Barry Andrews (Dún Laoghaire, Fianna Fail)

I wish to share time with Deputy Michael Finneran.

I am delighted to have an opportunity to speak on this important issue. This is not the first time we have experienced a recession. Many Members recall previous ones but each one is different. In the 1980s there were high interest rates, and rates of taxation whereas there was a balance of payments problem in the terrible recession that blighted the country in the 1950s.

The circumstances that obtain now are very different. Arguably we are well positioned to recover quickly from this recession. This is an open economy as everyone knows, with a high level of exports. It is, therefore, like a weather vane in a gale having a pronounced reaction to a tough global climate but being well-positioned to be at the forefront of a recovery when it occurs. The steps the Government has been taking reflect the anxiety to be well prepared for a recovery in the global economy. The launch last December of the smart economy idea was forward thinking for the medium and long term. It tried to ensure that we would lay the plans for the development of corporate growth in areas that everybody knows will lead economies into the future. That is only one piece of the jigsaw. Our actions on bank guarantees and recapitalisation is another piece, as is the work on social partnership to deliver fiscal change.

There are other things to be done over the coming months, but we need to recognise at all times that much of the development of our economy is related to the sentiment, mood and atmosphere that is created. In this regard, I advise all commentators to measure their words when they are referring to the performance of the economy. At one stage we all said that we should not talk down the economy, and that was at a time when we did not anticipate how bad things were going to get. Now it is more important than ever that we do not talk down the economy, that we encourage people not to postpone expenditure to the degree that it is happening at the moment, and that we allow retailers an opportunity to get back into business, because many of them are suffering.

Fine Gael was telling us in October that we should follow the Spanish economic model. We were told that the Spanish Government was providing superb leadership at that time. We know now that Spain is in a much worse recession than Ireland. We were told to follow the UK model of recapitalisation and told to follow the UK policy of dropping VAT rates. None of these policies has worked. By taking a more cautious approach, while at the same time adopting the radical policy of the bank guarantee and a smart economy, we have charted a careful course that will stand to our benefit in the months and years ahead. If we had taken the drastic steps that had been suggested by other people in the last few months, we would have created more difficulties for ourselves.

The fact that we are sticking with the capital budget is a crucial element in the preparation for recovery. In Germany, Angela Merkel rejected the idea of a stimulus package as recently as January. It is a field day for opposition parties across the world, because this is a developing area, circumstances are changing all the time and governments are reacting accordingly. Angela Merkel is now proposing a capital stimulus package of 1.5% of GDP in Germany. We have a capital stimulus package, called the national development plan, which consists of 5% of GDP. That is not a knee-jerk reaction, but something for which we planned. Credit has to be given for sticking to this at a time when other Governments are providing stimulus packages that are far less ambitious.

I support the partnership process. We cannot get everybody in the country into the room. I know that the partnership process has flaws, but being unable to get everybody into a room is not an excuse to do nothing. Bringing the partnership process with us will restore faith in the economy, and will help us towards recovery.

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