Brian Lenihan Jnr (Dublin West, Fianna Fail)

Of course, the delivery of Transport 21 and the national development plan is affected by the level of economic growth and the resources available to the Government in the medium term. It is clear that we will have to prioritise and extend the period within which it can be implemented, but the plan stands.

Last year alone, we spent €8 billion of Exchequer funds on capital projects. By 2010, we will have completed the motorway network connecting Dublin to Cork, Limerick, Waterford, Galway and Belfast. Work will also begin on the Atlantic road corridor. The second terminal in Dublin Airport will be open for business in 2010. There will be significant development of public transport in the greater Dublin area. We have an ongoing programme of investment in our environmental services infrastructure and we will provide increased energy security through the North-South and East-West interconnector projects.

The plan stands and as we have indicated, despite expenditure pressures which have arisen this year, capital expenditure will remain a top priority. As part of the Estimates process, we are reviewing all capital projects for 2009 to 2011 to ensure scarce resources are targeted at investment in core economic infrastructure that will add to our productive capacity, improve our competitiveness and ensure we are in an advantageous position when the present economic downturn abates.

The rapidity of deterioration in our economy has, as I stated, surprised all not alone at home but around the world. We have known for some time that growth was going to slow. That is why in his budget last year, the Taoiseach, who was then Minister for Finance, introduced an efficiency review with the objective of getting better value for the money we spend on public services. When he became Taoiseach, Deputy Brian Cowen reiterated our commitment as a Government to public sector reform. As Members know, a task force will report shortly on the implementation of the OECD report on this subject.

In the meantime, the savings initiative we introduced last July is being implemented and the efficiencies it will yield in terms of administrative budgets and the rationalisation of State agencies will be of continuing benefit to our economy when prevailing circumstances improve. There will be a redundancy programme for administrative staff in the HSE and I would like to see such a programme applied in the wider public service as well. The Government is determined to secure maximum value for money in our public services. By targeting better payroll management, seeking savings in the services we buy and prioritising productive capital projects, we will enhance the delivery and effectiveness of public services and maximise the return from capital investment.

As in many other countries, the pick-up in Irish inflation in the past year or so has been driven primarily by the global rise in food and oil prices. In Ireland, increases in interest rates have also had a direct impact on inflation. Recent inflation trends have been more positive. The annual rate of CPI inflation eased to 4.3% in August from 5% two months earlier. On an EU harmonised basis, annual inflation in August was 3.2%, significantly below the 3.8% increase recorded in the euro area. My Department expects to see an easing in the average rate of inflation in the later part of this year and into next year.

These are indeed challenging times. However, we should not lose sight of the fact that the level of economic activity remains very high, as does the level of employment and income per capita. The underlying health of our economy remains robust. The Government will bring forward initiatives that will promote additional economic activity and provide firm support for those parts of our economy that are continuing to perform well. However, effective management of the public finances and sensible fiscal policies are fundamental to our economic recovery. There is no easy way out if we are to protect the extraordinary progress we have made in the past two decades.

It is the job of the Opposition to hold the Government to account. I understand that the largest Opposition party, in particular, will want to make political hay out of the current difficulties.

See this speech in context