Brian Lenihan Jnr (Dublin West, Fianna Fail)

The restoration of Ireland's public finances to a stable and sustainable footing presents a significant challenge, but one the Government is determined to meet. Already steps have been taken to meet this challenge but the deterioration in the domestic and international economy has demonstrated that there remains a need for further action.

Many countries are facing challenging budgetary positions. This week the European Commission, when opening the excessive deficit procedure for Ireland, also did so for Greece, Spain and France, while the UK and Hungary have had a procedure open for some time now. I have already stated current indications are that economic activity in Ireland will be very weak this year and the publication of today's annual growth figures for last year underlines this point.

Lower levels of economic activity will obviously have implications for future tax revenue receipts and, consequently, the borrowing requirement. Internationally, the latest predictions by the IMF forecasts that global economic activity will contract by between 0.5% and 1% this year. This would be the first decline in activity in 60 years. For advanced countries, which constitute a large part of our export markets, GDP this year is projected to decline by over 3%

Our position as a small, open economy means that we attract a high degree of international attention, particularly from the markets on which we are increasingly dependent for borrowing because of our budgetary position. These markets need to have confidence that we will take the necessary budgetary measures to restore the public finances to a sustainable footing. We cannot look outward for solutions. The primary source of our recovery must be found from within. We will have to adjust our cost base, improve our competitiveness, restore order to the public finances and revitalise the Irish economy.

The addendum to the stability programme update, published on 9 January last, forecast total tax receipts in 2009 of approximately €37 billion. However, in light of the continuing weakness in the Exchequer returns, my Department now anticipates that there could be a shortfall of up to €3 billion on this figure. This would mean that only €34 billion in tax receipts would be collected in 2009, representing a year on year decline of over 16%.

Additional information not given on the floor of the House.

In light of this, the Government decided to announce further measures to stabilise the budgetary situation. This will involve the introduction of additional taxation and expenditure measures in 2009 to address the continued deterioration in the public finances. The supplementary budget will be presented to the Dáil on 7 of April and will set out a multi-annual plan to restore stability to the public finances. The scale of the challenge we face means that all options must now be on the table, including action on both current and capital expenditure, as well as revenue raising measures.

The Government has already taken significant action to restore stability to the public finances and the supplementary budget will continue this process. Taking action now will ensure that confidence in our public finances can be restored and that we are positioned to take advantage of a recovery in the international situation when it occurs.

As the Taoiseach stated yesterday, in formulating the supplementary budget in the context of what is best for the economy, the Government will seek to be as close as possible to the general Government deficit target of 9.5% of GDP. Regarding the details of what will be presented in the supplementary budget, it is not the usual practice to speculate in advance on the content of any budget and I do not propose to deviate from this practice now.

However, the Government has sought to engage all parties in our efforts to address the difficulties in the public finances. With this in mind I have made my Department available to the Opposition on an unprecedented scale by arranging for officials to brief the main Opposition spokespersons on the latest available figures and on the emerging position. The Opposition have also been asked to submit any proposals it may have to the Department of Finance for costing by officials. I am open to considering what further information that can be made available can be put into the public domain in advance of the supplementary budget.

In that context, I have noted that during this weeks' pre-budget debate Deputy Bruton outlined proposals on dealing with the structural deficit. I believe that there is some common ground between us and I would be happy to engage further with him in the next week.

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