Bertie Ahern (Dublin Central, Fianna Fail)

The end of February Exchequer returns were published yesterday, as Deputy Kenny noted, and the overall position is that the Exchequer deficit is €125 million at the end of February. The forecast for the Exchequer deficit for the year is €4.866 billion and a general Government deficit of 0.9% of GDP is forecast. The general debt level is projected to be around 26%. Trying to place it in anything other than its historically good context is wrong.

Taxes to the end of February were €516 million, which is 6.4% below expectations. Income tax, excise duties, stamp duty, capital acquisitions tax and customs are very close to target. Capital gains tax, VAT and corporation tax are significantly below profile. I am always slow to make any great judgment on two months' figures. February is an important month for capital gains tax. Looking at those figures, it would seem that capital gains tax figure is substantially down. There is no argument about that. That is based on the last quarter of 2007 so this means there was not a great deal of land purchase or closing of deals in construction in that period. That obviously pulls down that tax.

On the other side of it, house building is down from a historic high of 88,000 in 2006. The figure this year is projected to be 55,000. The rule of thumb is that every 10,000 houses not built pulls 1% off the growth or about 0.5% off the tax base. Most of this in the analysis of two months, which I would be loath to read as a year, is based on capital gains tax on one side, with construction and developers' deals not going through in the last quarter, which substantially pulls down the revenue base, and on the other side, the fact that we are down so many thousand houses on the construction side. It again shows, as I have said here for years, the importance of the construction industry's knock-on effect on the economy. The fact that developers, builders and others have a significant knock-on effect on the economy has always been a positive factor even though I have always had to argue in this House against there being something negative about that position.

Deputy Kenny does not need me to go through it at great length. We are now the sixth strongest country in the world in services exports, which are extremely high. If one looks at the position in manufacturing, exports, financial services and the services industry, which is extraordinarily strong, and what has gone on for the past few months, one can see that developments in the stock market, the credit crunch, the US economy and sterling-dollar movements have been substantially negative. However, we are still not that far off our targets. As I said at budget time, it is a year where there will be some increase in unemployment mainly in the construction sector. We will still create a significant number of jobs if, as is projected, we build 55,000 units and this is broadly in line with the consensus among economic commentators. As the year progresses and as we get the wash-out of houses that have already been constructed in 2007, we will see this improve as the year goes on. It is a year for tight and close management of the economy and for watching expenditure. The Government is wholly conscious of this and will continue to monitor the situation very closely, in particular, looking closely at the first quarter returns in a month's time.

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