Conor Lenihan (Dublin South West, Fianna Fail)

We face an extraordinary economic and financial crisis of the like that no one in the House and no one in the elected parliaments throughout Europe and the world has ever seen before. We are living through especially difficult times. Were Fine Gael or Labour in Government today rather the Fianna Fáil and the Green Party they too would encounter the same difficult challenges.

I refer especially to the difficulties we have faced in the past year. It has been very hard to make ready public opinion for the extraordinary events of the past year. No one could have forecast events. I realise some Members opposite suggested there were predictions or warnings. However, such warnings are two-a-penny at a time of plenty. Some commentators seem to make an art form out of warning and preaching doom and gloom during the good times. Then when calamity occurs in the international financial system such people are immediately up to tell us, "I told you so". However, very few people of any repute told us or warned us of what was about to take place in the global economy. We must be clear regarding the origins of our current difficulties. They lie in the banking system and especially in the banking system of the greatest and strongest market economy on earth, namely, the United States of America. It was there where the difficulties began. To this day the United States of America represents some 35% of the global economy. It is no coincidence or accident that such an economy would encounter the difficulties which have arisen there as a result of sub-prime mortgage lending and incorrect decisions made concerning which banks to recapitalise. Mistakes have been made at various points in this very difficult journey. Mistakes have been made by Governments throughout the world including that of Ireland. We have tried to learn from the mistakes made elsewhere and from the mistakes of the Federal Reserve and other United States authorities in their attempts to cope with the very serious crisis as it unfolded.

There is no doubt the response of the Government has not been perfect, but were Fine Gael, Labour or any of the Members opposite in Government they too would make mistakes and would find it very difficult to introduce policies popular with the public. There are few ways of devising popular policies which essentially take money from people. It is very difficult to sell hard times. The Minister of State, Deputy Martin Mansergh, can testify to the extent of that difficulty as he worked as an adviser to the former Taoiseach, Mr. Haughey, in the 1980s when he was paring back public spending in a radical manner. Let no one here say those decisions were popular. Mr. Haughey embarked on that journey and within a few years he lost his position as Taoiseach.

These are not easy decisions to make. There is a great difficulty when one takes more money from the public by way of further taxation, by lifting thresholds, or by curtailing schemes and grant systems which have been taken for granted for a ten year period of extraordinary prosperity. It is very difficult when one suddenly applies the brakes to public spending, as we have done, and as we did in a smaller fashion following the 2002 election. The then Minister for Finance, Mr. McCreevy, applied the brakes because of the threatened downturn which occurred or was feared.

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