Brian Cowen (Laois-Offaly, Fianna Fail)

Yes, I do. Once again I reject the assertions made in the Deputy's question. The first part of her critique was a suggestion that my fiscal policy was not sufficiently loose in terms of not meeting the current programme, which the Deputy and many other Deputies in her party and the main Opposition party continue to call for. By the same token she then refers to a change to a deficit in the current year as being a matter of doubtful legacy and suggests that I need a Supplementary Estimate. She cannot have it both ways. We are either spending too much or spending too little. She cannot come with both sides of the argument.

Based on the EU harmonised index of consumer prices, the gap between average EU inflation and Irish inflation is at the smallest it has been for a number of years, with inflation at 3.5% here and 3.2% in the euro area. Approximately 12 months ago there was a one percentage point difference, between 2.8% and 1.8%. Even before we joined the euro, historically we had slightly higher inflation levels. Regarding how that feeds into the pay negotiations, we need to make the point that as a result of our taxation policies and the previous pay agreements, taking account of personal, employee and other credits and tax age exemption limits, when the cost of living as measured by the CPI is taken into account, those on the average industrial wage will have seen their take-home pay rise by 41% since 1997 of which more than half is due to tax reductions in real terms. That is a very important improvement, which I am very glad to be able to report to the House. As we enter these negotiations — I will not negotiate here — it is clear from all our points of view that we want to enhance job security and not let further joblessness accelerate. We need to ensure we link productivity improvements with pay increases.

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