Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

Labour and Fine Gael made reckless commitments and promises before the election that they could not fulfil.

While the targets are correct, there is reason to believe that they might not be met and that public support for them has been undermined by the crass and growing inequity of the decisions being taken by the Government. A new concern is that these targets may not be met because of a combination of overspending and reduced revenue. In spite of Government claims about having an iron hand on spending, including the repeated claims by the Minster for Public Expenditure and Reform, Deputy Howlin, that everyone would stay within budget, the two largest Departments are showing major overruns this year. The inclusion of large amounts of unspecified savings in these Departments for next year suggests that exactly the same situation will obtain.

On the revenue side, last week's figures showed a serious undershooting of key taxes, particularly the €300 million deficit in income tax receipts. For 2012, the combination of overspending and lower receipts has been covered up by a number of one-off measures and the benefit of the Greek interest rate deal being automatically passed on to all countries. These will not be available next year and there is no reason to believe that this year's problems have been effectively tackled.

One of the most striking elements of the budget is how little it has to say about the economy. Beyond empty generalities, there is no analysis of the direction of growth or employment or discussion of the budget's impact on any economic indicator. There is no attempt to set out anything that updates plans made two years ago. In a major departure from tradition, most economic projections were relegated to appendices that the Ministers did not mention. It is in these that one finds the detail of a Government that has already missed every one of its targets for broad economic indicators.

This year, targeted growth of 2.5% will actually be less than 1%. The target of 3% growth for next year has been halved. These are not cold, irrelevant statistics. They have a real impact on people’s lives, particularly in terms of employment. It is for this reason that they were not mentioned in the Ministers' speeches.

Last year, the Government claimed that it was all about jobs. It had a jobs budget, which it downgraded to an initiative, and the Budget Statement was almost entirely given over to claims of jobs being on the way. The Minister for Finance, Deputy Noonan, predicted a growth in employment of 0.5% for this year. The reality is minus 1.2%. He predicted a fall in unemployment to 13.7%, but it will be nearly 15%. Yesterday, all that he had to say about the failure to hit any major economic target was that everything is Europe's fault. While the Taoiseach was speaking with the Minister of State, Deputy White, I outlined all of the budgetary targets for this year that have been missed by the Government. To blame Europe for everything is untrue. The Government's policies have had a direct impact on reducing growth and employment. Front-loading a major VAT increase, removing investment funds from the economy through a significant levy on pension funds and threatening employers with extra costs for every employee were among the measures that helped to drive down domestic demand and confidence, the two elements that our economy needs most if it is to recover.

In this debate last year, the Government was told that implementing these policies would damage the economy, but it went ahead with the measures anyway. Let no one be in any doubt - the policies of this Government have directly damaged domestic confidence and thereby reduced growth and employment this year. They will do so again next year unless there is significant external growth that drags us up with it.

What is also striking is that the Government is silent on the vital issue of debt sustainability. We are apparently seeking a deal to make our debt sustainable, but no member of the Government has yet said what he or she believes we need our debt to be for it to be sustainable.

Domestic demand and confidence are the most important elements that we require to build a strong recovery, but the situation in Europe is also important. To date, the Government's approach to Europe has been to hope that others can win concessions that will be automatically extended to us. Every development has been overspun and underdelivered. Getting a substantial deal to reschedule the promissory notes would provide significant extra resources. Ireland's case is strong. As the Taoiseach finally admitted in October, "Ireland was the first and only country which had a European position imposed upon it in the sense that there was not the opportunity, if the Government so wished, to do it their way by burning bondholders."

In spite of the claims made since June, nothing was agreed in respect of Ireland's debts and the news this week from Brussels marks a significant setback. The German Minister explicitly stated that he did not intend to support Ireland and Portugal getting major concessions and that the banking union, which was supposed to be operating from January and which is essential for our banks, has been delayed to some unspecified time. Given how important Europe is, after nearly two years in office it is time for the Government to set out a policy on Europe that goes beyond hoping that something turns up that can be claimed as a great victory.

The number of promises broken by both parties in this budget is even larger than anyone imagined. The defence being trotted out is the usual one, in that they are being forced to break their promises because circumstances changed. In reality, the only element that has changed is that Fine Gael and Labour are in government and their reckless campaigns to win votes has left them needing to justify the systematic abandonment of pre-election promises. The budgetary constraints faced by this Government were fully known to Fine Gael and Labour before they made their promises. In fact, last year the situation was ahead of what was targeted. No one forced them to make these promises and no one is forcing them to break them.

The overpowering cynicism of their campaigns is summed up by Labour's "Every Little Hurts" advertisement. In the closing days of the campaign and as the Taoiseach well remembers, Labour decided that it needed to attack Fine Gael. Labour drew up a list of cuts and extra charges it said would be implemented if Fine Gael got in without Labour there to stop it.

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