Brian Cowen (Laois-Offaly, Fianna Fail)

The measures we took this year in terms of expenditure mean our expenditure plans will come in broadly on target. The problem that has arisen relates to the serious decline in tax revenue across nearly all tax heads, a reduction in the order of 13% this year. This will have an impact on our opening position next year also.

Our strategy involves a collective effort by all stakeholders, including the social partners. Regarding the framework of the pay agreement, its operation is continually discussed in partnership. However, it is important to point out that continuing with our strategy of investing in public programmes, an investment that amounts to twice the European average, proceeding with public sector reform and using the people appointed by the Minister for Finance to examine other expenditure programmes and public service numbers are all part of a strategy to bring our public finances under control.

It is a serious situation, which we have indicated by bringing forward an early budget. Since then, there has been a further deterioration in our public finances. In an interview this morning, the Minister for Finance outlined how, given the relatively weak revenues accruing, he will not seek to raise tax revenue next year in addition to the budgetary arrangements already made. In a credible timeframe, we must consider how to bring the current budget deficit under control while continuing with the capital investment programme. Had the Government decided against the strategy of continuing record capital investment, the figures would be quite different. We are not prepared to postpone building capacity in the economy because it is part of our strategy to be ready for the upturn in the economy.

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