Brian Cowen (Laois-Offaly, Fianna Fail)

It has also been accepted by the social partners as the way forward. Deputy Quinn clearly has something to say about that but the framework agreed at the end of January gets the agreement of social partnership on the need to make this adjustment to our public finance position as a prerequisite to economic recovery. If the Deputy has a problem with that point, he is at variance with the facts. The policies being pursued are the policies which have to be proceeded with because they are the means by which we will reduce expenditure, raise some taxation and continue to find cuts in our public capital programme, which will be less in volume terms although similar in output terms.

The country can return to growth and we are seeking to build international confidence in our approach to ensure that, as a small open economy, we can continue to borrow and trade during this unprecedented period of international turbulence. In April's supplementary budget, the Government outlined a programme for restoring stability to the public finances for the period until 2013. That has set a clear pathway to a general Government deficit of below 3% by 2013 through a combination of taxation increases and expenditure reductions over that period. We have made a significant start while outlining how we will achieve further adjustments of $4 billion in 2009 and 2010. The greater part of the adjustment will be borne by expenditure reductions and informed by the ongoing work of the special group in public service numbers and expenditure programmes. The Commission on Taxation, which is to report in July, will inform Government choices and considerations on how we redesign our tax system for a sustainable way forward in terms of revenues which match the expenditure programmes we put in place. The Government's approach has struck a careful balance between international credibility in Ireland's fiscal position and borrowing to maximise economic activity in the short-term. Our strategy has been broadly endorsed by independent commentators at home and abroad.

The issue that has dominated economic debate in recent times has been the banking system. The Government's approach to the unprecedented crisis has been structured and considered. It is clear that we have to deal with this situation as we have been dealing with it. We sought advice and counsel from qualified sources and have at all times tried to protect depositors in Irish banks, the Irish financial system and Irish taxpayers. We sought to ensure the flow of credit, which is vital to the real economy. We have acted decisively to guarantee until September 2010 the liabilities of relevant institutions in order to ensure banks could maintain their normal liquidity positions in interbank lending and debt markets. The Minister for Finance, as part of the supplementary budget, has announced his intention to bring the guarantee into line with the way guarantees have evolved throughout Europe. The vast majority of guarantee schemes introduced by other EU states covered debt instruments with longer maturity terms of up to five years. We intend to introduce a scheme for a guarantee by the Minister of eligible debt securities with a maximum maturity of five years. That scheme will be laid before the Houses of the Oireachtas for approval in accordance with the provisions of the Credit Institutions (Financial Support) Act 2008.

We have also seen the establishment of the National Asset Management Agency. In order to strengthen the funding position of Irish banks and ensure the flow of credit to the real economy, the Government is conscious of the need to address the issue of impaired assets, in particular, specific asset classes currently perceived as carrying a higher than average risk in an Irish context which generally involve lending for land and property development. Strengthening the banks' balance sheets will considerably reduce uncertainty over bad debts and, as a consequence, ensure the flow of credit on a commercial basis to the real economy.

On the major issue of creating financial stability as a prerequisite for economic growth and ensuring that our public finances are brought into balance over the period until 2013, it is interesting to note that external observers are commenting favourably on the direction of Government policy. It seems in this House, however, that no credit is to be given to the Government. If that is part of the political game playing that takes place, that is fine and we can continue to debate it in these terms. However, the fact of the matter is that the macro-economic adjustment we are undertaking has been significant in its first year, is greater than that of any other Government in Europe and will continue on the basis of the plans which have been approved by the European Commission. Devising a mechanism like NAMA as a means of restoring confidence in our banking system is a precondition to restoring real economic growth as the external environment improves. That is something the Government defends and is a reason why one should maintain confidence in this Administration. The plan is in place and we have made it clear that we will proceed with whatever decisions are necessary to achieve the targets we have set in regard to it. This is the only way we can maintain credibility externally in the policies being implemented by the Government as a means of returning to a sustainable path in the future and the only way we can bring growth back to the economy.

There has been much talk about jobs, and rightly so. Many people are losing their jobs in this economy. Thankfully, even in the present circumstances 1.8 million people are working as we speak. The unfortunate reality this year is that employment will decrease for the first time in many years in terms of total numbers employed but it is also important to say that in historic terms many more people are working now compared to five, ten or 15 years ago because of the level of economic activity we are generating even in these recessionary times. The numbers on the live register, which have unfortunately increased to 11.8% according to last Friday's figures, are clearly a matter for concern. The only way we can return jobs to our economy is by restoring growth.

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