Seán Haughey (Dublin North Central, Fianna Fail)

In that regard, the 2010 budget forecast the stabilisation of the deficit in 2010, notwithstanding declining economic activity. Many of these measures have been difficult and painful but we are committed to reducing the general Government deficit to under 3% of GDP by 2014.

The strategy behind the Government's medium-term fiscal plan is based on two interrelated areas: inspiring confidence, both internationally and domestically, that the deterioration in the public finances has been arrested; and restoring Government expenditures and revenues to more sustainable levels, thus ensuring that debt does not rise to unsustainable levels. The current level of borrowing is not a sustainable long-term solution as increased borrowing in turn leads to high interest costs and ultimately represents deferred taxation.

Recent market developments once again underline the importance of continuing to take firm and decisive action to restore stability to the public finances. This will in turn help return the economy to a sustainable growth path. Over the period 2011 to 2014, it is expected that growth will return to the economy on an annual basis and that growth in tax revenues will resume. Further adjustments in the fiscal position will be required over the coming years to restore the public finances to a sustainable position. Challenges and difficult choices remain but we have embarked upon the correct path and that has been recognised and commended internationally.

There are emerging indications that the economy is beginning to stabilise, with macroeconomic and fiscal data published in recent months generally in line with expectations. A consensus is developing among commentators that the economy is likely to begin growing again in the second half of the year and re-establish itself on a full-year basis in 2011. This perspective is broadly shared by the Department of Finance.

Competitiveness is improving and significant progress has been made to return the public finances to a sustainable footing. It is notable that during these challenging times, a broad consensus has prevailed regarding the action needed to preserve our hard-earned economic and social progress. Our economy and workforce are resilient and across the wider economy we are seeing a number of necessary adjustments which will help restore our cost competitiveness. In particular, there is a decline in the general price level and there is evidence of an improvement in labour costs. These developments will help position us to take advantage of an improving outlook for the international economy and we can expect to see domestic business and consumer confidence returning. This will ultimately translate into increased economic activity and increased employment opportunities.

Over the past number of decades there has been sustained investment in our greatest resource, our highly educated and skilled workforce. This will enhance our potential to grow as future economic development will be focussed on harnessing emerging opportunities in knowledge-intensive sectors. This is being underpinned by initiatives such as the establishment of the innovation task force and the pursuit of policies to facilitate the development of a smart and green economy. We have also made significant investment in areas such as productive infrastructure, which will enhance our competitiveness and capacity to grow. A high level of capital investment is being maintained and for 2010 it will be 5% of GNP, twice the EU average.

The air travel tax represents just one of the measures the Government has taken in an effort to broaden the tax base and shore up the gap that has emerged between revenues and expenditure which is simply unsustainable. The Government accepts that the airline industry, along with other industries within the transport sector and beyond, continues to go through a difficult trading period. However, the Government does not accept that the decline in passenger numbers experienced by the airports in the State is due to the introduction of the air travel tax.

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