Frank Fahey (Galway West, Fianna Fail)

There is no point on the one hand claiming they want €4 billion in cuts in public expenditure and then going out and telling all the interest groups they will not cut their areas. That is hypocrisy. The electorate is more sensible than to believe that kind of stuff. If the Opposition had the courage to do what the former Deputy Alan Dukes did, it would get considerably more respect from the electorate.

I wish to speak about some of the positive measures in the budget. The Government's definitive statement that the 12.5% corporation tax will not be increased is very significant. I hope that in the way the Minister put the matter in the budget he will be happy to consider reducing it when the time is right. The 12.5% corporation tax is the single most vital aspect of the Irish success story. It matters to the multinationals already here and those considering locating here. There are other factors, including of course the workforce and our infrastructure. However, the taxation matter is critical and I welcome its insertion in the Budget Statement. We cannot ignore the fact that we are now competing with countries with lower rates of corporation tax.

I also welcome the announcement on the research and development credit. The Tánaiste is to be complimented on the way in which she put forward this measure for consideration by the Minister for Finance. With all the other controversies around the world, people might not have noticed that the row in Washington about the $700 billion also cast doubt on the US provision for research and development tax credits. According to Ralph Hellmann of the US Information Technology Industry Council who was quoted recently in the wall Street Journal, this was disastrous for the US. What could be disastrous for that country could be good news for us. That announcement in the budget is significant good news for us. The Government decision has positioned us for this US opportunity and put us at the forefront of research and development regimes globally. This is where we need to be and will leave us well positioned when the economy starts to recover.

I also welcome the Minister's announcement on intellectual property. It is vital that Ireland and the EU have a strong legal framework on intellectual property. China and the other countries that had problems in this area have straightened up their acts. We can no longer rely on people being afraid to patent in these jurisdictions. Ireland needs to put itself at the forefront of intellectual property legal regimes and introduce incentives. Ireland should consider introducing an artists' exemption-type scheme for scientists and others who base themselves here, register patents here, carry out research and development here and bring the associated jobs and revenue to this country. We could have special zones for such inventors and developers of intellectual property. I look forward to the Commission on Taxation making favourable recommendations to the Minister for Finance in this regard and I urge it to do so quickly. These three areas are of great significance in the context of ensuring that Ireland continues to attract international foreign investment and create new jobs.

I also wish to refer to the 6.5% deficit. This issue has been lost in the frenzy that has happened in the past week. We cannot underestimate the seriousness of the fiscal position in which we find ourselves. A 6.5% deficit in 2009 assumes relatively small contractions in GDP in 2008 and 2009. Exports are assumed to grow next year by 2.5% in real terms. However, recent examination of the global economy makes that export projection appear somewhat optimistic. If the global economy suffers a deep recession, which appears increasingly likely, Ireland's fiscal deficit will be much higher than 6.5% of GDP. We could be facing a budget deficit of more than 10% of GDP in 2009, which would involve the necessity for large increases in tax revenues to reduce that deficit gradually over a four to five-year period. That is the essential element of the budget. The budget's proposals need to be implemented and not the kind of winner-takes-all approach that we have seen from the Opposition during the budget debate.

The Opposition's one shining white light, Deputy Bruton, did not contribute to the farcical debate in the House over the past two nights. Every party needs to understand the main priority for the country is that we face up to the difficult fiscal position. If we do so, we will progress out of a recession much quicker than any other country. I challenge Deputy Burton to outline how we will not increase taxes while reducing expenditure by €400 million.

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