Brian Lenihan Jnr (Dublin West, Fianna Fail)

The risks identified by my predecessor on budget day have materialised. Growth will be lower than projected. We already see the impact of this on tax revenues. Recent unemployment figures are of concern, although they continue to be among the lowest in the EU. We are still creating jobs. IDA Ireland remains ambitious in its targets for attracting investment to this country. The creation of 168 high skilled research and development jobs in knowledge intensive industries was announced this week. It is important that we create jobs in such sectors of the economy. It is clear that the next two years will be challenging. We must take the right decisions now in response to the changed circumstances if we are to secure the more favourable growth prospects that many, including the ESRI, predict for the medium term.

I welcome Deputy Burton's contribution to this debate last night. She said we can move into a period of growth in two or three years' time. I am glad she acknowledged the underlying good health of the economy, which makes us uniquely well placed to weather this storm. I remind the House that we are in this healthy position because of the prudent action we have taken over the past decade or more. Given that most of the factors weighing on our short-term prospects are external, our priority must be to ensure we are in a position to benefit from the global recovery when it comes.

I reiterate the Government's commitment to improving competitiveness, through the implementation of appropriate policies which will result in sustainable economic development in the years ahead, while maintaining a commitment to protect the poor and vulnerable in society. As Deputy Burton pointed out last night, we are responsible for ensuring that our policies protect the most vulnerable in an economic downturn. We will have to work to ensure that those who have become unemployed on a short-term basis do not move into long-term unemployment. We must ensure that those losing their jobs in one sector have the skills and training to obtain employment in expanding sectors of the economy. That is why the programme of investment in education and skills, which includes a commitment to life-long learning, is so important. We must ensure we restore our competitiveness and boost our productive capacity, thereby generating employment opportunities.

During last night's debate, Deputies mentioned the prospect of low economic growth combining with rising inflationary pressures, most notably from increases in the prices of commodities such as oil and food. None of us wants such previous economic experiences be revisited. Therefore, we must ensure that the externally driven price increases we are experiencing are not exacerbated by attempts to secure compensation through wage demands which would lead to a further deterioration in competitiveness, with implications for future jobs and growth. In this regard, the Government will continue to work with the social partners.

The Government recognises the concerns that arise from recent increases in fuel price levels. However, the increase in the price of fuel, including diesel, is not tax-driven — it is an international phenomenon that affects all countries and all sectors of society and the economy. According to recent EU data, Ireland has the ninth lowest petrol prices and the 12th lowest auto diesel prices of the 27 EU member states. The view of my ECOFIN colleagues is that any attempt to compensate ourselves for higher fuel prices would send the wrong signal to consumers and oil producers. The Government has put in place a range of measures to help those on low incomes who have the greatest need. The national fuel scheme, which has doubled since 2005, has benefited from a widening of its eligibility thresholds. The households benefits package, which includes a free electricity or gas allowance, has also been stepped up. The supplementary welfare allowance is available to assist people in exceptional circumstances who have special heating needs.

The Exchequer returns at the end of May showed that Government expenditure was broadly on target for the first five months of 2008. As I said, the tax revenue position has weakened from that envisaged on budget day. However, this has to be considered in the context of the strong position of the public finances. I refer to our low debt to GDP ratio, for example. The overall economic and fiscal prospects for the current year are regularly monitored in my Department. Further comment will be made in the context of the Exchequer returns at the end of June, as we will then have fiscal information for the first six months of this year. I assure the House that, during the summer break, the Government will continue to focus on the economic and social issues facing the country. I do not doubt that this subject and other subjects will be discussed when the House sits for an additional week in early July. The Government will continue to provide a framework of macroeconomic and budgetary stability. We will ensure that we take the right course of action for all concerned.

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