Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 19: To ask the Tánaiste and Minister for Finance his views on the need to change policy in the face of vulnerabilities exposed in EU and IMF assessments of the Irish economy. [8062/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

In my budget last December I indicated that the outlook was for a moderation in the rate of economic expansion this year. These forecasts took into account the transition to a more sustainable level of output in the new housing sector while more modest growth in some of our major trading partners was also built into the projections. In addition, I identified that there are risks to this outlook, including a less benign international economic climate and a possible continuation of financial market difficulties. As provision for a downturn was already built into my Department's economic forecasts, these have not changed from those published on budget day, when GDP growth of 3% was projected for this year, with GNP growth of 2.8%.

The European Commission recently published its annual assessment of the Irish stability programme update. The assessment highlighted the overall strong position of the public finances and pointed out that the fundamentals of the Irish economy remain sound. It referred to challenges in the transition to lower growth, mainly linked to a return to more sustainable output in the housing sector. This assessment is consistent with the view outlined in my recent budget.

The latest IMF forecast for Ireland was published in September last year, when it forecast GDP growth of 3% for 2008. Recently, the IMF published a paper entitled Spillovers to Ireland, which referred to Ireland's exposure to developments in the US economy. In this working paper, the IMF postulated that a 1% decline in US GDP growth would negatively impact by 1.75% on Irish growth. This analysis, which others dispute, does not take into account other factors such as lower import growth and, as such, I do not share its view of the severity of the impact on Ireland of any downturn in the US economy. However, as a small trading nation we are vulnerable to downturns elsewhere and as I have already outlined, slower growth in our trading partners has been factored into the budget day economic projections.

Ireland is meeting these challenges from a position of strength. The fundamentals of the Irish economy remain sound.

Additional information not given on the floor of the House.

Moreover, fiscal policy is playing a key role in terms of providing support for the economy as we enter this period of lower growth. Current spending is projected to rise by about 8% this year while tax revenues are expected to grow by around 3.5%.

Capital spending is expected to grow by around 12% this year as full implementation of the national development plan continues apace. Even allowing for all this, only a modest budgetary deficit is in prospect for 2008.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Does the Tánaiste agree that he was seriously wrong in 2005 and 2006, when he said the building boom was based on sound economic fundamentals? Does he agree that he was also wrong to introduce expansionary measures in every one of his four budgets? Does he agree that the boom he cheered on has resulted in the loss of competitiveness that he rightly says is damaging our exports? Does he accept that the situation which we now have, whereby outstanding debt in the property area is 30 times the outstanding debt in manufacturing, is not the basis for sustainable progress in this economy? Against that background, does the Tánaiste accept the EU's assertion that it is now time to change policy?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The European Commission gave a very balanced view of where the Irish economy is going and the downside risks mentioned in my budget were replicated in its assessment. Regarding the building industry, it is clear we are adjusting to a more sustainable rate of growth having sought to meet an economic demand that exceeded supply. In the adjustment process, we have been able to put in place plans for a significant capital investment programme, which will assist our competitiveness greatly, and to ensure a competitive workforce through capital programmes and investments envisaged for science, technology, innovation, reskilling and upskilling. If we manage our position in the coming years, we can come out the other side with renewed growth in the economy. For these reasons, the European Commission's assessment is not one with which I am in fundamental disagreement.

In terms of trying to maintain an overall fiscally responsible budgetary policy, our commitment to implement the capital investment programme will require of us a budgetary balance.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Does the Tánaiste not agree that those who examine the public spending patterns of the Government and who see waste, complacency and self-indulgence are not the ones who are blind? The Government, which seems to surround itself in the belief that everything is all right in the garden and that it is correct, is deceiving itself. Does the Tánaiste not accept that we must confront Government waste, which is notably widespread in health and other areas, and reform a range of uncompetitive markets, which the Government has manifestly failed to do, and that we need effective preparation for major strategic challenges such as climate change? Yesterday, the Minister for Transport, Deputy Dempsey, had the grace to admit that the Government's climate change strategy was hopelessly wrong. Does the Tánaiste not agree that a little more honesty from himself concerning preparedness to deal with tougher times would serve the economy better than the stuff he keeps churning out?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I do not know how this could be "churning out" stuff. I seek to defend myself and the Government's position from what I regard in some cases as the talking down of the economy. Notwithstanding that my Budget Statement mentioned the serious challenges facing the economy, anyone who knows anything about the economy knows this to be the case.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

The Tánaiste is not doing anything about them.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The fiscal and budgetary stance I adopted relates to trying to manage our way through the issue. We are putting in place a capital programme and decelerating the increase of current expenditure this year, which will be a progressive measure.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Each of the Tánaiste's measures is expansionist. He should not need to——

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The criticism I am receiving from the left and the Deputy is that the budget is too expansionist.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

That is not what I stated.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

In every constituency, all of the Deputy's colleagues decry the fact we are not expanding services fast enough.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

The services should have expanded in 2004, 2005 and 2006.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Tánaiste without interruption.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

These are the realities. While the Deputy states that it is all about waste, Members ask why there are not more nurses or why the health service is not getting more money. The Deputy is playing the double game as usual. The policy bankruptcy is on the Deputy's side of the House. Until he gets agreement——

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Why is the Government not delivering accountable health services on the ground instead of leaving hundreds of people waiting in accident and emergency units?

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Tánaiste without interruption.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I listened to you and, when I respond, you want to shout me down. It is the same old game. Does Mr. Flannery have Fine Gael on this sort of message?

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Tánaiste should address his remarks through the Chair.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I will do so if people are prepared to listen.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I will ensure that.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I thank the Leas-Cheann Comhairle, as I know his is not an easy job.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I am about to call the next question. It might ease matters along.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I will be succinct. Until the Deputy has buy-in from his backbenchers on Fine Gael's fiscal and economic policy and until we see it resonating in the local newspapers——

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

The Tánaiste is in government.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Compared to statements made in the House, Deputies have different positions at local level. This is the truth of it.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

If the Tánaiste would read the next reply, it would be helpful.

Dinny McGinley (Donegal South West, Fine Gael)
Link to this: Individually | In context

The people are looking for these services.

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Deputies are giving out every day of the week down there.

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I remind the House that we are addressing Priority Questions and only the Deputies in whose names the questions are tabled may participate. We will shortly move on to general questions when everyone can be called.