Brian Cowen (Laois-Offaly, Fianna Fail)

It is not an either-or situation. We must bring stability to the public finances and without that, the question of progress or regaining prosperity and growth does not arise. We must stabilise the public finance position. It is not a fixation exclusive of all other considerations but a necessary part of the rectification and correction needed to ensure Ireland comes through this very serious international recession to the best extent possible.

Deputy Gilmore indicated that one is considering only expenditure and not taxation items. If the gap in the public finances, which could be over €18 billion this year, is to be closed, it will either be done through expenditure savings and-or taxation measures. This particular year is one where we will see the most contraction in the Irish economy, as we try to come through this period and get back to economic growth in the years ahead. This will be the most difficult year.

To impose a further tax burden at this point in the cycle would depress demand even further, although I recognise the expenditure savings will have that impact. If the gap was to be closed any more quickly this year, we would have that impact, and that would not be the right thing to do. We must send the signal this year at home and abroad that we are seeking to stabilise the current position, which has a deficit of 9% and 10%.

With regard to how we can bring forward interventions that will maintain the maximum number of jobs in the economy, I agree that this is part of our task. One of those tasks relates to competitiveness and reducing our cost base. That is happening in the private sector at enterprise level and, in speaking to employers, there are many people doing this throughout the country. When people sit down and examine their position, the level of demand and orders and the number of employees, instead of simply implementing redundancies, many are putting in place measures such as work-sharing or short-term work.

People who work three days per week rather than five will go on the live register for the two days they are not working and that will add to the figure I supplied earlier. Those sort of arrangements are also being made. People are trying to adapt to the situation on the basis of trying to maximise the numbers who can remain in employment. It is a welcome development that this approach is being taken, at management, union and employee level, by many businesses. Rather than ten people being made redundant, decisions are being made for all employees to work a four-day week, to take a 10% wage cut or whatever in order to do what is necessary to retain the maximum number of people possible in employment during this difficult period. This is happening in many sectors.

We were obliged to address the position as it applies to the public sector. That was part of the rationale behind the decisions announced yesterday. What we have done will have a beneficial effect in the context of the public finances. Despite our best efforts to arrive at an agreement through the partnership process a decision in respect of those finances could not be deferred any longer.

On how we maintain demand in the economy, the stimulus programme we have brought forward is the capital investment programme. Based on data provided by economists, the €8 billion spend will have the benefit of retaining the equivalent of approximately 80,000 jobs. That stimulus, which, at 5% of total GNP this year, is the highest in Europe, will go towards retaining jobs. It will also have a reasonable impact in respect of how the Government can provide capital investment through the provision of schools throughout the country. There are generic designs relating to school construction and those type of cost savings and that kind of acceleration through the process to which the Deputy refers already exist. We are seeking to reorient some of our capital spend towards further school building, despite the fact that we do not have much room to manoeuvre. The level of school building currently taking place is at record levels when compared to even the best of times experienced in the past.

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