Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

-----with a pro rata increase on other tobacco products. This will bring the price of cigarettes in the most popular price category to €11 per package of 20 cigarettes. The House will be pleased to hear that this is the only tax increase in today's budget.

Shortly after I took office in March 2011, the CSO announced that the headline deficit for 2010 was 32% of GDP and even on an underlying basis that excluded banking-related transactions it was still over 12% of GDP.

Today, we are forecasting a deficit of just 0.4% of GDP in 2017.

In March 2011, Ireland was no longer able to borrow on the open market and we were dependent on EU-IMF programme loans to keep going. Ten-year bond yields peaked at 14% in July 2011, whereas only last month the NTMA was able to issue ten-year bonds at a yield of 0.33% and it is issuing treasury notes at negative interest rates. In March 2011, unemployment was already at 14.3% on its way to peaking at more than 15% in January 2012. Now it is 7.9% and the new jobs I mentioned will help reduce it further next year.

We have come a long way and the objective of a balanced budget set in our medium-term fiscal policy is within our reach, provided we continue to act responsibly and implement prudent fiscal policy. Separate from the fiscal rules and our obligations under the Stability and Growth Pact and the fiscal compact, the fiscal policy we are following makes sense. We are a small and very open economy in a world that has more risks than usual. It makes sense to complete the task we set ourselves to get to a balanced budget. It makes sense to continue reducing our debt to much lower levels and to build our capacity to withstand shocks. It makes sense to avoid the mistakes of the past that could lead to overheating our economy. It is an uncertain world full of risk and now is not the time to move away from the prudent and sensible fiscal policy we have been following, which is obviously yielding very positive results.

My Department’s forecasts and those of all other bodies project continued steady and sustainable economic growth. It is our collective duty to protect that growth because it is the best way to continue repairing the damage done to our economy in the past and to ensure that we can look forward to a new Ireland with an equitable tax system that provides sustainable funding for efficient and effective world class public services.

Today’s announcements are the first steps on a new road by a new Government. Subsequent budgets will travel further down that road in accordance with A Programme for a Partnership Government and the support of the Oireachtas. I commend the budget to the House.

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