Michael McCarthy (Cork South West, Labour)

I welcome the debate on this important and sensitive issue in the week leading up to the budget. We are discussing it against the backdrop of the horrific circumstances facing not only Ireland but the European Union as a whole. One does not have to be an expert in economics to recognise that the situation has been deteriorating rapidly in recent days. This Government came to power in February with a strong mandate and is doing its best with very limited resources. That is the context in which the budget is being brought forward. The budgetary process itself has been very transparent, with information made available on several aspects which traditionally would have remained a mystery until the Minister arrived on the plinth, briefcase in hand.

The single greatest loss to this country in the last 100 years was the loss of our economic sovereignty. On 28 November 1920, Kilmichael in my county became a focal point of the War of Independence. On 28 November last year the previous Government ceded our economic sovereignty. Not only was this utterly humiliating but it had huge consequence for the State and its citizens. That is the historical context in which we find ourselves.

We are borrowing €1.25 billion every month in order to meet our outgoings, exclusive of banking-related costs. Now the very existence of the euro is being called into question. Figures today show that the unemployment rate in the eurozone has risen to an all-time high of 10.3%, equating to 16.3 million women and men out of work. Central banks around the word have this afternoon moved to ease market strains by providing cheaper dollar liquidity to European banks. However, the next ten days will prove vital in terms of an effective conclusion to Europe's response to the crisis.

This stark reality brings into sharp focus the dire economic context in which tonight's debate is taking place. Much has been said and will be said about the Labour Party's participation in this Administration, particularly in the run-up to the budget. There are no easy options, no low-hanging fruit. I am confident that our presence in government, along with our colleagues in Fine Gael, will ensure this budget, tough as it will be, is also fair. The last three budgets certainly were not. The overarching ethos must be job creation and the protection of the most vulnerable and least well-off in our society. When delegates of the Labour Party met in O'Reilly Hall in University College Dublin and voted to go into government last March, we knew full well that difficult decisions lay ahead. This is not a popularity contest. It is about restoring economic sovereignty and restoring Ireland's reputation abroad, which was severely tarnished by the outgoing Administration.

It should be acknowledged that we have had several important achievements since coming into office, not least of which was the restoration of the minimum wage. Of all the poor decisions taken by the previous Government, one of the worst was the €1 reduction in the minimum wage, which amounted to an attack on the most vulnerable and least well-off. The restoration of the minimum wage was one of the first tasks this Government set for itself. While by no means an economic panacea, it is an indication of the Government's commitment to the least well-off. We also reduced the pay of the Taoiseach and Ministers, abolished State cars and State drivers, reduced retirement packages for Secretaries General, introduced a public sector pay ceiling of €200,000, reduced the number of Oireachtas committees, abolished the €10,000 allowance for Vice Chairmen of committees, halved the €20,000 allowance for committee Chairman, and held a referendum and subsequently published legislation to allow for reductions in judges' pay. Many of these measures will not of themselves get us out of the hole we are in. However, for the benefit of an informed debate, it is important that they be acknowledged.

The bottom line is that while the Department of Social Protection spent some €20 billion last year, the State took in a total of €34 billion. That is wholly unsustainable, which is not to say that I do not join colleagues in hoping that child benefit will not be reduced next week. It is incumbent on all of us to be proactive and constructive in our contributions to the debate on this and other issues. We are all very fond of Deputy Mary Lou McDonald on this side of the House. She is a great colleague and a fine politician. However, her proposal that all earnings in excess of €100,000 be taxed at 100% is unrealistic. What is needed in this debate are proactive, constructive policies which serve to ensure that the least well-off do not suffer disproportionately in the budget.

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