Arthur Morgan (Louth, Sinn Fein)

We are supposed to be debating the economy, but the Government has not put in place even a short-term plan to stabilise it or to deal with the plight of those who have lost their jobs or are at risk of losing them in the near future. Stemming the rise in unemployment and creating alternative employment is crucial. State spending on unemployment benefits is increasing as tax revenue falls. Some 19,000 people joined the live register between May and June. How does the Government propose to meet these rising costs and how, for example, is the Department of Social and Family Affairs, which is expected to achieve a 3% cut in payroll costs, supposed to deal with the considerable increase in the volume of clients accessing its services?

For all the spin of yesterday, the reality is that the Government is introducing cutbacks that will hurt the most vulnerable. Yesterday's much hyped announcements will not address the wider problems facing the economy. Instead, we have a set of proposals to deal in a limited way with a gaping hole in the public finances. Clearly, we will need to wait until December's budget to determine how the Government intends to deal with the revenue shortfall, although it is becoming clear that serious cuts in public services are looming. Cutbacks in public services and failing to deal with those whose need is greatest will result in a prolonging of the period of recession being experienced. Recovery demands that investment in key economic and social infrastructure and services be maintained.

There has rightly been criticism of the Government's management of the economy during the past decade, primarily that the fruits of the boom were not distributed equally or fairly and that the money generated was not used to deliver necessary improvements in quality and capacity in public services. Had the Government acted differently, would it have been possible to minimise the negative effects of a global economic downturn? Undoubtedly, the answer is "Yes".

The Government's claim that we are facing economic and fiscal challenges from a position of strength is blatantly untrue. The argument that the economy's fundamentals are sound does not stand up to scrutiny. Since the start of the decade, economic growth has been driven by consumer spending rather than export growth, a fact that the Government failed to address. Measures announced yesterday testify that wastage and inefficiencies have been normal practice to date. Only now is the Government proposing to deal with tribunal costs and the unnecessary use of consultants and PR companies. Value for money must always be central when public money is being spent. There is no room for wastage or inefficiencies in times of recession or boom.

In addition to the money wasted through the failure to achieve value for money, including cost overruns, absence of fixed price contracts and so on, a significant amount of public money was misspent on tax breaks for the wealthy. While many people became almost obnoxiously wealthy on the back of tax breaks that had little social or economic value, the economy's overdependence on the property sector was further fuelled. We may never know the extent of the money wasted in the past decade, but it should and could have been used to deliver the necessary improvements in public infrastructure. That we failed to address the substantial deficiencies in public infrastructure — school buildings, hospitals, social housing and public transport — during the most sustained period of economic buoyancy is the disgraceful legacy of 11 years of Fianna Fáil-led Governments.

Today, the Taoiseach, Deputy Cowen, mentioned that the State is not unique in the economic difficulties facing it. While other European states are experiencing the effects of the global economic downturn, none of our neighbours is experiencing a similar dramatic contraction in public finances. The peculiar nature of and reasons for this contraction do not seem to have been recognised by the Taoiseach.

During the past decade, the Government cut income and other taxes to unsustainable levels, thus allowing the Exchequer to become precariously overdependent on revenue related to construction and consumption. This is a major reason for a collapse in public finances, the extent of which has not been witnessed elsewhere in Europe. The Government ignored warnings that revenue from construction and consumption was open to fluctuation and ignored the fact that the amount of revenue derived from an over-inflated property sector was unsustainable.

The problem with the Government's current approach to the public finances is that it is not based on addressing the root cause of the dramatic contraction in tax revenue. The Government is approaching the current economic and fiscal problems in a shortsighted manner. In dealing with the shortfall in the public finances, it appears that the only option under consideration is cutbacks in public spending. Assertions that the most vulnerable will not bear the brunt of such cuts are not credible because experience tells us otherwise. While the Government is claiming that recruitment freezes and payroll reductions will not affect front-line services, this has not been the experience to date. There is mounting evidence across many services, including health and education, of cuts that are already beginning to hurt the most vulnerable.

The Government is spinning that these cuts do not affect the health services and pretends that it is safeguarding patient care. This is false. Long before yesterday's announcement, patient care was being affected by cuts. Since last September, the HSE has imposed major cuts, with its ban on recruitment putting patients and front-line workers in our public health services under further pressure. The Labour Court ruled that the HSE was in breach of Towards 2016 and the EU information and consultation directive in the manner in which it introduced, without prior consultation, those staffing restrictions in September 2007.

The IMPACT trade union points out that the €38 million budget cut for new developments announced by the Minister for Health and Children, Deputy Harney, means that planned service expansions in areas like disability, mental health and care for the elderly have been put on ice. With further cutbacks threatened for next year, these badly required services are effectively cancelled indefinitely.

At a meeting on Friday, 11 April 2008, the Irish Nurses Organisation and other health service unions were advised by the HSE that a range of measures were being considered, including the closure of wards, the reconfiguration of seven-day wards to five-day wards, the closure of accident and emergency departments that do not have consultants, the suspension of primary care developments and a limit on expenditure on statutory schemes, such as the drug refund and long-term illness schemes.

The cuts represent a base betrayal of the electorate that voted for the parties in government, which promised an improved health service. They also expose the gross mismanagement of our public health service by a Government that prefers to subsidise the private health care business. The Government must outline the measures that it will introduce in the short term to stabilise the economy and to introduce a medium-term recovery plan that includes steps to restore competitiveness and measures to retrain and upskill workers. We must also start planning for a longer-term reorientation of the economy to ensure that it will be built on a solid foundation and that future economic prosperity will be used to eliminate economic inequalities and to develop proper infrastructure.

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