Shane Ross (Dublin South, Independent) | Oireachtas source

From this side of the House I always struggle to find measures in the budget that I welcome. However, people on all sides of the House should welcome the proposed abolition of the pension levy. It is a bit like congratulating a highwayman on stopping robbing carriages. It caused great hardship to many people and was unjustified if not unlawful. On this side of the House we should acknowledge the Government's realisation that it was wrong. It caused great pain to many people who depended upon these savings for their existence.

The Government has been able to do remarkable things in the budget. The most peculiar feature of it was the debate coming up in the past few weeks where the figures suddenly changed and from it having a choice between cutting expenditure or increasing taxes by a diminishing amount, suddenly if found it could give some money away. We have to ask why this happened and why it happened so suddenly. The answer of course lies in the Minister's Budget Statement, in which he came out with some sensational and spectacular growth rates. He is not alone in that - they came from the Department of Finance. I believe his growth rate projection was 3.9% following the budget measures - it was 3.6% before that. It has to be asked how the growth rate projections changed so suddenly and whether they are questionable.

The basis of the entire budget will be undermined if these growth rates are not correct. The Minister is not alone. IBEC, an organisation that is not particularly reliable in any way and one I would not commend to people to study for their thesis on economics, changed its growth rate projection for next year from 3.1% to 6.1% in the space of three months, which is utterly extraordinary. The Central Bank is more conservative saying the growth rate will be 3.5% while the ESRI says it will be 5.3%. The Minister and the Department of Finance have come in somewhere in the middle at just under 4%. How and why has this happened? Are there dangers in this? If a growth rate projection can change from 3.1% to 6.1% in three months and the first projection is unreliable, like the initial projections from other sources, then surely the current projections we are relying on are just as vulnerable to being changed or to not being reliable in the future.

The basis for the projections is the US and UK economies because while the Minister said last Tuesday that the economic growth rate next year would be 3.9%, later in the week bad news came out of Germany, France and almost the entire eurozone area. Germany is on the verge of recession, France is missing all its targets and other European countries such as Italy are not living up to the expectations the European Commission has asked of them. Europe is contracting while Ireland apparently has a rocketing growth rate. It sounds unnatural but the explanation for this lies in the fact that the US and UK economies were up to recently the best preforming economies in the western world. Ireland has relied on them because we luckily have a large proportion of our trade with them, which is unusual for a European country. We are expanding in that direction and that is expected to continue next year.

However, as the Minister outlined in his Budget Statement, the stock markets of the world were taking fright the same day. The stock markets, which we are told rightly by Deputy Higgins are the masters of our destiny rather than ourselves, were saying they were spooked by the prospects for the US, in particular, because of bad retail figures last week, and the UK for other reasons. If the US and UK economies do not perform to the expectations of the budget arithmetic, Ireland will be in trouble as well because these economies will not fuel the export-led growth predicted in the budget. That is a serious danger, which was signalled to us by the stock markets last week.

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