The Labour Party has outlined plans for a "substantial shift" in the State's economic policy, saying there is now growing public support for spending the fruits of growth on improving services rather than more tax cuts. Mark Brennock, Chief Political Correspondent, reports.
Publishing a new economic policy document yesterday, the party's leader, Mr Pat Rabbitte, said he wanted to contest "the extraordinary orgy of adulation and admiration we have been treated to in recent days concerning Charlie McCreevy's stewardship of the economy".
He said he also wanted to challenge the Government's version of economic history, outlined most recently by the Minister for Justice, Mr McDowell, in a speech to an IBEC dinner.
The greatest inaccuracy was the notion that tax cuts created the economic boom. In fact, he argued, the boom led to the tax cuts, and the State's highest employment growth took place in 1997, before any FF/PD tax cuts came into effect.
In addition, he said, it was the Rainbow government which locked Ireland into the low 12.5 per cent corporation tax rate, although the PDs were now "trying to claim ownership" of this change.
It would be "fatuous" for any government, including the Rainbow government, to claim ownership of the boom. It had been created by measures taken by governments up to 30 years ago, such as decisions to invest in education.
Under this Government, private wealth had increased for many, while many services were still in crisis.
"Neo-liberal" economics had led, but it was time for "a social democratic alternative".
A "substantial shift" in economic policy was now required to bring about a fair society. "What is the purpose of a very successful economy if it is not to produce a fairer, better society?" He added: "We have reached the end of the road in terms of our capacity to make tax reductions."
The policy document, "The Fair Economy", says that to fund public services properly there may now be a need for greater tax revenues.
Mr Rabbitte did not suggest any reversal of the cuts in personal taxation and ruled out taxing domestic residences. The extra revenue should be raised, according to the document, "in the first instance through developing a fairer tax system, ending the tax breaks which have been built into the system to benefit wealthy individuals, and generating a fairer share of revenues from taxes on capital gains, inheritances and profits from land speculation".
Asked whether middle-class voters would fear that Labour would tax them more, he said that the middle classes also wanted good education services, access to hospital beds for their families, better public transport and other services.
"A great majority of people, including in the middle-class category, are very concerned about the recent drift in economic policy." People had now acclimatised "to the new affluence that is evident all around us", and were asking how we had used the fruits of the boom.
"They are uneasy about a lot of aspects of that," he maintained.
He said Ireland could not "move up the value chain" in terms of the type of industries that set up here without investment in people and education.
The party's finance spokesman in the Seanad, Mr Derek McDowell, said: "The major choice McCreevy made was to channel the bulk of the fruits of economic growth into people's back pockets. The choice now is whether we continue to put the fruits of growth into tax cuts or boost investment in services and areas which underpin economic growth, such as research and development and science."
The document says Labour believes in an enterprise market economy with proper regulation of markets. It supports "universal" public services paid for by tax and available to all, rather than the move towards private provision of essential services.