Brian Lenihan Jnr (Dublin West, Fianna Fail)

I will try to deal with the questions instead of delivering a conclusion, as it will allow me to be of as much assistance to the House as I can. Deputy Rabbitte asked how much freedom the next Government will have in light of this agreement. It will have as much freedom as I have had since my appointment as Minister for Finance in May 2008. It is important to remember that, when one is borrowing at unsustainable levels, one must take certain decisions in the public interest, decisions which might not be popular in the political sense but are essential for the longer-term interests of the country. The practical options open to the country during the next four years would not have been any different were funding available to us in the markets than were we to adopt the programme. When the markets began to turn nasty, as they did in September, the Government immediately decided to formulate a four year plan. That plan was drawn up by the Government without any external advice. When external advisers arrived later in the year, they agreed our programme was the correct one. Even were market finance available to us, the next Government could not do anything substantially different from what is contained within the programme.

Of course there are differences of detail. As the Deputy's party has advocated, for example, it is open for the next Government to lean more heavily on the taxation side, although all international evidence suggests that attempts to make a correction through an excessive reliance on taxation are doomed to failure. The Labour Party proposal is for a 50:50 split between taxation and expenditure. This differs from Sinn Féin's proposal to do it all through taxation, which would be a recipe for a total economic collapse. The Labour Party's proposal runs contrary to most of the advice and literature on how to make a correction.

An idea advocated by some, although not all, in Fine Gael is that the bulk or an overwhelming preponderance of the correction should be done through expenditure reductions. Deputy Varadkar cited proportions of either 3:1 or 4:1. The idea that one could do this without an excessive reliance on taxation in the context of a low tax economy is questionable. A balance must be struck.

I do not accept that the freedom of the Government commercially speaking will be any greater or lesser as a result of this agreement. Arguably it is greater, since a security of funding has been provided promptly after a negotiation that took place under conditions in which the State was pre-funded for a certain period. It would have been most unwise for the Government to have allowed Ireland to drift into Greece's position, that is, heading into a funding wall next April or May. This is what the Greek Government opted to do. It dissolved its parliament in November, refused to face realities and left its socialist successors with the difficulty of addressing the country's problems. We opted not to do that. We did not believe it would have been in our country's best interests, nor did we believe that negotiating terms under those conditions would have resulted in a better conclusion than negotiating terms now.

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