st, the largest annual increase ever recorded
Official records tell us there are 110,000 children living in poverty.

It's never been harder to save or retire and thousands of pensioners have to choose between food and fuel because the rising price of both is not matched by either their pension or their fuel allowance.

Right across Ireland, young people have to come to terms with a reality that their parents never thought would return.

In the coming 5-6 weeks, thousands of young men and women and their proud parents will go to graduation ceremonies in Universities and Institutes of Technology all over Ireland.

Many will have failed to get jobs since they left college or will have stop-gap temporary jobs. Many graduates of earlier years have been let go this past month.

Engineers, Architects, Scientists, Accountants, Surveyors, Solicitors, the best brains of a generation will feel as if the dream that so many have hoped for is slowly slipping away.

It's been an interesting 3 months for the 2 Brians.

It's been really interesting to watch both of them respond so belatedly to the new economic reality.

They sat on their hands all summer until it was too late. Their first reaction to this crisis was traditional bluster, with the same old tired line over and over and over again

"the fundamentals of our economy are strong."

Just as the bank regulator used to say ‘the fundamentals of our banking system are strong’

Every unemployed worker would love to have a euro for every time he heard that dreary slogan all through the spring and summer as jobs were lost and the banking crisis moved inevitably to a long predicted meltdown.

I have every confidence that we can steer ourselves out of this crisis.

The whole world knows the Irish are a resilient race.

One lesson we should learn is this: we can't steer ourselves out of this situation by heading in the same direction with the same failed policies.

Now, I certainly don't fault Brian Lenihan for all of the problems we're facing right now.
I do fault his delay in waking up to their existence and his tardy response. I do fault the economic philosophy his Government has slavishly followed these past 11 years.

It's a philosophy that says we should give more and more to those with the most and hope that prosperity trickles down.

It's a philosophy that says even common-sense regulations are unnecessary and unwise.

It's a philosophy that lets vested interests - the speculators, the developers, the bankers - dictate our country’s economic policy so it worked for them instead of for our people.

Well let's be clear: what we've seen the last few months is nothing less than the final verdict on this philosophy - a philosophy that completely failed the most basic stress test.

A Government less given to vanity and to lecturing the rest of the world on the brilliance of its economic achievements would have seen the dangers and prepared for them.

Minister & Taoiseach, the economy has become seriously unbalanced on your watch.

Basically, after months reassuring everyone that things were under control, Brian Cowen now says the sky is falling, and that to save the world we have to do exactly what he says now. Why should we respect that word today? I heard his own party constituency colleague, Sean Fleming, on Prime Time last week saying:

‘The people who led us into this mess are not the people to lead us out of it.’

Yes he meant the failed bankers, but his words are no less pertinent about the Taoiseach and his Ministers.

This Budget is Brian Cowen’s legacy to Irish families; the true cost will hang like a millstone around the necks of our people for years to come.

It was bad Ministerial judgement, not international events that created the costly decentralisation fiasco.

It was bad Ministerial judgement, not international events, that created the HSE fiasco and now we are paying McKinseys millions to undo that particular Michael Martin monument to bad governance

It was bad Ministerial judgement, not international events that made Brian Cowan continue to inflate the property bubble with tax breaks when every warning shouted stop.

It was bad Ministerial judgement, not international events that that made the public finances so utterly dependant on an overheating house-building sector.

I want to put one question to the Minister and I hope it won’t bewilder him. I am sure he and the Taoiseach would want to be remembered not just for economic success, however elusive that now seems in present circumstances, but also for a progressive record in advancing social justice.

So let him answer the following simple question?

After 12 years in power why is income inequality still so deep and why is wealth inequality—in assets—actually worse than when they took office?

This is a Government which has invented more tax breaks in a decade for the rich than their accountants can keep up with.

This is a Government which has presided over a widening, not a narrowing, of inequalities of personal wealth.

The top 1% now own more of the nation’s wealth than ever.
Property and land speculators have been the biggest beneficiaries of your terms in power. You coaxed them on regardless of the consequences.

Banks

It now appears inevitable that this Government will have to provide capital to financial firms. If this must be done it must be on one clear proviso. The Government and the people of IrelandI support the decision of the Government to provide capital to financial firms on one clear proviso:-
It should get what people who provide capital are entitled to — a share in ownership, so that all the gains of a successful rescue plan don’t go to the people who made the mess in the first place but back to the tax payers who made very significant sacrifices to calm the situation down.

The banks have to be made fit for purpose. In banking we must go back to basics.

The reformed financial system, rebuilt by the Government and paid for by the taxpayer needs to be plain and old fashioned, a back to basics approach. In the US they call it Plain Vanilla Finance.

The banking system should be restored to its traditional role of supplying credit to the real economy, with as few complications or fancy products as possible.

We need a system in which retail banks accept savings and make loans for regular businesses, large and small, and regular mortgages for families up and down the country. and where the complexity of financial products is strictly limited and subject to the kind of independent safety tests associated with new drugs or cars.

This is serious hard touch regulation and citizens will rightly insist on it as the price of the rescue packages.

Bank Bail-outs

Despite the huge rise in the budget deficit and the many spending cuts and tax increases outlined by the Minister, its impact on Irish people will probably be overshadowed in the next ten years by further tax increases to pay for bank bailouts.

The Minister has said that the unnecessarily wide-ranging bank guarantee will not cost taxpayers anything. He is wrong and taxpayers will pay the price for his (and Brian Cowen’s) misjudgements

CREDIT CARDS

One of the striking features of the Irish economy is the low level of national debt. However, while public debt has been falling, private debt has been ballooning. People who use credit cards pay some of the highest rate of interest. Yet our lax regulatory system of regulation has encouraged credit card debt.

While over 60% of consumers clear the balance on their card each month, a significant number only pay the minimum 5%. These are the people who get into serious debt difficulties

It amazes me that neither the Central Bank nor the Financial Regulator have taken action to increase the minimum payment perhaps to 10% so as to help people avoid falling into the clutches of the credit card companies and the debt trap.

We are moving closer to Christmas. Many parents will want to spend for a good Christmas, leaving the worry of paying for the festivities into the New Year. The Government should think about immediate steps to help people from falling deeper into debt.

When Minister Lenihan brought in his Credit Institutions Bill, one of the amendments put forward by the Labour Party was that all banks being bailed out by the Government should set up a scheme in conjunction with the Money Advice and Budgeting Service to help families falling into debt traps.
Ansbacher Man

For many people this Budget brings unhappy memories of an era we had hoped would never return.

We should remember one nasty feature of that era that we only discovered years later during the various Tribunals and enquiries.

Remember the hidden off shore accounts. Remember Ansbacher Man and his arrogant determination that taxes and sacrifices were for the little people only while he and his friends lived in splendid luxury as their fellow citizens endured job losses, high taxes and emigration.

What measures does this Budget have to share the burdens of today? I see very few. We still tolerate the tax exiles who dominate many sectors of the economy, while refusing to contribute their share.

We still riddle the tax code with exemptions and breaks for the super rich, including the very people whose banking practices have brought us to the sorry state we are in today.

Most citizens have braced themselves for sacrifices. I’m not at all sure that feeling is shared by our local Masters of the Universe, who blithely demand cuts in public services to facilitate their unlimited greed and avarice.

I wish I was more confident that the Minister had some of these people in his sights today. All the talk of burden sharing is shallow unless people see clear evidence of it but there is precious little of that evidence in today’s Statement.

SUMMARY

The present crisis bears the fingerprints of the extreme free-marke advocates who have dominated economic thought for 2 decades now. They had a naive belief that free markets are always self-correcting and that markets left to themselves will always achieve the best results.
They are the ideologues who believe that any regulation of private business is fundamentally wrong.
They are the ideologues who have resisted the regulation of financial markets and the supervision of financial institutions.
They are the ideologues who believe that government is always the problem, never the solution.
Except, of course, when there is a crash; then, the self-same ideologues argue that we should cover their losses with the peoples’ taxes
By the way, the very same people always demand lower and lower taxes for themselves and many pay none at all.
There is an alternative viewpoint and it is high time it was heard.
A viewpoint that recognises the importance of markets, but also recognises the limims of markets.
It recognises the role of the public good and market regulation.
It values transparency, honesty, competition and innovation but does not encourage speculation or reward for merely short-term success.
It is a political culture that values profit and productivity achieved through hard work, but does not endorse the ethic of the quick buck.
I believe in incentives and rewards .
I also believe that trust and traditional ethical standards are essential elements of the financial system.
I believe in the profit motive but also believe in responsibility to the community where those profits are made.

After a decade of so much squandered on the short term, we must encourage a much wider community debate on values and the role values play in economics and business.
A debate about how we assess the long-term values of companies, their executives and their assets against their long-term performance, as opposed to short-term asset bubbles we have experienced at such a high cost.

And this is very much a values debate: greed and mega profits as against a culture that values hard work and that values thinking about and preparing for tomorrow.

FF Hubris

We should pause for a moment to prepare a balance sheet of FF’s 11 years in power.
I would sum up by repeating a lesson repeated since the dawn of civilisation but so often ignored.

Hubris is always followed by nemesis

Remember the mood music at the turn of the century, just 8 short years ago.

Ireland - the fastest growing economy on earth.

Ireland on steroids, racing ahead.

And now: Nemesis.
The irony of Brian Cowen’s first few months is that a man who came into office committed to both celebrating and reinforcing the unbridled power of his own party has presided over a truly astonishing weakening of that power .

Ireland is economically weaker.

The social divisions within our country are greater than ever.

And Ireland’s status in Europe has never been lower.

Economically, we are faced with a financial meltdown on a scale not seen for decades. The proud advocates of the market and its invisible hand now oversee a partial nationalisation of the economy that would make even ultra leftists blush

In American universities they talk about soft power - the power to attract. The decline in Ireland’s soft power is no less dramatic. That is the unquantifiable but important power of a good name and a established reputation.

We had it in spades for the best part of 15 years with a well founded reputation as a place to do business, to live and to invest, a reputation helped by the successes of Irish people in the Arts and Sport.

With the defeat of Lisbon, much of that has evaporated. The unilateral and unsuccessful bank rescue measures eroded it even more.

If you put together a panel with a discussion theme on what to do to rescue our country from the present state they would say with one voice:

"Restore a sense of confidence to Ireland and about Ireland. "

Obviously not all this mess can be blamed on the two hapless Brians up there: neither are responsible for the international aspects of the state we are now in.

But a great deal of blame can be placed on them. At the Truman Library in Independence, Missouri, you can still see the glass sign that President Harry Truman placed on his desk in the Oval Office:

The Buck Stops Here.

Nemesis follows hubris as night follows day. That is the lesson of history.
Sure Brian Cowen was not directly responsible for wild financial irresponsibility, but he is responsible for not supervising and regulating it, he is responsible for coaxing it along.
He is responsible for the refusal to steer the economy of our country away from the dominance of one sector.

As for the decline in Ireland’s international standing, that is something for which Brian Cowen is directly to blame. His arrogance, his insensitivity, his category A failure on Lisbon, his long-time denial of the need for urgent action on climate change: all these feed directly into Ireland’s plummeting credit in both Europe and the wider world.