Leo Varadkar (Dublin West, Fine Gael)

I would like to share time with Deputy Reilly.

I thank the Leas-Cheann Comhairle for allowing me the opportunity to speak on this motion. There has been a debate as to whether this has been an international downturn or a domestic downturn. The reality is that there are elements of both. There is an international credit crunch under way and we are suffering the effects of rising commodity prices. However, there are significant domestic factors, but Ministers have not admitted that to any great extent. The housing bubble has not burst in other countries to the extent that it has happened in Ireland, with the possible exception of Spain. Rather than dealing with the housing bubble by responding to artificially low ECB rates, by discouraging the level of credit, the Government, particularly the Taoiseach, made it worse. No measures were taken to deal with the fact that we had artificially low interest rates. People were given 42% incentives to invest in property, in spite of the recommendation of the Bacon report that they be removed. The banks were allowed to offer huge amounts of inappropriate credit to people like me, for example, and those people are now lumbered with a 100% mortgage. No action was taken on stamp duty.

The public finances were appallingly mismanaged, even as recently as in the last budget. At a time when everyone understood that the economy was slowing and when growth was predicted at 4-5%, even though it now looks like there will be no growth, the then Minister for Finance decided to increase public spending by 10%. Anybody can understand that this is no way to run an economy. This happened consistently during the Taoiseach's time, and that of his predecessor, in the Department of Finance.

We have also seen an appalling loss of competitiveness as Ireland has fallen from being the fourth most competitive country in the world in 1997 to 22nd place under this Government. That is due to inflation, unjustified pay increases, an absence of public sector reform and an increased cost of doing business. The cost of doing business has spiralled, through regulation, Government charges, local authority charges and a refusal to bring real competition into the electricity market, among others. This country is now in a much worse position than most other European countries. For ten or 15 years, Ireland was fortunate to out-perform the world, through a combination of good policy measures and good luck.

The reverse is now happening and we are doing much worse than almost any other country in the OECD. Growth in GDP has decreased by 5% on last year, something which has not happened in other countries. Unemployment is rising ten times faster in Ireland than it is in the UK, yet the OECD estimates that unemployment will fall in 25 of its 30 countries. No country has seen such a rapid turn-around in the public finances as Ireland as we are now going to be at a deficit of 3% of GDP. Our deficit is about six times the OECD average.

The time has come to challenge the narrative of the past ten years. We have heard a little bit of that narrative from the Minister of State, Deputy Curran. It may be an over-statement to say that the past ten years were squandered. Some good things were done, but it was certainly a lost opportunity. Consider what was done in similar boom periods in other countries, such as the post-war boom during the Adenauer years in Germany, the Atlee and Churchill years in Britain or the Eisenhower period in the US. They used that incredible boom period to build a modern society. They built a public sector that works and an economy that functions and they delivered high class infrastructure and public services. That was not done in the past ten years here.

In spite of a 50% increase in spending during the period in which Charlie McCreevy was Minister for Finance, we saw nothing like a 50% improvement in public services. There was a 300% increase in spending in health, yet there was nothing similar in terms of service improvement. Nobody can tell me that the health service is three times better than it was ten years ago.

Some Members on this side of the House have been accused of talking the economy down, but one cannot talk the economy down. It is bad policy that does that, not words. However, if anyone has been talking the economy down, it is the Minister for Finance. In the greater scheme of things, nobody really cares what I or Deputy Reilly thinks about the economy, but they care about what the Minister for Finance thinks. The Minister stood up at an international conference in front of developers and investors from all over Europe, complained about the fact that he had the misfortune to be Minister for Finance and then told those potential investors that our economy had come to a shuddering halt. When I hear Members opposite bleating about economists, journalists and Opposition politicians talking the economy down, I wonder how they can possibly have confidence in their Minister for Finance, especially when he says such things publicly and when he clearly does not want the job he has been given.

In the past ten years, the Government should have prepared us for the inevitable downturn that was going to come at some stage. Unlike any other country, Ireland had the opportunity to prepare for the downturn and generate large enough budget surpluses to now be in a position to reduce taxes, increase spending and invest in infrastructure rather than cut spending and increase taxes, but that was not done. The fundamental duty of the Government over the past several years was to prepare for the inevitable downturn, lay the foundations for future growth and ensure we had enough resources to weather the storm. The opposite course was taken which is the real disgrace of the Members opposite, with the possible exception of the Green Party which only came on board recently.

The Government has announced plans to reduce spending by €500 million this year and by €1 billion in 2009. When examined more closely, the savings do not seem credible. There are some real cuts such as the €50 million in overseas development aid, affecting the poorest people in the world, and €100 million in the nursing home scheme, affecting the elderly.

The rest of the cuts seem cosmetic. There are no details as to which quangos will be abolished or merged. This morning on the Order of Business, the Tánaiste and Minister for Enterprise, Trade and Employment confirmed the Government does not intend to withdraw any of the five Bills which will establish new quangos. Some cutbacks are proposed in departmental advertising and consultancy contracts, which are welcome, but it exposes the reality of the appalling and reckless overspend on advertising and public relations, particularly by the Green Party Ministers. All over Dublin, billboards tell me not to water my lawn. It might be appropriate to withdraw this campaign. I cannot sit in my garden, anyway, because there has been so much rain lately. To spend large amounts of Government money in the wettest summers in ten years telling us not to water our lawns is a kick in the face to taxpayers.

It is proposed to reduce the public sector payroll by 3%. This makes no sense to me. The Government will go ahead with a 2.5% increase in public pay in September and obviously another pay increase next year, maybe 4%. This will be an overall 6.5% increase in public pay. How does one turn a 6.5% plus into a 3% minus unless 10% of public sector staff are dismissed? I do not think the Government will want to do that either. The Government seems to be operating on a wing and a prayer. It is doing the bare minimum to keep the budget within the Maastricht criteria and hoping something will come up next year. It will not happen. The Government is not really tackling the crisis.

The Tánaiste and Minister for Enterprise, Trade and Employment has decided to cut €20 million from apprenticeships and the Skillnets programme in FÁS. Many savings — even up to €100 million — could be made with FÁS but not with the apprenticeships. That is one of the few things that FÁS does that is worth holding on to. During the debate on financial peculiarities at FÁS, I released an extract from an internal audit report which I got from a freedom of information request. This included comments about the matter in which advertising was placed by FÁS while its advertising agency was bypassed. Last week on "Morning Ireland", I drew attention to the fact that a €100,000 contract was given to one local newspaper, which was referred to in the internal audit report. Lest there be any confusion, I believe any impropriety or irregularities in this regard are on the part of FÁS and not on the part of outside advertising agencies or the local newspaper group concerned. I would like to correct the suggestion that there is any effect in terms of the tickets that may have been exchanged in return for this particular contract. I want to state once again categorically that to the best of my knowledge this Garda investigation is into FÁS and contractors and not the local newspaper group or any of the advertising agencies. I look forward to the outcome of that Garda report and hope it produces some good results.

I agree with the Labour Party Members that this is the Taoiseach's recession. It was created by Fianna Fáil and is its legacy. For the first time, it is being asked to clean up its own mess. The recession cannot be explained away exclusively by international factors. No other country is experiencing the job losses, the price increases, the exports loss or housing market collapse we are. International factors have exposed how badly the economy has been run in the past five years. This week's savings plan is an ill-conceived and half-hearted attempt by Fianna Fáil to clear up its own mess. We are entering a tough period. If the right decisions are made now, we have the prospect of a reasonable recovery in three years time. If those decisions are not made, we are facing into a long-term downturn and economic decline. My great fear is that is exactly where we are heading.

See this speech in context