Brian Cowen (Laois-Offaly, Fianna Fail)

I reject the Deputy's contentions. The Government does have direction and has taken decisions as a result of the end of year Exchequer returns which saw a deterioration in the public finances beyond those provided for in the budget. The Government decided to submit a five year stabilisation plan to the European Commission which requires savings of €2 billion this year, €4 billion for the following two years, €3.5 billion the year after that and €3 billion in year five, until 2013. It has made a commitment to the Commission to reduce the general Government deficit to less than 3% as required under the Stability and Growth Pact at that time.

I undertook before Christmas to use January to work with social partners to ensure that people fully understand the scale of the problem, that this will require a national effort, that people must buy into the requirements of the situation to meet the real political, economic and social challenges facing the country. That is being finalised this week and weekend. I said I would do that because I believe it is the way forward. It involves providing leadership, to ensure that we are all committed to achieving those savings of €2 billion. The Government has been working to identify these savings. Unlike the Deputy, we have stated clearly that all areas of expenditure must come into play in achieving those savings of €2 billion and that the ability to identify in terms of pay or pay-related, pension and non-pay issues is the best means by which we can minimise the impact on those who require services which is funded by the non-pay side of the budget. Those are the types of approach we have made and discussions we have held. The discussions continue and progress is being made. We will know by the end of the week whether we can come to an agreement on a framework for a pact that will bring stabilisation, that will be based on social solidarity, and that will allow us to take the opportunity for reform that this recession provides for us.

As Taoiseach, I am acutely aware that people are losing their jobs and that more will lose jobs. I am acutely aware of the fact that this open economy is not immune from the international developments which have taken place. I am acutely aware of the Government's responsibility to bring forward a macro-economic plan on our public finances that meets with our obligations as members of the eurozone, and to bring forward at the same time micro-initiatives on all the issues the Deputy mentioned to deal with the savings of €2 billion that must be identified. We are prepared to do this. We are actively engaged in it and we are finalising it at the moment.

The proposals put forward by the Deputy and his party during the Dáil recess would be totally inadequate and would go in the opposite direction. The proposals put forward, such as a freeze in the increments for public pay and a contribution made by those earning over €100,000, would bring forward a maximum of about €330 million if it was provided for in full. He also spoke about the need to increase capital spending by €1 billion, all of which would make us worse off by €700 million.

We are going in the other direction. We are looking at all areas of current and capital expenditure. We have identified the €20 billion that is needed for pay and pension costs, the €20 billion in social welfare and social security costs, and the €15 billion in non-pay costs on the current side. We are identifying all areas of expenditure and engaging with the social partners in order to solve this problem and provide the €2 billion in savings in a way that will minimise its impact on ordinary working people and those people who require the delivery of State services.

See this speech in context