Michael Ahern (Cork East, Fianna Fail)

I thank the Ceann Comhairle for the opportunity to speak. It was with disappointment that I heard the opening speeches of the Labour Party which continued its old mantra of attacking the Fianna Fáil Government and trying to make the point that Fianna Fáil did not look after the less well off in our society. However, the evidence is that the last Labour Minister with responsibility in that area gave an increase to social welfare recipients of 79 cent. The records will show that, even in the toughest of times, Fianna Fáil led Governments gave social welfare increases greater than the rate of inflation. We will continue to do this as it has been one of the bedrocks of our party. Over the past ten to 15 years there has been growth in our economy greater than that of any other country in the European Union, even more than 7%.

Employment has risen by 64% since 1995 and more than 820,000 people have come into the employment market. There are now over 2 million people working in the economy, a factor we must not forget. The rate of unemployment has come down from 12% in 1995 to 5.4% last month. However, there is a change in the economy. The house building industry has contracted, with serious effects on the tax take and levels of employment, but we must not see this as a doom and gloom situation. The economic forecasts from general economic commentators state that there will be growth of up to 2% this year in the economy, which will still represent one of the highest growth rates in the European Union.

It is untrue to say that the Government did not warn about what was coming down the tracks. In the last budget it was made clear by the Department of Finance that there were going to be restrictions in the economy and weaker economic times approaching. It pointed out clearly that international financial market difficulties had intensified; the exchange rate had appreciated significantly, which undermined our competitiveness; oil prices had risen to an all-time high and continue to rise; and that global inflation had picked up, reducing the scope for many central banks to stimulate demand through lowering nominal interest rates.

We must regain competitiveness, which is crucial to the future of the economy. We are an export based economy, exporting between 85% and 90% of GDP and we must continue in that vein. The fundamentals of our economy, as has been pointed out by many speakers, are strong. We have a dynamic and well educated labour force. Our markets are flexible, allowing us to respond efficiently to adverse developments, and we have a pro-business, outward looking society. Our public finances are sound with one of the lowest levels of debt in the euro area. The tax burden on both labour and capital is low and participation in the EMU provides insulation against currency speculation.

When I worked in the Department of Enterprise, Trade and Employment, I was involved in drawing up innovation policy. That policy statement was put before the Government several months ago. It shows that the significant and sustained investment in human capital, physical infrastructure and commercialisation of research is beginning to bear fruit. We must continue to invest in that area to ensure our educational institutions produce the numbers of educated young people needed to develop our economy and our industry. Investment in education at all levels must not be curtailed because it is the lifeblood of the future of our economy. It is essential if the economy is to grow in the years ahead.

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