Up to €6 billion of the national pension reserve fund can and should be used to tackle the jobs crisis and infrastructure deficits, the Irish Congress of Trade Unions said today.
A small stimulus would take the economy out of the decline and give us a chance to get on our feet again, David Begg , General Secretary of the Congress said at the launch of its pre-budget submission.
There is a “great danger” of entering a “deflationary spiral” unless we provide opportunities for growth, he said.
The Government's austerity policies had not worked and had made matters worse, trebling employment, and increasing the deficit, he said.
The proposal would see the pension fund invested in jobs initiatives led by the state, such as a water conservation and retrofitting energy inefficient buildings.
“We should also use it as a fund to promote innovation in the commercial sector on a risk sharing basis,” Mr Begg said.
The €24bn pension reserve fund was being "raided" to purchase shares the failed banks, Congress said. It suggests investing €2 bn next year, a further€2 billion in 2012 and 2013 respectively.
Money from the fund can be invested to the satisfaction of the EU if it meets certain criteria, according to Congress.
These conditions include showing that the investment is commercial, the Government must not have control of the project and the private sector must take full risk in the investment
Proposals to ask the multinational sector to invest further in the economy was another part of the proposal. Congress wants multinational corporations to invest in Irish based enterprises and businesses by deferring repatriation of a portion of their profits.
“At the moment they are making huge profits” said Mr Begg. ”It’s not unreasonable to say, you have a long term interest in this country, would you not repatriate profits into other ventures with the private sector,” he said.
Congress is also proposing a temporary increase of two per cent in corporation tax until the 3 per cent of GDP deficit target is reached.
The submission also proposes that bondholders in the banks should be “burned” for a saving of up to €24bn. It suggests the value of their holdings be reduced to 10 per cent of their nominal value.
This would annoy the bank bondholders, but other bondholders would see that Ireland had got rid of liabilities and would be “queuing up to lend to us,” after a while, Congress economist Paul Sweeney said.
The congress again questioned why the Government's period of adjustment to reduce the deficit was 2014 rather than its proposal of 2017. “What is the authority for that statement?”Has someone in the markets made a statement that we can’t do that?” Mr Begg said.
“If we if carry on this path to achieve 3 per cent adjustment by 2014 it will cost 60,000 jobs, we face a prolonged period of deflation and ultimately the project is not likely to succeed,” he said.
The submission did not propose cuts in day-to-day government spending.
This would “run its course” through the Croke Park agreement, Mr Begg said.
Congress also proposed tax measures which focused on changes to tax exemption sand reliefs. It proposed no further cuts to social welfare
