Leo Varadkar (Dublin West, Fine Gael)

I do not accept that the measures introduced to boost tourism have not increased the number of jobs. The Restaurants Association of Ireland has indicated an increase in job numbers and we will see from the quarterly results whether job losses have stabilised or increased in the tourism and leisure sector. The ESRI report acknowledges that reducing VAT has increased the number of tourists visiting the State, but the revenue lost, in terms of the reduced VAT intake, is not compensated for in the additional revenue that has come in from those tourists. The ESRI does not comment on employment. That remains to be seen. However, with a 10% increase in tourist numbers this year, I would at least expect the number of people employed in the sector to stabilise or increase. I certainly hope it will increase next year.

As regards the capital budget, the announcements will be made tomorrow. Everyone on the Government benches understands that cutting spending and increasing taxes are not good for the economy. We are not stupid. We realise that increasing taxes and cutting spending will further depress the economy and make it more difficult to achieve growth and employment growth. The reason we are doing it is not because we think this is the way we will solve the country's problems but that we cannot afford to finance the State. We have a primary deficit of €12 billion, which is the gap between what we raise in tax and revenue and what we spend. That has nothing to do with interest repayments on debt, the banks or bondholders. It is simply our primary deficit and it must be addressed. We must work out the best way to address it. In that context, one must choose between current spending cuts, capital cuts and tax increases. The Government has taken the view that it wishes to honour its commitments not to increase taxes on work and not to cut social welfare rates as far as is practicable. It believes this is the most effective way to maintain demand in the economy as much as possible. Capital investment is a very expensive way to create jobs. The probable best way in which the Government can sustain employment is to try to keep wages up and taxes down and that is its priority.

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