Martin Mansergh (Tipperary South, Fianna Fail)

While capital investment is important, the severity of the deterioration in the public finances inevitably means there will be a significant delay in the delivery and completion of the national development plan. When we had the resources over the last ten years, it enabled us to go full speed ahead on improving many deficient aspects of our infrastructure. The completion of the national motorway network in particular will be one of the principal permanent legacies of the Celtic tiger era, but there have also been great improvements in public transport, including rail and the Luas. The cutbacks in maintenance need to be temporary if the investment and public safety are to be protected, and this applies to both road and rail.

The OPW has seen a 25% reduction in its nominal budget since last summer but the falling costs would have softened the impact of that to some degree enabling us to achieve more with less, for example in flood relief schemes. It has taken on additional functions such as responsibility for coastal flooding and the establishment of a national public procurement operations unit, on which the previous speaker, the Minister of State, Deputy McGuinness, spoke.

While there is a voluntary retirement scheme for over 50s in the budget for public servants and arrangement for more flexible working including unpaid leave, which have been cautiously welcomed by the public service unions, and there is some parallel with the voluntary redundancy scheme in the 1987-89 period, the preservation of jobs for those who have and need them has taken precedence over the preservation of income levels, which was the reason for the pension levy. The tax provisions for the budget are onerous but fair and can legitimately be described as highly progressive. All those above a minimum threshold contribute something, but those on higher incomes contribute more. It is not viable to maintain approximately 30% of the population entirely tax-free, although the small contributions asked at lower levels will be compensated for by the drop in the cost of living.

There is no doubt that the additional impositions will put a serious strain on family finances in very many cases, but at least most of those concerned are in jobs with reasonable incomes. The purpose is to protect all our futures and to hasten some recovery from which we will be in a position to benefit. We need to begin to get our economy and public finances on the road to convalescence and that is in the interests of the future protection of everybody in this society.

In the 1980s there were constant complaints about the limited contribution company and capital taxes were making to our economy. With the high level of activity and the reform of those taxes, both came to make a very important contribution to Revenue. The reliance on them has greatly diminished and alternative sources must be found. The marginal increase in capital gains tax to 25% will not seriously discourage such transaction activity from taking place but is an expression of social solidarity. With falling asset values, a lower and less overly generous approach to capital acquisitions tax with a higher rates and lower thresholds is justified. 4 o'clock

The NTMA was created about 20 years old and has proved to be of invaluable assistance in managing public debt and performing other challenging tasks given to it by Government. The management of the NAMA is probably its biggest challenge to date. Given the responsibility of the parent organisation for borrowing on markets abroad and the need in that context to maintain Ireland's creditworthiness, it has a keen interest in making a success of what will be a closely watched operation. As a sovereign country, we are able, in consultation with international agencies, to devise an innovative approach that addresses our problems. In this supplementary budget we are not simply imitating any other country but are trying to avoid approaches that would have a probability of creating even greater difficulties.

Politically, Governments in the 1980s had difficulty maintaining the support necessary to carry corrective measures. Two Governments fell in 1982 because of that and another coalition broke up at the beginning of 1987. With the benefit of a steady majority and solid partnership, the Government will provide the stability needed over a full term to carry us through to the other side without shirking necessary actions at any point along the line. The costly escapism of calls for elections or predictions of public disorder would not help anyone's situation. Policies sketched out in Opposition bear little resemblance to what any party would actually have to do in government.

As underscored by the Minister for Finance, part of getting back on track will involve affirmation of our willingness to be fully committed members of the European Union on the basis of a treaty negotiated and agreed by all EU Governments. We cannot expect to restore confidence in the Irish economy if serious question marks are allowed to remain about the future extent of our membership of the European Union. The European mainstream is the social market economy, not the socialist command economy nor, on the other hand, the lightly, regulated neo-liberalism which carried to extremes, has caused much of the current disaster. We need to manage the balance between Frankfurt and New York.

A United Irish patriot from a Tipperary family who subsequently became Attorney General of New York, Thomas Addis Emmet, told a secret committee of the old Irish Parliament in 1798, by way of justifying Ireland's dream of republican independence, "America is the best market in the world and Ireland the best situated country in Europe to trade with that market". That largely sums up our economic position today.

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