Mr. Sebastian Barnes:

The Deputy has done an excellent job of summarising our report. I am glad he found this medium-term analysis important. In some ways, it is much more interesting and important than the €2 billion next October while setting a context for that as well. It is a big concern that we have highlighted. There is the real cuts element and the fact the economy will be growing. That means that if one is fixing things that are constant such as welfare rates, those rates will be moving away from wages. There are demographic pressures, including population ageing. If one is committed to keeping welfare rates where they are in that regard, extra money will have to be found somewhere else. Of course, there are some very big parts of spending, which means the margin to adjust outside that is potentially very small. This is a very major concern.

It all fits together with the fact that it is very difficult to live with high public debt. We are still in a very risky situation with our high public debt levels, which means a strategy must be found to manage that. There must be very deep thinking about how it is done. It is not for the council to say whether specific expenditure or taxation or some balance of the two should be followed. That is a political decision which involves important social choices. What we wanted to do is bring the matter to the table and highlight it to provide for a more informed public debate about what is at stake.

Currently, what we see is that much of the reduction is focused on the expenditure side in the SPU plans leading to the 8.4% as a share of GDP. That raises real questions about its viability. In asking whether it makes sense, questions arise as to whether the public and economy will support it. There is also the question of its desirability. Even if one can make it all add up, is this the right thing to have? One area we highlight is public investment. One can cut public investment for a while without doing that much damage as one can catch up. After a while, things start to fall apart where one has not had investment for a long time. Public investment is very important for supporting growth. If one's roads are falling apart and the public investment is not keeping up, it makes one wonder why people in the private sector would invest here. These are very serious issues. The comprehensive spending review in the autumn provides a good place to start thinking about the strategy that will be needed over these next few years and to have this discussion about where the country is heading.