Kieran O'Donnell (Limerick East, Fine Gael)

It is fairy tale stuff. He spoke about a 7.5% rate of economic growth since 1997, but he neglected to mention that it will be as low as 1.6% for 2008. He neglected to mention that when the new Taoiseach became Minister for Finance, growth was three times this year's predicted rate. He stated that 88,000 units were produced by the Government on an annual basis, but he overlooked the fact that as Minister for Finance in 2005, Deputy Cowen was told by the IMF and the ESRI that the number of house completions was unsustainable. Nonetheless, he went out and told everybody to keep building and the banks started to provide 100% mortgages. The result has been negative equity and a fall in house prices for young couples. Members of the Government should hang their heads in shame, as this does not stand up.

The Minister of State also said that inflation is due to external factors, but the truth is that much of it is due to internal factors, such as Government-led increases across a range of sectors. In the last seven years, areas regulated by the Government account for half of non-mortgage inflation. Examples include housing and water, so to say that inflation is due to external factors does not stand up. When the euro appreciated by 17% against sterling and the US dollar, the Government did absolutely nothing to make sure that the drop in price was passed on to the consumer. Members of the Government are now taking credit for the small drop in the rate of inflation from 5% to 4.3%. This inflation mainly affects the less well off. A young mother trying to feed her family often cannot afford the new prices for bread, milk and so on. People on social welfare cannot afford these rises, which are around 16% to 17%. Shame on the Government.

Towards the end of his speech, the Minister of State spoke about competitiveness and that there would have to be constraints. Yet he takes credit for the fact that he and his colleagues are looking to defer the increases. The Taoiseach should be telling us that Ministers will not take the increases. The Minister of State also spoke about "finances permitting". The report of the higher remuneration review group states that the increases are conditional upon the state of the public finances. He will quote chapter and verse when it suits him, but he ignores it when it does not suit him. He said that the Government's fiscal management over the past year brought about no shocks. What about the 9% drop in the price of houses? Up to 40,000 people have gone on the live register since the start of the year. Economic growth is down to 1.6%, yet the Government was budgeting for 3%.

First, Ministers must state that they will not be taking pay rises. Second, they must introduce real public sector reform. There should be a 2% cut in administrative services across all Departments, but not in front-line services. Third, the Government must bring down the rate of inflation below the average rate in the eurozone. Competitiveness is the key and we must get back to being a competitive country. Our inflation rate in the past 28 months has been higher than the average rate in the eurozone. Deputy Brian Lenihan has been appointed as Minister for Finance. He must state that he will not sanction any inflationary increases in stealth taxes or Government charges. He could examine a practical measure that Fine Gael proposed, namely, to merge the National Consumer Agency with the Competition Authority. He should give the new body some teeth to make things competitive. I support the Labour Party motion. The speech of the Minister of State does an injustice to the House and to those finding it difficult, who are feeling the shocks.

I congratulated the Minister of State on his appointment but it is nothing more than a smokescreen for what is happening in the economy. There will be further appointments in coming week but that will also be a smokescreen. The body politic and the people know that the Government made a mess of the finances. We face an Exchequer deficit of €7 billion to €8 billion. As Deputy Burton stated, we come perilously close to breaching the stability and growth guidelines set by the EU. This was not mentioned in the speech of the Minister of State but it is relevant. Inflation must be reduced and the less well off must be looked after.

See this speech in context