Jimmy Deenihan (Kerry North, Fine Gael)

The spin by many Government speakers in recent days has been to blame Opposition Members for talking down the economy. However, I intend to cite some figures produced by the Department of Finance that demonstrate that the points made by the Opposition are completely accurate and were not exaggerated. In 2007, tax revenue was €47,249 million, which was €1,826 million below target. An Exchequer deficit of €1,619 million was recorded in 2007, compared to a surplus of €2,265 million for 2006 and a budgeted Exchequer deficit of €546 million. The budget 2008 forecast for the Exchequer deficit is €4,866 million. If this does not constitute a problem when analysing the economy, what does?

Another statistic I examined concerned the most recent balance of payments data, which relate to the third quarter of 2007. The data show a current account deficit of €1,768 million in the third quarter. In addition, the deficit for 2006 was the largest current account deficit ever recorded. Undoubtedly, other speakers will confirm that the economy is not perfect and that a major problem exists. According to the latest set of forecasts published by the Central Bank, economic growth will halve this year. The volume of goods and services produced by the economy, or gross national product, GNP, is expected to increase by 2.6% this year compared to an estimated real GNP growth of 5.1% in 2007. In addition, the number of people claiming unemployment benefit rose in January at the fastest pace since 1980. That statistic speaks volumes about achievement.

In addition, business conditions have deteriorated markedly in the Republic. More than four years of growth in manufacturing came to an abrupt end in January. Furthermore, a recent analysis appeared in the Irish Examiner on individual debt in Ireland. In the past 20 years, the economy has been fuelled by American investment, especially from the information technology and pharmaceutical industries, by European investment, including Structural Funds, and, to an even greater degree, by domestic borrowing. The local economy has been fuelled by local individual borrowing and, as Deputy Noonan has noted, every house completion is worth the equivalent of approximately €100,000 in taxation. However, that trend has now stopped. The money borrowed from banks and elsewhere — it was once the State that borrowed and now it is the individual — was spent directly on fuelling the economy, providing services, etc. It was not really a sound economic philosophy.

A recent statistic suggests the value of our exports is increasing but apparently it is decreasing. Foreign-owned firms are responsible for 90% of our exports. There seems to be a wobble in the US economy and a 1% drop in US growth translates into a 1.75% decrease in Irish growth. Since our export trade is so dependent on foreign-owned international companies, the wobble will therefore have major repercussions for the Irish economy.

I welcome the initiatives on vehicle registration tax. Ten years ago, when Deputy Noonan and I were official spokespersons on finance, I called for such a measure. Traditionally, we dealt with emissions by trading and capping but the way to proceed is to focus on new appliances, be they cars or other items. We must deal with them and I agree with the proposed policy.

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