Phil Hogan (Carlow-Kilkenny, Fine Gael)

I wish to say a few words on this motion and to acknowledge the confirmation by Government in the announcement of its package of measures yesterday that it has taken 11 years to blow the boom. It ignored all warnings from the IMF, the Central Bank and the National Competitiveness Council that there was a problem on the horizon with jobs and the construction industry. I agree with Deputy O'Keeffe that there should have been a financial framework under the auspices of the Minister for Finance to ensure the construction industry did not become such a dominant feature in the economic welfare of the State that we would inevitably be in difficulty when the housing market softened. Nobody could predict what has happened but we could certainly have introduced anticipatory policy initiatives that might have ensured a softer landing.

What is disappointing about the package of measures announced by the Taoiseach and the Minister for Finance is that it provides no economic stimulus to deal with the harsh reality of such a precipitative and speedy deterioration in the construction industry. That deterioration has had a significant impact on the Exchequer finances as a result of declining capital gains tax, stamp duty, VAT and excise duty receipts. The State benefited by as much as €100,000 from the sale of individual properties in recent years. This source of funding provided for the development of services in many other areas.

The Government has not addressed the extent of the current difficulties in so far as it has professed satisfaction at the increasing prevalence of negative equity. It is satisfied that no initiative is required to help people on to the first rung of the property ladder through reform of the social and affordable housing schemes. The capping of local authority borrowing for capital programmes at €200 million by the Department of the Environment, Heritage and Local Government will mean a reduction in services and the scrapping of many of the projects that were promised. In the case of projects to meet local infrastructural needs, for example, an allocation of €10 million or €12 million in the past was often supplemented by the local authority by the same amount to ensure the project was viable. That additional €10 million or €12 million which was generally heretofore sanctioned by the Department of the Environment, Heritage and Local Government will no longer be available to the local authorities and, therefore, these projects will not proceed. This will have an impact on essential infrastructural development in respect of which promises were made last year before the election.

The Minister for the Environment, Heritage and Local Government, Deputy Gormley, must reduce payroll costs by 3%. That 3% will have to be taken from the local government fund, which will impact on services such as libraries, roadworks, footpath repairs and so on. I welcome the abolition of consultancies, public relations agencies and quangos, of which an additional 260 were created in the past seven or eight years. These quangos and consultancies were always a waste of money. That funding could have been used to provide essential services throughout the public services. It is only now, however, with its back against the wall, that the Government has decided to get rid of some of its friends in these agencies.

The Minister, Deputy Gormley, says he must achieve cutbacks of €48.3 million, but he has not outlined in detail where those cutbacks will be made. Like other Members, I suggest he begins with the e-voting machines which were purchased at a cost of €51.3 million and have accrued storage costs of €2.8 million in the past four years. To dispose of those obsolete machines would be a popular and meaningful way of yielding savings. The Minister has acknowledged they will not be used in the local and European elections next year — it is clear they will never be used — so why are they being stored at enormous cost to the taxpayer when available funding is much reduced?

Much of our prosperity was built on the construction industry. In addition, we have moved from a position where we had a low rate of personal debt to a situation of high individual indebtedness. We will hear many difficult personal stories in the coming years. This situation has been exacerbated by the lack of Government action on competitiveness and other issues. Many people are struggling to meet loan and mortgage repayments as they grapple with the nine interest rate increases that have occurred in the past two years. Professional jobs will no longer be available to the same extent as in recent years. The housing market is at a standstill and there is no economic stimulus to rectify that. As Minister for Finance, the Taoiseach was stubborn about reforming stamp duty. He said he has no problem with the fall in house prices and the decline in construction activity. He acknowledged that the housing boom was unsustainable but did nothing about it for the four years he was Minister for Finance.

These proposals represent a confession of failure by the Minister for Finance. This package of measures is a clear indication that he has delivered on the low-hanging fruit. However, the devil will be in the detail in regard to decentralisation, the 3% reduction in payroll costs and so on. A commitment has been given that frontline services will not be affected, but we are already seeing the effects on those services with cutbacks, for example, in many health and education programmes. A tightening of the purse strings, with the resultant impact on frontline services, has been apparent since last January or February.

All the elements of this package point to wilful inadequacy. I did not hear the Minister, Deputy Gormley, say whether he will withdraw the funding of €15 million for the climate change promotion package, which is an advertising contract for the purposes of promoting himself rather than explaining the important aspects of climate change. People are aware of the importance of taking action on this issue. It does not require €15 million to tell them that. What is needed now is action to resolve these issues.

The Fine Gael Party, through our spokesperson, Deputy Bruton, has put forward constructive proposals in recent days to deal with some of those issues. However, it is only right that we should expose the failure of the Government to reform public services. It neglected to do so through the benchmarking process and it missed another opportunity yesterday by not going far enough in many areas.

See this speech in context