Michael Mulcahy (Dublin South Central, Fianna Fail)

Having listened yesterday with great attention to the Budget Statement of the Minister for Finance, I appreciate the opportunity to speak on budget 2007. A Minister for Finance framing a budget is like anyone else who must sit down to present something which must be done in a balanced way. One can increase or reduce expenditure, increase taxation or play with any of many variables. It has never been an easy task for a Minister for Finance since the foundation of the State to get the balance right. It is never easy to achieve the perfect synchronisation of the various elements which must come into play. It is obviously much more difficult during a recession or when a large current budget deficit is being run, which is certainly not the case currently. There is an overwhelming responsibility on any Minister for Finance to be fiscally responsible to ensure the finances of the State are in a good and positive position and that any further problems along the road can be addressed.

In his economic preamble, the Minister made it very clear he was setting the following fiscal targets for 2007: a projected general Government surplus of 1.2%, an increase in gross current spending of 11.5%, an increase in gross capital spending of 13% and a gross debt-GDP ratio of less than 25%, one of the lowest in Europe. No Minister for Finance, no more than any other Member of the Dáil or any member of the public, knows precisely what is coming down the road in terms of the rest of the world. Interest rates are much higher in the United Kingdom and the United States than in the eurozone. Many people in the USA are talking about a slowdown in that economy. A slowdown in the US and-or British economy would normally affect Ireland because of the levels of trade between Ireland and those countries. In that context, I was very glad the debt-GDP ratio is 25% and no higher. The Minister is clearly storing up reserves of borrowing potential for the future in case that rainy comes, which is very prudent.

I draw attention to section D.15 of the Budget Statement, a table showing the trend in national debt and general Government debt. The table covers the period from 1983 to 2005. The period from 1983 to 1988 had a most alarming rise in debt as a percentage of GNP in the history of the State.

See this speech in context