Michael McGrath (Cork South Central, Fianna Fail)
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I will try to be brief to allow as much time to examine the Estimates as possible. I join the Minister in acknowledging the commitment of his staff. They have impressed me over the course of the year with the commitment they have shown to their duties. Many of them have gone beyond the call of duty on many occasions and I readily acknowledge that and thank them for all of their work.

The Minister pointed out in his opening statement what he regards as evidence of a recovery in the economy. There is evidence of a recovery in some sectors and I believe we should make the next budget about SMEs. We should build on the package of measures the Minister announced in December to give SMEs even more support. When we talk to people who are in business, they refer to the same issues again and again: rent, rates, energy costs, waste disposal, red tape and compliance. If we can free up the entrepreneurial spirit around the country, we will secure a recovery in the domestic economy far more quickly than will otherwise be the case.

The approach to date has been to rely on an export-led recovery. Exports have been doing well generally but as the Minister acknowledged in his own contribution, the exports of goods has declined, it is now the export of services that is leading the recovery. There is a major threat for Ireland because we export 90% of everything we produce and we need demand from our trading partners. We returned to modest growth in 2011 and 2012 because of exports. When we look at the economic data that continue to come out of the eurozone, they are extremely weak. It is still in recession and many countries that should not be continuing with fiscal consolidation and that have scope to invest further in their economies are continuing blindly down the road of austerity which is hampering demand across Europe.

These are issues we discussed during the Private Member's debate last night. It would be very helpful for Ireland and other peripheral countries if many of the triple A countries in Europe, for example, allowed their own economies to breathe and grow again. That would certainly help our recovery very significantly.

The issue of the banks is still looming very large. The Minister said that the lending targets for the SME sector have been met but the evidence on the ground is quite different. We have had representatives of the banks in here on a number of occasions. We have drilled down into the detail of the data and found that the level of new lending is only a fraction of the €7 billion that the banks claimed they had lent last year. When one examines the detail, one finds that there was actually a reduction in the overall amount of credit for SMEs in circulation because many SMEs paid back debt in the last year. The total pool of funding that has been lent is actually contracting.

There is no doubt but that a key element of our recovery will be dealing with the overhang of debt that people are dealing with, whether that is personal, mortgage or SME debt, as well as, of course, the national debt that the country is carrying. My party has set out its own analysis and criticism of the steps that have been taken with regard to mortgage arrears and personal debt. I genuinely hope that the measures that have been announced will work and that the mortgage arrears targets are met by the banks. I have my doubts but I hope I am wrong. I hope the measures work because the reality is that unless we confront that issue and engage in a genuine way with people who want a fresh start and who are facing up to their responsibilities, we will find it very difficult to get any recovery at all in the domestic economy.

There is scope and a need for greater investment in the economy. The Government announced in the autumn of 2011 that it would set up a strategic investment fund, which would require legislation, and that some of the remaining moneys in the National Pensions Reserve Fund, NPRF, would be invested in commercial projects in the economy. We are still waiting for that legislation almost two years later. We all acknowledge that unemployment is the single biggest crisis the country is facing. In the context of the almost total collapse of the construction industry, in particular, the length of time it is taking to advance initiatives like that is unforgivable, given that they would definitely have a positive impact on the economy. The reality is that, except for the safety valve of emigration, Ireland's unemployment rate, which is completely unacceptable as it is, would be far higher. I urge the Minister and his colleagues in government to initiate the investment we want to see. The capital spending programme has been butchered. The money that is provided is not even being fully spent, as was evident last year and, indeed, so far this year. We need to go far beyond that and do much better.

We acknowledge the absolute need to reduce our deficit. The Minister indicated in his opening remarks that €28 billion of fiscal consolidation has been put through already, equating to approximately 17% of GDP. I know of no other country that has managed to achieve, or rather, implement fiscal consolidation on that scale. It has come at a very high price for the people in our communities and we are seeing that on a daily basis. We need to get to the end point of austerity budgets and, hopefully, we are nearly there. The Minister is planning a further adjustment of €5 billion but he might reduce that by up to €1 billion, depending on how he uses the yield from the promissory note deal. We must get to a point, as quickly as possible, where we are no longer implementing tax increases and spending cuts because they are hampering the recovery of the economy.

There has been progress on the bank debt issue. I acknowledge that the deal on the promissory note was certainly an improvement. The extension of the loan maturities of the European Financial Stability Facility, EFSF, and European Financial Stabilisation Mechanism, EFSM, money is certainly helping our debt profile. The next step in that area, of course, is to improve the overall stock of debt and to reduce that. In that context, I ask the Minister to redouble his efforts during the Presidency and beyond, to get what I would regard as justice for Ireland, in terms of the European Stability Mechanism, ESM, dealing with the €30 billion that was injected into the pillar banks and Permanent TSB. In my view, it will become increasingly important for us to reduce our stock of debt, which will be 123% of GDP this year. In reality, if the economy remains relatively static and we have growth levels of between 0% and 1% for the next few years, that debt level will be, unquestionably, unsustainable. We need growth but in its absence we will run into serious difficulty in terms of debt levels.

Finally, I wish to refer to NAMA. I am of the opinion that we do not pay enough attention to the work that is going on within NAMA. It is an economic giant and has a footprint in Ireland, and beyond, which is second to none. I genuinely believe that we need to strengthen the political oversight of the workings of NAMA. Representatives of the agency appear before this committee and the Committee of Public Accounts occasionally but I am not sure that any politician fully understands the operations of NAMA and what it is doing on a day-to-day basis. The Minister mentioned yesterday, in response to parliamentary questions in the House, that he has ongoing communication with NAMA. He referred to a quarterly meeting with the agency but said that NAMA makes its decisions independently and on a commercial basis. That is all very fine but it requires a big leap of faith to allow the agency to operate completely independently with, in my view, insufficient political oversight. I would like to have representatives of the agency appear before this committee and the Committee of Public Accounts more often. We should be examining NAMA's annual and interim reports in far more detail. The oversight needs to be strengthened. Personally, I would like to get a better handle on the decisions that NAMA is making, which have very serious consequences for the Irish economy.

I look forward to getting into the detail of the Estimates.