Brian Hayes (Dublin South West, Fine Gael)

I had the opportunity to listen to this debate in my office for approximately two hours this afternoon. There is a certain air of unreality about the debate - possibly on this side as much side as the other side - because we must all realise that no one owes us a living. The only way forward for the country over the coming years is to stabilise our public finances and get them back on an even keel so that the country can grow and develop again. That requires fundamental change not just in how we spend and raise money, but also in how we evaluate the appropriate way to spend money.

I looked back over a speech I gave in County Donegal in the summer. Some of the information I put on the public record then screams out in the context of this debate on the budget and the collapse in the public finances we have seen over the course of the three years. Of course the biggest scandal is that over the past three years 300,000 of our people have lost their jobs. The new inequality in this country is the fundamental difference between those people at work and those who cannot find work. The primary responsibility of the Government through the budget and in everything we do is to ensure we create the opportunities for those people to get back to work.

The most rapid rates of annual expenditure increase in the past decade at 18% and 14% happened in 2001 and 2006, respectively. There was 18% growth in public expenditure one year before the general election in 2002 and 14% growth in public expenditure one year before the general election in 2007. Those statistics highlight the great problem we face in this country. Collectively there is great responsibility on us all because no one shouted stop. In order to get back to a balanced budget we need to ensure in every way we spend money there is proper value for money, there is fundamental change in the public sector and there is ultimately stress testing of how we spend money. We can no longer go to that kind of situation because we are no longer in that situation.

The country is bankrupt and the lender of last resort is here. The country is being held together by international agencies, not just on bridging the deficit but also in terms of the funding of the banking sector, which adds up to €150 billion from ECB funds. There is no easy way out of this. Ultimately we need to mature as a Parliament and the ridiculous debate I was hearing today from some people in the Opposition with business as usual, Punch and Judy politics, suggesting nothing has changed, and the same kind of pantomime performance will not do anymore. There is no way forward for this country with that kind of ridiculous politics. Collectively we need to ensure that everything we say is rigorously debated. A new economic fiscal council, independent of Government, has been established by eminent economists, its task to comment critically as it sees fit on what Government says. The Opposition, including Fianna Fáil, Sinn Féin, the United Left Alliance and others, should send their proposals to the new economic fiscal council to be critically appraised. If we reach a mature politics in terms of how proposals are assessed, then never again will our people be faced with this catastrophe. The great challenge of this new Dáil is to ensure proper, rigorous and value for money auditing of expenditure is a fundamental part of this House. As stated by the Minister for Public Expenditure and Reform, Deputy Howlin, recently, we need a new budgeting strategy and committees wherein Government and Opposition engage honestly in terms of stress testing proposals to determine how competent they are in terms of the financial envelope available. If we do that, we will have done a good day's work.

What is important now is that we keep the 1.8 million working at work and that we create new opportunities for people to return to work. There are many measures in this regard in the budget, which I will not go through now. We will not do that if we continually increase marginal rates of taxation. The top rate of tax of 41%, plus 11% through the universal social charge, USC, and PRSI, amounts to a top marginal rate of approximately 52%. The sum of €110,000 is a substantial income. The effective tax liability on that in this country is 41% while in the UK it would be 34%. We cannot solve our problems by increasing tax at the top end. While that might be possible the first year, the people involved will not be around the following year. No economy in the world has ever resuscitated itself, following such a huge collapse, by increasing taxes. Principal to this budget, from the perspective of Fine Gael and many other people in the country, is to work out how we can increase tax but in a way which does not inhibit the potential of jobs growth, which is crucial to the resuscitation of this economy. It is important that people know that under this budget their take home pay next month will be the same as it is this month. While indirect taxes will increase, this will allow people to make decisions about their patterns of expenditure next year and provide stability in respect of what they have left.

The Opposition has made the charge that the Government has not sufficiently increased taxes on capital, acquisitions and savings, and has not introduced a new surcharge on property charges and so on. However, these increases are but first steps. It is likely that additional increases in taxes in these areas will be made during the course of the next few years if we are to balance our budget by 2015, which is the ambition of the Government. To do that will require much greater fairness in the manner in which our taxation system is constructed and structured. There is an enormous debate that has to occur in this House over the course of the next six months which will allow us, as we go into the next budget, to develop such a fairer system.

Ireland is a small, open, trading, privatised economy. Exports are doing well and we have managed to reduce costs and increase productivity. The way forward for this economy is to return to the type of economy of the early to mid-1990s, before the property bubble took hold, at which time we were a strong exporting economy. For this to happen, we must continue to encourage exporters, who are the lifeblood of this country as an island country, to trade within the eurozone and internationally. We expect and hope that the world economic situation will improve so that we as a country can come back.

We have submitted our Estimates for next year and a growth rate of 1.3% is predicted, which I believe is conservative. I believe we can do better than that if the world economic situation changes. This ultimately will provide the way out of this crisis, which the Government has been asked, on behalf of the Irish people, to sort out.

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