Pearse Doherty: We must invest our way out of recession

We need to do things differently and if that means removing tax breaks that reward banks, high earners and big business, then so be it.

1st June, 2020
Pearse Doherty: We must invest our way out of recession
We need to seize this opportunity to tackle the housing crisis and we should borrow to do so. Picture: Sam Boal/Rollingnews.ie

The Covid-19 pandemic and its impact on almost every aspect of our lives has opened up space to discuss how we resource our public services and to assess who and what we value as a society. Our people have shown over the past three months that they are our most valuable asset.

Workers once classified as “unskilled” are now recognised as essential. While the appreciation of these workers may have changed in the eyes of some; their pay and conditions have not. Recent data from the Central Statistics Office (CSO) showed that over 120,000 workers earned the minimum wage or less last year – mostly in the retail, hospitality and food sectors.

The crisis has further illustrated the incredible work undertaken by our nurses and doctors, in addition to the work undertaken by public transport workers, cleaners and those in our emergency services.

Long periods of having to work from home for others have also served to highlight that homes are our sanctuary. The housing crisis we have witnessed in recent years must be tackled.

Out of every crisis springs opportunity and this is our chance to put things right in a host of policy areas. I do not pretend this work will be easy and the economic situation undoubtedly presents major challenges.

Over half a million people have lost their jobs in a short space of time, with more than one million workers in receipt of income supports and the Central Bank forecasting that 400,000 people will remain unemployed in the second half of the year. Despite this, there is a clamour among some to reduce or end emergency income supports in the coming period.

Doing this will only increase the financial burden facing workers and their families and will hamper our prospect of recovery by reducing demand in an economy already starved of consumer confidence. Those who advocate the mantra of tightening our belts are peddling an outdated and economically self-defeating philosophy. Austerity does not work. It merely prolongs recession and increases unemployment.

By investing our way out of recession, instead of cutting public spending, we can tackle some of the deep seated and fundamental flaws in the state’s economic model.

By directing our fiscal resources to the task of sustaining incomes, providing targeted grants to SMEs and scaling up capital investment, we can sustain and create jobs and build affordable homes that are desperately needed.

This approach will, of course, cost money and will require borrowing that will lead to bigger deficits and higher public debt in the short-term. In this regard we are at a real advantage, with debt funded this year at historically low interest rates.

While this means that the next government – whoever is in office – will be able to sustain higher deficits, the debt that accumulates will have to be serviced and the question that follows logically is: who will pay for it?

To ensure we are not restrained in being able to forge a fair recovery, the incoming government needs to work with others to rewrite the fiscal architecture of the eurozone, and to ensure that EU member states can make the domestic choices to build a recovery that safeguards those that were forced to carry the can for banks and developers a decade ago.

We need to rebuild the economy through investment and to stimulate economic activity. We need to build affordable homes, deliver a functioning health service, tackle climate change through retrofitting and invest in energy infrastructure. We also need to get people back to work in that process. A living-wage, workers’ rights and the right to retire at 65 must be central to this approach.

It’s not good enough to freeze rents and halt evictions for a short period when the reality is that we have been living through a housing crisis for years. We need to do things differently and if that means removing tax breaks that reward banks, high earners and big business, but do nothing for workers and their families, then so be it.

The common good must always take precedence over commercial interests, not just in the middle of a global health pandemic. If our economy is to break from the past, then our politics must do the same.

Pearse Doherty TD is Sinn Féin‘s spokesman on finance

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