Leo Varadkar (Dublin West, Fine Gael)

Last night the Minister for Finance told us he welcomed a debate on the economy and asked us not to engage in dishonesty or misrepresentation. I agree with those sentiments and it is in that spirit that I will make my contribution today. The economic crisis Ireland is facing has two features, first, the recession; and, second, the precipitous deterioration in our public finances. I will deal with the recession first. This year we will have the first year of negative growth after 23 years of growth, some of which have had major growth and others had small amounts of growth. For the first time in 23 years we are in recession; the economy is shrinking and will do so again next year. We have also seen the precipitous deterioration in the public finances with the worst turnaround in the history of the State going from a budget surplus to a massive deficit and a very likely public sector borrowing requirement of €10 billion this year.

Regarding the recession the Government's narrative seems to be simple — it is all down to international factors as we have heard again today. They say that commodity prices are increasing, the credit crunch is affecting borrowing and the financial markets are in turmoil. From the way they speak one would believe the banks collapsed last year rather than last week. While international factors are at play, Ireland is not the only country affected by international factors. The fair and reasonable question to ask is why Ireland is faring much worse in this scenario. Why is Ireland the only eurozone country that will breach the 3% borrowing limit this year? Why is it, according to the intelligence unit of The Economist, that out of the 56 largest economies in the world Ireland is one of only two that will be in recession this year? Why is Ireland the only economy that will be in recession next year? Why do the USA, Japan, United Kingdom, Germany and France still have moderate growth this year? Why did China and India still grow at 10%, Russia at 7%, Africa at 6%, and South America at 7%? Why will the world economy still grow by 4% this year? Why are the international factors affecting Ireland so differently? Why is unemployment increasing in Ireland when, according to Eurostat last month, it is decreasing in the EU? Why has Ireland overtaken the US, United Kingdom, Japan, Britain, Austria, Netherlands, Denmark, Norway, Czech Republic, Sweden, Malaysia, Singapore, New Zealand and Israel in terms of unemployment? Why will Ireland overtake the EU average in unemployment in the coming year? The question that has to be asked is simple. Why is Ireland, a country that boasted about outperforming the international economy for the past ten years, the dunce in the class and the economy that is faring worst? The answer is simple, it is domestic factors. In his contribution, Deputy Michael Ahern told us that Deputies should have regard to the facts when quoting figures, and I agree. Let us examine the facts.

Last year the economy grew by 6%, this year it will not grow at all. For every 10,000 houses built, that is 1% of GDP. Some 85,000 houses were built last year and 45,000 were built this year. Therefore, four out of the six points we have lost in growth are due to the housing bubble that was not created by Merrill Lynch or Lehman Brothers but by Fianna Fáil. It was done by allowing 100% mortgages, 40 year mortgages and tinkering with stamp duty.

In his contribution, the Minister for Finance, Deputy Brian Lenihan, told the House that Fine Gael destabilised the market through half-baked ill-conceived proposals to reform stamp duty. We did not destabilise the market. The Government destabilised the market. Mr. Michael McDowell said we did not need stamp duty. The Taoiseach, Deputy Cowen, said we would not have any reform. Then he introduced reform after the general election and another reform, which was more or less what we proposed, six months later. The Government destabilised the market not Fine Gael. The Government gave tax breaks to developers at a time when it should have been trying to rein in construction, poured cash into an economy which was already overheating and increased mortgage interest relief tax credits, which is essentially a mortgage subsidy. The Government did this and should be honest about it and accept it. It ignored all the warnings from Deputy Richard Bruton, Deputy Joan Burton, the IMF and the Central Bank. If there is blame to be had in this crisis, 20% may be due to international factors and 80% is due to Fianna Fáil. The Government took a Celtic tiger that was based on competitiveness and export driven growth after five years and replaced it, after 2002, with a septic tiger, based on cheap credit and borrowed money. That is the reason we are in this mess. I accept there are international factors at play and that next year the US, United Kingdom and Japan may go into recession. Next year we will feel the bite of those international factors and it will get much worse, thanks to the Government.

The public finances need to be examined. Why have we seen the worst turnaround in the history of the State? Why will the Government borrow €10 billion this year? Deputy Thomas Byrne and some of the other Deputies opposite mentioned that as a proportion of national debt the percentage of GDP has fallen to 23%. That is a good thing and a genuine achievement. The reality is that the Government will borrow €10 billion this year, probably €10 billion next year, perhaps €7 billion the year after and €6 billion the year after. That is if we are lucky.

The Minister for Finance, Deputy Brian Lenihan, will double the national debt. Where has one heard that before? When the Minister is sitting on the Opposition benches in 2011, as Leader of the Opposition, we will remind him that he was the second Minister for Finance in a generation to double the national debt. I will enjoy doing that.

This year the Government will issue bonds and borrow €10 billion. That money will come from China and Arab cashflows. Essentially we will borrow €10 billion this year to pay teachers, nurses and gardaí. What is worse is that we will borrow that Chinese and Arab money to buy back from them their oil and cheap toys for Christmas.

International factors have not caused the deficit. The two reasons for the deficit are that the Government used unsustainable tax revenues from the housing bubble to fund the economy for years and its reckless spending whereby the Taoiseach, Deputy Cowen, increased spending at twice the rate of growth in the economy for five years. Anyone, whether they have studied economics, knows that is not a sustainable economic policy. It is reckless. Let us take the contrast of Spain. Spain is also an open economy, it is globalised and is affected by international factors and it also had a housing bubble but it will not go into recession this year because it has a competent government that prepared for the downturn. Our Government did not prepare for the downturn. It should have built up a surplus but did not, hence the reason for the mess. It should have invested in the future and in infrastructure. It had no plan whatsoever. When things started to go wrong, instead of having a plan, it got angry and blamed other people, for example, David McWilliams, Joe Duffy and whoever it could find. After that it was in denial and said nothing was wrong, that the fundamentals of the economy were sound. It was going on holidays, everything was fine but now it has come back and there is panic.

Some of the contributions last night by speakers opposite deserve a response. The Minister for Finance accused Fine Gael of making political hay from the current economic crisis. That argument would have had more credibility if Fianna Fáil and Members opposite had not used the international boom of the past ten years as political hay and claimed credit for everything good that happened, whether it was of its creation or not. It appears the Ministers and Members opposite speak with two faces. They look back on the past ten years and claim credit for everything good that happened and look at the present and then forward to the next few years and absolve themselves of any responsibility.

Last night the Minister for Finance told the House that loose lips sink ships and that in current economic times loose lips may sink a bank. That may be credible but it came from a Minister who stood at a meeting of international investors and international developers and told them he had the misfortune to be the Minister for Finance. He told them that our economy was coming to a shuddering halt. The arrogance and the hypocrisy is hard to understand. This was the same Minister for Finance who last night suggested Deputy Bruton should rein in some members of Fine Gael. He appealed to Deputy Bruton to rein in the worst excesses of those in the party who in the pursuit of political advantage are undermining confidence in the economy. He was probably referring to somebody like me in that regard. Yet what has he to say about the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, who in July told the House we were facing an economic crisis, the likes of which we have not seen in 20 years? That came from a Minister in the Government.

What about the different messages being sent out on the economy. On "Morning Ireland", the Tánaiste, Deputy Mary Coughlan, said the Government would intervene in the housing market to help out first-time buyers. That afternoon, the Minister for Finance said it would not. Mr. Michael McDowell said we did not need stamp duty. The Taoiseach, Deputy Cowen, said there would be no reform but there was reform. There were also the mixed messages from the Minister of State, Deputy John McGuinness, the Taoiseach and Tánaiste in regard to public sector reform.

I reiterate the calls for honesty and accurate presentations from the Minister for Finance. Let us have truth from the Government. If it is truthful it will get more respect for it in the long run. This is not a downturn, it is a recession and one that will turn into a slump. The medium-term prospects are not good, they are uncertain. The problems that occur in the economy are caused by international and domestic factors. Primarily they are caused by domestic factors and the international factors have yet to kick in.

The fundamentals of the economy are not sound. Unemployment, inflation and competitiveness are all bad. The only thing that is good is the national debt and the Government intends to double it. There is no silver bullet to solve the economic crisis, what is needed is recovery through reform. I draw the attention of Members opposite, Deputy Calleary in particular, who clearly is very ignorant, to the three policy documents on our website, streamlining Government, recovery through reform and our VAT reforms.

I commend the motion to the House.

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