The Labour Party yesterday published its economics document. Mark Hennessy, Political Reporter, heard leader Ruairí Quinn explain its policy on borrowing
The Labour Party's willingness to increase borrowing to pay for vitally needed roads and hospitals must be contrasted with the lack of clarity surrounding Fianna Fáil's plans, the party's leader, Mr Ruairí Quinn, has said.
Publishing its economics document yesterday, Labour said it would spend an extra €1 billion on new roads between now and 2007, and €2.1 billion on better social welfare payments and €7 billion on health.
Reducing contributions to the National Pension Reserve Fund, from 1 per cent of Gross Domestic Product to 0.25 per cent for five years would fund the improvements in the health services, said Labour.
"We are not 'raiding' the pension fund. We are reducing the payments into it for a period to allow us to do things that will increase Ireland's productive capacity," said Labour's finance spokesman, Mr Derek McDowell.
Accusing Fianna Fáil of travelling "the road to self-delusion", Mr McDowell said it was "trying to ignore the hard choices and trying to dodge the tough issues by promising all things to all people, with no price attached".
"In his ardfheis speech, the Taoiseach, Mr Ahern, tried to pretend that he could have everything. Lots more spending, no increases in taxation, no borrowing and no reduction in the contribution to the pension fund," said Mr McDowell.
Acknowledging the political risks attached to the party's economic plans, Mr Quinn said Labour had to explain that they would borrow only for borrowing and not for current spending.
"My biggest fear is that Fianna Fáil would take a decision not to come onto the pitch. So far, they are just doing laps of honour around the edge. But they can't do this for the whole campaign.
"It is a richer nation today than it has ever been. We are saying to people, 'Let's remortgage to pay for a new extension, and for a lot less than we did the first time," he declared.
Labour moved quickly to head off criticism that the National Pension Fund proposals would impact on the pensions that will be available to public servants after 2025.
Its document stated: "All public sector pensions are 'defined benefit' pensions.
"This means that when public servants retire they receive a pension which is a proportion of their salary and which then increases in line with public pay thereafter.
"This cannot be changed without negotiation with the public service.
"Labour is opposed to breaking the link between pay and pensions.
"Similarly, the level of the State pension is not determined by National Pension Fund reserves."
Supporting the concept of the fund, Mr McDowell said it made no sense, however, to save as much in it at a time when infrastructure needed to be developed, particularly given that Ireland's population was younger than the EU average.
"If people are persuaded that we can do what we say we will do with the money, they will vote for it.
"We deliberately put out this idea weeks ago so that people could look at it," he told The Irish Times.
Employer groups, such as ISME and IBEC, would "make an awful lot of noise" about the proposal to reverse last year's cut in PRSI employer contributions, Labour TD Mr Pat Rabbitte admitted.
However, the money raised by this charge would fund half of the costs of a national network of childcare centres, and that would help employers to attract and keep workers, Mr Rabbitte said.
Labour would set up a Department of Infrastructure - comprising the Department of Public Enterprise, the roads and sanitary sections of Environment, Education's schoolbuilding unit and Health's hospitals construction unit.
Backing the return of programme managers, Mr Quinn said they had helped to drive the policy agenda during the Fianna Fáil/Labour alliance.
Acknowledging that they were publicly unpopular then, he said: "The cost of the programme managers then was a fraction of the public relations costs of this Government."