Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

The forecast is looking good for the next few days anyway. I am looking forward to it. It is going to be a good weekend.

Notwithstanding speculation in newspapers, the Government's overall budget policy remains unchanged. It is to be prudent first of all and to continue to reduce the deficit. We still have a deficit so we will continue to reduce it and also the debt. While our debt has come down, it is still very high. Our national debt works out at roughly €45,000 per person. That is a consequence of the financial crisis and the lost decade, which Members will have heard me speak about before. When we entered the financial crisis, the debt per head in Ireland was approximately €15,000. Although we are in a good position, with the economy being strong, with the fall in the deficit and in unemployment and with incomes rising, and with all such trends going in the right direction, the country is still dealing with many legacy issues, not least the enormous debt placed on the heads of people. It now stands at €45,000 per head. As well as reducing the deficit, we need to reduce the debt. The most important thing is that the Government will be prudent in the decisions it makes on budgets. We will not adopt the policy of the past – the if-I-have-it-I'll-spend-it procyclical economic policy. I encourage Opposition parties not to go back to that philosophy in their demands in the run-up to the budget. After that, it will be matter of investing on a two-to-one basis in favour of investment and public spending. I refer to spending on infrastructure and public services. It will also be a matter of finding some space for tax reductions, particularly focusing on middle-income earners and the fact that people on very modest incomes pay income tax at the highest marginal rate. The average person working full-time in Ireland earns €46,000 per year. If he gets a pay rise, does a bit of overtime or gets an increment or promotion, he finds more than half of it is taken away in income tax and PRSI. We would like to raise the threshold further and allow more people to keep more of their hard-earned money.

With regard to the fiscal space, the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, prefers not to speak of that and instead prefers to talk about the fiscal stance, which takes into account issues wider than the question of how much money is available to allocate. I refer to the deficit, for example. We would all agree that no matter what the fiscal space is, we should not have a higher deficit next year. The economy is going well. When the economy is going well, one should try to reduce and eliminate the deficit so there will be some headroom should the economy slow down. No matter what the fiscal space is, we should still try to reduce or eliminate the deficit. We should still be trying to reduce the debt. That is why we have put forward the concept of the rainy-day fund, or of setting aside some money for a downturn in the economy, if it occurs.

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