BUDGET CUTBACKS by the Government will not rescue the economy, the Labour Party has warned.
Calling for a shift in Government thinking on how to escape the downturn, the Opposition party has made the case for a €1 billion fund to hire unemployed building workers to build schools and public housing, and insulate existing dwellings in order to help meet climate change targets.
Issuing a 10-point recovery plan yesterday, Labour said newly-jobless workers should be immediately retrained, rather than left to languish on the dole queues for a year before qualifying.
Ireland must be weaned off "its dependence on construction", but the sudden collapse threatens long-term unemployment and hardship for many, it said.
"There is a need for immediate measures to cushion the blow," said party leader, Eamon Gilmore, as he published Labour's Key Proposals for Economic Recovery.
The party urged the Government to:
• Employ thousands out of construction workers to build schools, and properly insulate homes;
• Direct newly-unemployed into training courses and college;
• Focus on improving exports;
• Set out four-year economic plan to get through existing crisis;
• Target National Development Plan on jobs-intensive projects, such as schools and public housing;
• Ring-fence education from budgetary cutbacks;
• Offer tax-breaks to high-tech start-up firms; and end tax breaks for property and high-earner pension plans;
• Improve value-for-money in the public service, but block cuts that lead only to greater costs for the State in the end;
• Investigate the performance of the Central Bank and Financial Regulator over the last five years, and;
• Back EU moves to curb international financial excesses.
Mr Gilmore said the Government so far remained wedded to the idea that it must savagely cut public spending rather than chart a way out of the crisis. "There is a level of fear out there amongst people about their jobs that I have not seen during my time in public life."
He said the Government must maintain domestic and international confidence in the Irish economy by plotting out a four-year recovery plan, and not try to do everything in one.
A four-year plan would help to block European Union objections to Ireland breaching the Maastricht borrowing rules, which limit new debt to 3 per cent of national spending, the document argues.
Ireland's current difficulties fit under the EU's Growth and Stability Pact's "exceptional and temporary" exemptions for over-spent member states.
Payments into the National Pension Reserve Fund should be stopped: "The notion that the Government would borrow at higher interest rates to invest in falling markets is senseless," said the document.
While the Government should spend money on schools and public housing, it should not do anything for first-time buyers since this will be nothing other than an attempt to prop up developers by another name.
"[That would] delay normalisation of the property market and act as a further drag on economic growth," the document says.
The national insulation scheme would help to cut Ireland's climate change bills, while cutting welfare payments, and increasing taxes.
