Martin Mansergh (Tipperary South, Fianna Fail)

There is general agreement on the depth of the economic and financial crisis facing the country and the necessity of taking further action now to, to the greatest extent possible, lift some of the uncertainty. There is no merit in half measures. The unprecedented global downturn forms the backdrop to the problems we face and has no doubt massively compounded them.

The differing analysis of causes, though important in terms of lessons for the future, must not distract us from taking fair and balanced necessary corrective action now. I stand on the side of those who seek a more equal society. I note the research which suggests people in such societies enjoy, on average, greater opportunities, a higher quality of life and better living standards, as well as a high degree of social stability.

The model where people were almost encouraged to become extremely wealthy and to collect extraordinary rewards in the belief that everyone else would benefit to some degree has collapsed, causing widespread difficulty and hardship. Not only did we allow our tax base to become seriously eroded and far too dependent on speculative activity, but we all loosened our grip on the purse strings without always ensuring a proper return, the best value for money or sufficient prioritisation.

Many business and professional people were so well rewarded they had more money than they knew sensibly what to do with, while others were still going seriously short. Not too many called on us to slow down and many voices suggested we should be going even faster.

However, as The Economist, not always a champion of the Irish economy, pointed out this week, to focus on the bursting of the housing bubble would be to miss the lasting gains that were made. There has been a lot of worthwhile investment in education and training, health and transport and environment infrastructure, as well as in arts, sport and heritage, which will stand to us for a long time to come.

We have also identified many more gains which would be lasting if we could still afford them. More than once, the European Commission complimented us on the strategic way we were spending our Structural and Cohesion Fund allocations, although we no longer enjoy those. We used the opportunity to drive down our national debt to a very low level and put aside, at its peak, more than €20 billion in the National Pensions Reserve Fund, without which we would have found it very difficult to handle the banking crisis, in addition to the fiscal and employment ones.

What we must do and are already doing is very clear. We are now reaping the consequences of being in the eurozone. There is no dispute that we have lost competitiveness far beyond the natural consequence of catching up with average EU incomes. This occurred particularly in recent years. As members of the eurozone we are prevented from devaluation. The only alternative is to achieve an equivalent effect by accepting lower incomes and salaries and driving down costs.

Remarkably, we are now experiencing, for the first time in our lives, significant deflation which will mitigate, to some degree, the effect of pay freezes and income reductions, whereas our UK neighbours have inflation of more than 3% due to the weakness of sterling. The same article in The Economist states "Ireland's response to austerity goes against the grain" and that "Ireland seeks salvation in lower wages, even though its households are also heavily indebted". The Minister for Finance, Deputy Lenihan is quoted as saying, "The key is to turn the model back to export-led growth", a point he has made on many occasions.

With more realistic and competitive costs and wages, companies and investors may look again at the advantages of locating export functions in Ireland rather than outsourcing them to distant countries which have problems of their own. The Economist also states, citing the late 1980s, that "Ireland has form when it comes to retrenchment". It is quite a positive assessment of our current situation in all the circumstances.

As a small country we have shown, on many occasions, a determination to survive economically and overcome difficulties. In the 1920s we established basic financial viability following the chaos of civil war. In the 1930s we came through the economic war, having built up an indigenous industrial base. We survived the Second World War thanks to tremendous diplomatic skill, backbone and economic organisation.

In the late 1950s we took stock and changed around our whole economic strategy, which was not working in the post-war world. We tackled high debt, low employment and bad industrial relations in the late 1980s. There is no doubt we can do what is needed today, if possible through co-operation and agreement with the social partners. I am very glad there is to be a return to talks and that the national day of action on 30 March has been called off.

We should be grateful for the understanding of our EU partners for this unprecedented situation in which we all find ourselves. We have been given until 2013 to bring the public finances back on track. When we come back to the Lisbon treaty we need to remember the value of belonging to a partnership of neighbouring nations, including the inner circle of the eurozone.

What we have to do now is bound to be difficult. Most people do not have significant room for manoeuvre or reserves. A few, but not enough, do. Most of what we have to achieve at the end of all of this is to put ourselves on a sounder footing. We will again be able to compete with advantage with the rest of the world which, assuredly, has plenty of problems of its own.

A revival of confidence in our ability to turn the corner will help us get through a difficult period. We need the maximum social understanding and solidarity in rebuilding a true social market economy.

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