Seán Ardagh (Dublin South Central, Fianna Fail)

In the longer term, one issue disturbs me, namely energy supply and cost. There are many forms of energy and bio-fuels are often spoken of these days. Up to the first week of August cereal farmers were in dire trouble, afraid that crops would be left in the ground. Thankfully the weather improved in the last few weeks of August and they had a reasonably good crop. Prices increased by up to 50%, which had a knock on effect on the price of cattle feed. The price of milk increased for the consumer and the price of bread is increasing. Much of the land that was formerly used for foodstuffs is now applied to the production of bio-fuels.

There is nothing wrong with that per se but it has had a significant effect on the cost of living. There have been significant increases in the price of oil recently. We do not know whether peak oil happened last year or whether it will happen in the next few years. However, when it is recognised that peak oil has arrived, there will be significant, accelerated increases in the price of oil. That will create major problems.

In terms of alternative energy we have wind and wave, both of which are very laudable. However, the fishing village of Kilmore Quay, for example, has been visually destroyed by the windmills there. The development of wave power is very much in its infancy. The amount of energy that can be generated by wind and wave is very limited.

The question of nuclear power must be brought to the fore again. The Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan has said he wants to see a debate on nuclear power take place. I also wish to see such a debate take place. However, I do not want to see a debate take place so the issue can be buried. I wish to see a debate which forces people to realise that nuclear power is an option we must examine very seriously. We must ascertain whether the people are prepared to accept all of the nasty and bad aspects of nuclear power to obtain the energy we need for our livelihood, economy and the future of the country. It is an enormous question that must be examined closely.

There is no doubt that the development of the economy is ongoing. Inflation is an important issue and many people are pointing to the fact that our inflation rate is 5%. However, inflation is measured in two different ways in Europe. The first takes account of increases in the Consumer Price Index while the second takes account of increases in the Harmonised Index of Consumer Prices. The latter excludes mortgage interest payments. Under the HICP method, where mortgage interest payments are excluded, Ireland's inflation rate was 2.3% in August, down from 2.7% in July.

Several commentators have pointed to the fact that the number of new house starts is dropping and argue that this indicates that the economy is in dire trouble. However, a different picture emerges if one examines the progress of the economy in the first half of 2007. The Irish Exporters Association issued a first-half review of 2007 which showed that exports increased in aggregate by 7% over the equivalent period in 2006. Internationally-traded services grew by 9%. These are services which are of the mind rather than the back and are very important to our economy. According to the IEA, service exports now account for one third of all exports, which is well ahead of the EU average of one quarter. The 9% increase in internationally-traded services in the first six months of this year indicates that it is a significant economic driver, an area which is improving and a basic foundation of the economy.

Housing is definitely a problem. The number of new house starts has decreased because of high interest rates and the high cost of housing. Mortgage costs as a percentage of average earnings have risen from approximately 20% in 1996 to 37% or 38% in 2007, which is unsustainable. There must be a significant reduction in interest rates and house prices for mortgage costs to come down to a reasonable level vis-a-vis average earnings. Two factors that have contributed to this situation are 100% mortgages and the increase in mortgage duration to 40 years. Both factors have contributed to an increase in the price of houses. The Department of Finance must develop a carrot and stick approach to bring about a quantum reduction in the price of houses in the short term, rather than over the next five or six years. If we can get over the hump quickly we will ensure continued economic growth over the next few years.

I turn now to the Government's performance in the areas of health, education and welfare. With regard to welfare, Ireland had a growth rate in social protection expenditure, which includes social welfare payments, old age pensions and associated items, of 7.8% between 2000 and 2004, the last year for which figures are available. That compares with an average of 2.1% for the EU 15 countries. In that context, we are well ahead in terms of the increase in the amount we spend on social protection. However, as a percentage of GDP, our expenditure is slightly lower than the EU average. The EU countries in general spend 8% of their GDP on pensions because they have more older people than we do. This highlights the problem that will arise here in the next 20 to 30 years. As the Taoiseach pointed out this morning, the number of elderly people in our population will increase significantly. Currently, there is one senior citizen for every six people working but by 2050 there will be one senior citizen for every two people working. Expenditure on social protection must increase significantly in the future. We must ensure that people put adequate funds by for their pensions. The National Treasury Management Agency pension fund currently stands at 11% of GDP but must be increased on a regular basis.

There has been much comment on the amount of money being spent on the health service. I hear complaints about the health system from all sides of the House. St. James's Hospital, Our Lady's Hospital for Sick Children and three area health boards are all located in my constituency of Dublin South-Central. Every one of the managers in the health boards responds almost immediately to any request or query I put to them.

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