Leo Varadkar (Dublin West, Fine Gael)

I welcome the Labour Party motion tabled by Deputy Burton. It is timely, given that the economy is the most important issue before us. When I thought about what to say in this debate I decided to look back on some of the claims Members opposite made in the past year. It is interesting to do so in view of the first anniversary of the general election, which is Saturday week. The then Minister for Finance told us the economy was at its strongest for ten years, which does not seem to be the case now. Another told us we were heading for a soft landing in the housing sector, which is not the case now. The former Minister for Enterprise, Trade and Employment spoke of rebalancing in the economy, another spoke of welcome correction while the former Taoiseach spent a huge amount of time talking about international factors when he had given up on the housing downturn excuse.

I am not sure where the Government stands on this. It seems to be a combination of deceit and denial. In the case of some it is denial that we are facing a serious economic downturn and potentially, if one believes Moore McDowell, a recession with negative economic growth in two consecutive quarters. The Minister for Social and Family Affairs, Deputy Hanafin, told us on the radio this weekend that everything was fine and that the economy was growing faster than it was in Germany. I do not understand how an economy growing at less than 1%, 0% or potentially in recession can be growing faster than the economy of Germany. I do not know if that is ignorance on the part of certain Cabinet members, denial or deceit.

The Minister for Finance, Deputy Lenihan, is the only Minister I have heard who accepts that we are facing a combination of factors, domestic and international. While we do not have control over international factors, we have considerable control over domestic factors. Any competent Minister must address these domestic factors. In fairness to the Minister opposite he is the only member of his party who accepts that.

It is important to focus on three matters: the housing bubble, the loss of competitiveness and the public finances. There is no question that the Government must accept a large degree of responsibility for the housing bubble by not reforming stamp duty when it should have, by allowing easy mortgages and cheap credit to a greater extent than should have been the case, the cheerleading by the current Taoiseach of growth in prices in the housing market and mistaken supply side economics, where Ministers increased spending and cut taxes by more than they should have, fuelling the economy and driving up prices, particularly housing prices.

No one can ignore the series of national and international reports on the loss of competitiveness by the OECD, NCC and the World Economic Forum, which point to our failure in infrastructure and inflation, most of which is driven by Government services and badly regulated services rather than the private sector. The absence of reform in the public sector is another factor.

We must urgently redress the public finances. It will not be an easy job for the Minister. While the economy is in choppy waters, the public finances are a sinking ship. We have gone from a €2 billion surplus to a projected borrowing requirement of €7 billion this year. That is the worst turnaround in the public finances in the history of the State. In general Government deficit figures we have gone from +2.3% of GDP in 2006 to -2.3% of GDP this year. This comes perilously close to the stability pact criteria.

In respect of public spending, the former Minister for Finance, Deputy Cowen, increased current public spending, not capital spending, by 10.5% or 11% or twice the rate of economic growth. Anyone running a budget, small business or household can understand that is not sustainable.

The past ten years have been a wasted decade, a boom that was squandered and a story of incompetence in economic management by Members opposite. It is important it is understood recovery is not guaranteed. We will only have the type of recovery spoken about by the ESRI in its recent report if the right policies are put in place and this means restoring competitiveness, taking climate change seriously, using social partnership to benefit taxpayers and consumers and not just vested interests and getting the public finances in order, which I hope the Minister will do quickly.

See this speech in context