Willie Penrose (Longford-Westmeath, Labour)

The stream of negative economic data on unemployment, inflation and tax revenues show clearly that the Celtic tiger era has come to an end and that the Government has no worthwhile policies to reverse these negative trends. It has been on auto-pilot so long it does not know what to do.

Since the beginning of this year, consumer spending has slowed, unemployment has risen significantly, redundancies have risen to a level not seen since the 1980s, export growth has slowed, tax revenue has fallen and the fiscal deficit has risen sharply. Surveys of consumer confidence are at their lowest level since the series began. In the past year the numbers signing on for unemployment benefit have risen by 41,000, 28,000 of whom have become unemployed since the beginning of this year.

Television is the most up to date and accurate barometer of what is happening in our economy and society. It is significant that RTE has decided to drop its "House hunters in the Sun" series and has instead during the past two weeks broadcast a sobering programme entitled "Where's my job gone?" This illustrates the human cost of redundancies in manufacturing during the past year. The closure in my constituency of one of Westmeath's longest established manufacturing plants, Iralco at Collinstown was only narrowly averted last month. Had it closed, the consequences for hundreds of families would have been disastrous and many of the firm's older workers might not have worked again.

The Government constantly tells us about the number of new jobs being created but most of these jobs are in high-tech manufacturing or in services. In rural areas, many workers lack the skills to take up such jobs and the decline in construction and low skill manufacturing is leaving many workers with few prospects of finding alternative jobs. While FÁS does some good work in retaining workers, we have never developed in this country the kind of active labour market policies which have been so successful in Scandinavia in reducing long-term unemployment. While we have made impressive progress in educating our young people during the past 20 years, we must bear in mind that a large proportion of people in the labour force aged over 40 years did not complete second level education and that half a million people in Ireland have literacy problems. We need a much better resourced and more proactive labour market policy if large numbers of older workers are not to be consigned to long-term unemployment and eventually reclassified as social welfare dependents.

It is important to remember that many of the jobs lost during the past year were not in older manufacturing firms but in companies such as Pfizer, Boston Scientific, Abbott and Allergan which the Government repeatedly tells us are the industries where most manufacturing jobs will be created in the future. They were in fact the high technology, high value added jobs which we are constantly told are the alternative to low value added manufacturing jobs, most of which will inevitably move to low wage economies.

We should recognise that the Celtic tiger period which began in 1994 ended six years ago in 2002. Deputy Quinn, as Minister for Finance at the time, played an important and pivotal role in ensuring the economy got on its feet. Growth from 1994 to 2002 was based on a tremendous growth in exports, which is the only sustainable way for a small open economy to grow.

Since 2002, despite a lot of idle boasting by the Government about our economic performance, most of the growth has been due to a credit-fuelled housing boom, much of which is a pure bubble. This bubble has now largely burst due to rising interest rates, resulting from the credit and banking crisis and has caused a sharp downturn in housing starts. House starts are likely to continue falling for at least another year because of the large number of unsold new houses and apartments. If there is to be a recovery in the economy, it will not come from housing.

The downturn in the housing market has resulted in a dramatic fall in tax revenue because during the past 15 years the Government has become overly dependent on tax from the construction of new houses and stamp duty on second-hand houses. Stamp duty which was never intended to be a major source of tax revenue has risen from 3% of total tax revenue to 9% since 1998. It must be bitterly ironic for the Government to recall former Deputy Michael McDowell's assertion before the last election that the Government did not need the revenue from stamp duty. If stamp duty receipts were not falling so sharply, our new Minister for Finance, Deputy Brian Lenihan, would not have had to use the phrase "financial discipline" three times in his first interview as Minister.

While I have a great deal more to say I must hand over to my party leader. As we no longer have control over exchange rate or monetary policy and have only limited opportunities for fiscal policy, we must rely on the competitiveness of our exports for growth and on competitiveness based on productivity. Increasing productivity must begin with the education system. Despite the economic downturn, spending on education, in particular on primary education, must be increased. We take too much comfort from surveys that show that Irish teenagers perform well in international comparisons of literacy but we ignore the results of the same surveys that show a mediocre performance in maths and science. If we are to produce workers for the so-called knowledge economy, we need to increase our spending on education and ensure all pupils achieve their potential.

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