Brian Cowen (Laois-Offaly, Fianna Fail)

From the Government's point of view, the task we have had to undertake, in the context of the economic situation our country and others face, has meant we have had to involve ourselves in expenditure cuts totalling over €4.3 billion. That is 3% of GNP, a reduction greater than that taken by any other country in Europe. We have also had to increase taxes, a measure totalling €3.8 billion. I accept that level of adjustment of over €8 billion is an imposition on the people. It is, however, a necessary response, a balance between expenditure cuts and taxation measures, given the scale of the problems we face and the need to provide a sustainable path forward. This week the European Commission acknowledged the courageous efforts made by this Government to create a sustainable path for our public finances.

The basic point I have been making in this House for some time is that the rectification of our public finance position is an absolute prerequisite to economic recovery. The critique outlined by Deputy Kenny, in which he criticises the fact that expenditure savings had to be made and tax increases considered and implemented, flies in the face of that basic fact about recovery. He contends, as do his spokespersons, that the Government has not done enough with further expenditure savings. Yet he does not identify those further savings, in addition to ones we have already identified for this current year, which he feels are necessary or appropriate.

Deputy Kenny also seeks to contend that tax increases are not necessary to the corrective measures that have to be taken. We have outlined the plans in overall expenditure cuts and taxation measures that have to be considered for this year, for next year and the year after. We are also waiting on the Commission on Taxation to give a considered view of all the measures that the Government intends introducing in the further budgets.

The measures taken by this Government in the past 12 months have been very significant, not only in respect of the public finances but other major issues to deal with the financial crisis such as the banking crisis, etc. All of these measures are part of an overall plan to bring balance back to the public finances over a reasonable timescale. We have the agreement of the social partners in that task, as shown in the framework we agreed with them in January this year. They accept, on the basis of common analysis and the NESC report, that as a prerequisite to economic recovery we must make these changes, corrections and adjustments.

In the meantime, Deputy Kenny seeks to obtain an opportunity to exploit this for the popular mood. Of course these measures are unpopular in the short term. However, they are necessary in the longer term and in the interests of the country.

See this speech in context