Brian Cowen (Laois-Offaly, Fianna Fail)

Wage increases in Ireland have significantly outstripped inflation. Pensions have increased by 85% in the period mentioned by the Deputy, whereas inflation has been 30%. We would have been waiting a long time to get to that level if pensioners got increases of just £1.50 a week, which is what they were getting the last time the Labour Party was in Government. Under the social partnership agreement, a committee meets to ensure we monitor the position in respect of this matter. Our long-term strategy for responding to higher oil prices involves continually repositioning the economy so it produces more knowledge-intensive goods and services. Such services tend to be less energy intensive, which should help to reduce Ireland's exposure to international energy price developments. The impact on the economy of higher energy prices will ultimately depend on how economic agents, including policy makers, react in such circumstances. In the past, higher energy prices resulted in demands for higher wages. The subsequent increases in public spending had a detrimental effect on our economic performance. We now have a greater awareness that we cannot compensate ourselves for such increases. We intend to increase significantly the productive capacity of the economy by investing an average of 5.4% of funds in the public capital programme each year, thereby ensuring there are no inflationary pressures. This measure will ensure that our growth is not accompanied by the inflationary pressures which would arise if we did not expand the productive sector of the economy. Deputy Burton spoke about builders, who are needed to build houses.

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