Eamon Gilmore (Dún Laoghaire, Labour)

This budget screws middle-income working families and does little or nothing for jobs. Take a couple earning a salary of €45,000 each. The budget will cost them €900 on the income levy on top of the €900 they started paying in January, €1,800 on the increased health levy, €1,000 by losing the early childhood payment for their two young children, €900 by losing their mortgage interest relief on their €250,000 mortgage, on top of the €300 cut in January, an extra €130 on the price of diesel to travel to and from work and an extra €91 if one of them smokes, on top of €182 in January, not to mention extra costs of insurance on cars and mortgages. If they are public servants, all that comes on top of the so-called pension levy taken out of their pay packets last March. In all, this couple, on €45,000 each will be down €9,400 since January if they are both public servants, €7,800 if one of them works for the State and one for the private sector and €6,212 if they both work in the private sector - in which case, they may already have had their pay reduced and their jobs may be at imminent risk.

This is a budget on a timer - we will not feel its full impact until we get our pay packets in May, pay our insurance or make our next tax return. That is not all, because there is more to come. The Minister for Finance signalled yesterday taxes will go up again in the next budget, that we may be facing a tax on the family home and that charges for services may be increased.

The only concession to the concept of fairness in yesterday's budget is the perverse idea that if one screws the working middle class, one should also screw the poor. The Minister takes the Christmas bonus off pensioners and others on social welfare and those on the minimum wage are brought into the tax net.

This budget should have been about jobs, but it is not. It should have been fair, but it is not. It should have charted a course for economic recovery and a better future. What it does is make working families pay for the failures of Fianna Fáil. The budget makes working families pay for 12 years of bad governance and economic mismanagement by Fianna Fáil. I and the Labour Party can say that with some authority, because for the past decade or more we warned about the direction in which Fianna Fáíl was taking the country and the economy.

Ten years ago, the Labour Party published a document on housing prepared by economics professor, Dr. P. J. Drudy of Trinity College Dublin, which warned about rising house prices, land speculation and increased borrowing. Fianna Fáil would not listen then and yesterday it took away mortgage interest relief from the very people who bought their houses at inflated prices and who now find themselves in negative equity. We brought before this House a Bill to end land speculation and to have the State acquire development land at existing use values. Fianna Fáil voted it down and now the taxpayer has to acquire this land anyway when it is of no immediate value and we have to guarantee and subsidise the banks which lent the money for the speculative purchases in the first place.

Last year, when we, from these Opposition benches could see the job losses beginning, business slowing down, credit dwindling and the economy turning, Fianna Fáil with all the resources and information of the State available to it, refused to see the economy weakening and spent the first part of the year making excuses for Deputy Bertie Ahern and changing leaders. When last summer, we wanted to stay here to debate the economy, the Government closed down the Dáil and thought it was business as usual. In September, when the Labour Party was arguing for a national recovery plan, Fianna Fáil thought that all it had to do was to look tough and bring forward the budget but it ended up getting the budget figures and strategy massively wrong.

When, on 30 September last, it should have nationalised Anglo Irish Bank, and probably Irish Nationwide as well, and cleared out Irish banking the Government gave them all a blanket taxpayers' guarantee from which we can not now escape, and ended up having to nationalise one of them while putting €7 billion into two more. In yesterday's Supplementary Budget Statement it came forward with a plan to buy up the €80 billion of bad debts and bad assets. Even in recent weeks the Government continued to insist in the face of declining Exchequer figures that there was no need for a second budget.

This budget is an abject admission of economic failure by Fianna Fáil. The Minister could not bring himself to say it yesterday because for Fianna Fáil "sorry" is always the hardest word. This is the direct result of its gross mismanagement and what happens when a country is run on Galway tent economics. It was a perfect circle. Fianna Fáil's friends in the know speculated on land, its councillors rezoned it, its friends in the banks gave them loans to finance it, the Government provided tax reliefs on it and the working people who paid for all this with excessive mortgages are now going to have to pay for it all over again, now that the economy has come crashing down.

Some will no doubt say that I am engaging in a blame game and that there is no point in that now. There is a point to it because if we can not now identify clearly those who caused the economic mess we are in, and if as a country we do not determine that they will never be let do it again, we are doomed to repeat the mistake for another generation.

The pain which every household in this country is now enduring must be for a better future rather than a return to the old ways of Fianna Fáil. I do not blame Fianna Fáil only for this bad budget but also for wrecking the economy and causing the circumstances which led to this situation. There is no easy way out of this recession and taxes have been increasing for some time. I reject the Taoiseach's assertion that the Opposition does not acknowledge the part taxes must play in the solution. The Labour Party has consistently made the argument that taxation unfortunately has to be part of the solution because that is where Fianna Fáil has brought us.

The people I meet up and down the country are angry but they are ready and willing to contribute to a solution. They demand that the solution will be fair and will be for a purpose. Those who have the most must pay the most and those who caused this mess should be held accountable. However, the culture of greed built up by Fianna Fáil is so strong that even with the economy in such dire straits, the club does not want to pay. The restriction on landlord relief is less than €100 million whereas €500 million could have been found. Residential properties are hit but commercial properties are not. A promise was given to close off the property reliefs which allow the rich to pay little or no tax but we know the value of a Fianna Fáil promise. After all the spin and leaks, nothing was done about tax exiles. The high rolling pensions were again left untouched. People who have accumulated tens of millions of euro in pension funds with the assistance of tax reliefs have not been asked to contribute.

As always, the people who pay are those who work hard and pay for everything. Some will pay for this budget out of their pay pockets but others will pay with their jobs. This budget will destroy jobs. It will deliver a fiscal shock to the economy that will put more people onto the dole. The Government is proposing to take 2% of GDP out of the economy in nine months on top of the cuts delivered in the October budget and the subsequent February package. A cumulative fiscal shock of 5% of GDP is being delivered to an economy that is contracting by 8%. I know it is not popular to say this. There is appetite abroad to deal with this issue quickly and firmly and I understand that view but the laws of economics do not evaporate merely because we wish them away. This budget will drive more people onto the dole, destroy more viable businesses and delay recovery.

That is not to say that the public finances can be ignored. In an ideal world we would not have to take these actions in the middle of a recession but that is not possible. We needed a well judged budget and real action on the banking crisis but we got a knee-jerk budget and an even bigger bill from the banks landing at the door of taxpayers.

As a country, we have to satisfy the international markets that Ireland is a good risk. In preparing Labour's pre-budget submission, we took the time to consult the NTMA, which was clear in response to our questions that there is no risk of Ireland defaulting on its debt. We have to get real about that because we risk talking the country down in this area. If we want to restore our reputation abroad, we must start by clearing out the banks rather than savaging the economy. Getting the sums wrong in January is not an excuse for destroying jobs in April.

The cuts in the capital programme will have direct and indirect impacts on employment. Construction costs are collapsing across the country but instead of grasping this opportunity to build schools at low cost so that we can serve our children for decades to come, the school building programme has been cut. Comparing the figures in the budget to those in the January statement, €12 billion has been taken out of the capital programme over five years. That is an enormous cut. I acknowledge that a lot of this saving can be achieved through lower tender prices but it means that the NDP is dead in the water. In fact, the capital programme is a complete shambles. The Department of Finance was not even able to provide the Opposition with a detailed breakdown of the projects it is financing. This is a €7 billion programme with no real management.

I have to hand it to the Minister that he knows how to tick boxes, however. The Labour Party has proposed a range of initiatives on jobs and training and he has tried to tick these boxes. Last November, we proposed an earn and learn scheme and, lo and behold, here it is. That is great news until one reads the fine print and discovers that there are only 277 places on the scheme. Labour has proposed a graduate job placement scheme and, again, this is set out in the budget. However, there are only 2,000 places for 26,000 graduates.

This budget is purely a book keeping exercise. It shows no serious intent to deal with the jobs issue. I remind the Taoiseach that every single person who joins the queue of the unemployed costs the Exchequer more than €20,000 in lost revenues and higher expenditure. We should use that money to create opportunities rather than close them off but instead of showing imagination or creativity, all we have gotten from this Government is lip-service. The budget package contains welcome initiatives but the scale of the response shows no realisation of the scale of the problem.

This is the second time in a generation that Fianna Fáil has brought this country to bankruptcy. Its supporters and members may have swopped the mohair suits for Armani but they are the same bunch of charlatans and cronies who take the profits and none of the pain. However, the same people will be asked to pay again. The people who left Ireland in their droves in the 1980s and came back during the boom of the 1990s will pay again. The parents who waved them off and went home in tears will pay again. The people who lived through the 1980s and thought they had left all of that behind will see their children graduate to unemployment. They placed their trust in Fianna Fáil and they have been betrayed. The bankers will be protected, the tax fugitives will be exonerated and the club will stay intact.

Nobody claims that solving the banking crisis will be easy. The Labour Party has acknowledged that and we have set out eight principles that should be applied to dealing with the banking crisis. The bad loans will have to be quarantined and the balance sheets will have to be cleaned up to get credit flowing again to businesses and families. However, this must be done in a way that protects the taxpayer and it has to be accompanied by regime change in the banks. The budget sets out a proposal for the taxpayer to assume responsibility for €80 billion in bad debts. That is a staggering sum.

Yesterday I received another lecture from the Taoiseach about the banking guarantee. Now we see that the cost of the guarantee will be €80 to €90 billion in debt being taken on by the State without any clarity on how the taxpayer will be protected. The bondholders cannot take a hit because they are guaranteed. No other country has guaranteed dated subordinated debt but no other country is run by Fianna Fáil. This assets management scheme presents the prospect of huge losses for the taxpayer. The question and answer sheet that accompanies it is vague and features that favourite phrase of Government, "commercial confidentiality".

How are we to know that the developers whose loans are being transferred to the banks will be dealt with on a strictly commercial basis? How are we to know that the friends of the friends will not be protected? We have the assurance of the same Minister who was going deep into the banking system but did not bother to read the PricewaterhouseCoopers report. In the middle of his Supplementary Budget Statement, he quietly slipped out the news that the guarantee is to be extended for some loans for up to five years. This may have been inevitable but it is a far cry from what was claimed on the night the guarantee was made, when the Taoiseach assured us it would create no costs for the taxpayer. That was €7 billion ago.

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