Willie O'Dea (Limerick City, Fianna Fail)

The point about it is that he was found deliberately telling lies to the people.

When the Government introduced its jobs initiative last spring, it had only just taken office. At the time, I took a constructive approach and I think it will be judged as such. The Government had only just been elected and I wished them a fair wind. I had reservations on how they were going about job creation, but nevertheless I was prepared to give them a chance. I praised what I agreed with in their approach and said I hoped it would work out because, God knows, it is in all our interests that this country should be able to create jobs thus enabling our people to work again and have a good standard of living here. At the time, the Government thanked me for my constructive approach and said they were willing to be judged on the results. We are now beginning to see the results but, unfortunately, some of my worst fears have been realised.

The objective of a jobs strategy it to reduce unemployment but since that strategy was introduced unemployment has risen by almost 10,000. That is not counting the increased number of people who have gone on the various job training schemes the Government has set up. Nor does it include the accelerated rate of emigration at the rate of 100 per day, according to all the anecdotal evidence. Some bodies are predicting that emigration could rise to as much as 200 a day over the next 12 months. It would appear therefore that the Government's jobs strategy has flopped faster than a fat man chasing a moving vehicle. The Government's jobs strategy is a miserable, abject and pitiable failure. That has now been demonstrated beyond any shadow of doubt by the figures we have from the Central Statistics Office.

Do not take my word for it. Mr. Mark Fielding, the CEO of ISME, represents the small and medium business sector employing 665,000 people. In a statement issued on 24 November, after the Government had announced its micro-credit scheme for the 129th time, Mr. Fielding said:

This Government needs to start taking its role more seriously and desist from participating in public relations stunts. What is required is less waffle, more action.

That quotation is not from me or other members of the Opposition, it is from someone representing 665,000 people in the small business sector. The clue to the Government's strategy - or, rather, the lack of it - can be found by comparing the Fine Gael and Labour Party election manifestos. Everyone, with the possible exception of Sinn Féin - I cannot speak for them - agrees with the debt reduction strategy that has been imposed on us from outside. We have choices, however, as to how we reduce the deficit by balancing tax increases against expenditure cuts. The Fine Gael election manifesto proposed a ratio of 75:25 for expenditure cuts and tax increases.

The Labour manifesto proposed a 50:50 ratio, with 50% coming from expenditure cuts and 50% from raised taxes. The result, believe it or not, is a division of 62.5% coming from expenditure cuts and 37.5% coming from taxes, an almost exact splitting of the difference. In other words, it is a squalid compromise. Instead of any coherent strategy, what we have is a strategy that can be agreed by a majority of backbenchers on both sides. It is not budgeting by strategy but budgeting by horse trading. One would find no more coherence in the Government strategy than one would in a bunch of fireworks.

In my praise for the Government's jobs initiative, I should have remembered the words of Jonathan Swift, who said "Expect nothing and you will not be disappointed." We have a compromise rather than a coherent strategy at a time when the country is in great peril. Deputies do not have to take my word for it as The Irish Times, no friend of Fianna Fáil, had an editorial yesterday stating "the eventual [budgetary] package had more to do with conflicting ministerial and backbench demands than economic vision." It went on to describe the budget as "underwhelming" with "little or no sense of unified vision" and so on. Yesterday, the Irish Independent described the budget as a "mishmash" of measures to which the two Government partners could be persuaded rather than a coherent strategy. Deputies do not need to take my word on the matter.

I have heard my constituency colleague, Deputy Noonan, when on this side of the House describe various budgets as pantomime horses and such. This is not even a pantomime horse and it would be an exaggeration to describe it as a pantomime donkey, with the two ends ungainly parcelled, sticking out with a vacuum in the middle. If the Government had a strategy - it argues that job creation is central to a strategy - how can we explain such wonderful job creation wheezes as the 2% increase in the VAT rate? In introducing the jobs initiative earlier this year, the Government stated that the panacea would be a reduction in VAT. We are told this is a job creation budget but central to revenue raising measures is an increase in VAT. Was the Government wrong then or is it wrong now? The two strategies contradict each other directly.

Conventional wisdom would indicate that consumption taxes are less destructive of employment than direct raising of income taxes, and I agree with that. The circumstances of each case must be considered separately. I listened to the Taoiseach this morning but I do not believe he fully comprehends this matter. The export-led growth strategy is beginning to falter seriously, and all one must do to see evidence of it is consider the diminishing trade balance. A couple of years ago the trade balance of exports over imports was 52% but it decreased this year to approximately 4.5%, which is a third of what was provided for at the start of the year. The export boom is beginning to peter out.

There has never been a time in our history when it has been more vital to stimulate the domestic Irish economy. Retail sales have fallen for 44 successive months, and one would imagine this is hardly the time to impose a hike of 2% in the VAT rate. Not only is this taxation strategy economically illiterate in Ireland's current financial circumstances, it is also socially unjust. There are many people on social welfare or on very low incomes, who do not have a taxable income and cannot avoid paying VAT. By definition, it is a regressive tax, and the poorer a person, the greater the percentage of income paid in indirect tax. That is an economic reality that is widely recognised.

This time last year the current Minister for Social Protection, Deputy Joan Burton, when speaking from the Opposition benches rejoiced in the fact that the then Minister for Finance, the late Mr. Brian Lenihan, had rowed back on an earlier budgetary strategy. She said it was "with his tail between his legs" that he removed the 0.5% VAT increase which she had described as the "single most disastrous action he took in the 2009 budget." It was a disastrous and Earth-shattering mistake for the late Mr. Brian Lenihan to increase VAT from 21% to 21.5% but there is now no problem in increasing VAT from 21% to 23%. That is raising hypocrisy to the level of a crusade.

The Sunday Business Post, which is an objective observer, stated on 4 December that the decision by the Government to increase VAT smacks of a calculation about the impact of income taxes on electoral fortunes rather than a coherent plan to revive the economy. That newspaper has no axe to grind. The Taoiseach recently suggested there was no difference in the choice of increasing income taxes and increasing consumption taxes. He suggested that hikes in VAT would give people more choice. I know the Taoiseach personally and he has always had his feet on the ground since coming to the House. I am sorry to see that after nine months in office, he is suffering from a degree of delusion that would make the great Walter Mitty look unimaginative.

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