Dáil debates

Wednesday, 10 June 2009

Confidence in Government: Motion (resumed)

 

5:00 am

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)

The scope for further income tax increases is limited if we are not to dampen recovery; therefore, the bulk of the future budgetary adjustment will need to fall on the expenditure side. This task will not be easy, but the Government will not shirk its responsibilities.

Sound public finances will provide the backdrop for renewed export-led growth in the economy. As we regain international competitiveness through cost reductions, businesses will find themselves needing to increase employment and investment to expand capacity. This adjustment in cost competitiveness is already occurring. The European Commission projects that our unit labour costs will decline by 4% this year compared with a 3% increase across the euro area on average. This translates into a 7% improvement in competitiveness. Public services and their reform must measure this improvement. Deputies must focus on this factor because the House is responsible for the public finances and members of the Government are collectively responsible to the House for them. The containment of costs and the reform of the public service must play a crucial part in improving basic competitiveness. Prices of consumer goods and services are dropping at a remarkable rate, cushioning the effect of falling wage levels on households' spending power. Interest rate cuts have injected significant amounts of money into home owners' pockets, the people who are obligated to make mortgage repayments.

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