Dáil debates

Wednesday, 3 December 2008

10:30 am

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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This morning, the Minister for Finance revealed that we are living beyond our means despite the fact that, some weeks ago, he stated that this was the way in which people wanted us to go. We have been led into the middle of an economic swamp by the most disastrous Government of the past 40 years. Confidence in the economy has fallen and there is no strategy or plan to get us out of this situation.

Just six weeks ago, the Government set out a projected borrowing in 2009 of €13.4 billion. Given yesterday's figures on Exchequer returns to the end of November, the projection will be out by at least €5 billion, meaning a possible borrowing of up to €20 billion. This morning, the Minister for Finance stated that only a certain amount of taxation can be levied and that he does not expect further tax increases in 2009.

The Government has established another subcontractor to make recommendations on how to rein in public spending. If there are to be no further tax increases in 2009, does the Government intend to rectify the economy by cutting public spending by €5 billion and revisiting the national pay deal?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The measures we took this year in terms of expenditure mean our expenditure plans will come in broadly on target. The problem that has arisen relates to the serious decline in tax revenue across nearly all tax heads, a reduction in the order of 13% this year. This will have an impact on our opening position next year also.

Our strategy involves a collective effort by all stakeholders, including the social partners. Regarding the framework of the pay agreement, its operation is continually discussed in partnership. However, it is important to point out that continuing with our strategy of investing in public programmes, an investment that amounts to twice the European average, proceeding with public sector reform and using the people appointed by the Minister for Finance to examine other expenditure programmes and public service numbers are all part of a strategy to bring our public finances under control.

It is a serious situation, which we have indicated by bringing forward an early budget. Since then, there has been a further deterioration in our public finances. In an interview this morning, the Minister for Finance outlined how, given the relatively weak revenues accruing, he will not seek to raise tax revenue next year in addition to the budgetary arrangements already made. In a credible timeframe, we must consider how to bring the current budget deficit under control while continuing with the capital investment programme. Had the Government decided against the strategy of continuing record capital investment, the figures would be quite different. We are not prepared to postpone building capacity in the economy because it is part of our strategy to be ready for the upturn in the economy.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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This morning, the Minister for Finance justified bringing the budget forward by a number of weeks on the basis that people should be informed of the seriousness of the situation as if they were stupid in their perception of the state of the economy.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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Deputy Kenny has no perception.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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The Taoiseach was the Minister for Finance for three years prior to assuming his current office. He saw the warning signs and knew that, given information received from the housing industry, spending programmes would lead to this situation, yet he ignored those warnings. Jobs are being lost at a rate of 10,000 per month and, despite the fact that 2 million people are at work, consumer spending is not confident. The Government exacerbated the situation by imposing a VAT increase. This has devastated a swathe of countryside 50 miles south of the Border because the British Government has gone the other way and reduced its VAT rate.

There is no plan. The Government should inform the House as to whether it intends to go back to the drawing board to examine the fundamentals of the budget's structure. If the Minister for Finance will not introduce a mini-budget in the spring or increase taxes in 2009 on top of the 17 imposed in the budget six weeks ago, the Taoiseach, as Head of Government, must inform the House as to whether the Government will propose a reduction in public expenditure of €5 billion.

I have provided three alternatives. The Government should reconsider whether to reduce investment in the capital programme by almost €1 billion. Infrastructure is critical. The VAT increase is devastating thousands of retailers within 50 miles of the Border. In light of the Minister for Finance's comments on the national pay deal this morning and given the way in which it was negotiated and the current financial circumstances, does the Taoiseach intend to revisit it and plough savings from it into public infrastructure, retraining, upskilling and the protection of jobs?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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To answer Deputy Kenny directly, he makes the case that there should be €5 billion in cutbacks next year. That is a matter to be decided by Government in terms of the credible timeframe in which——

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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No, it should be decided by both sides.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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——we can restore balance in the budget without damaging the economy unduly. We have set up a process by which we will do this and we have ensured that our expenditure programmes this year have come in on schedule. A difficulty has arisen in that 13% of projected revenue was not raised this year. We must react to this position, but we should not do so by adding taxes to the economy because all tax heads, not just those relating to construction——

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Government is adding taxes.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Approximately 17 taxes.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am talking about over and above our current budgetary position. We have introduced an income levy and some minor changes in capital taxes as part of our balanced approach and in light of a gross return on revenue of €2.3 billion. We also had cutbacks in the context of the July decision, which will have an impact of €1 billion. Further economies were also brought about as a result of the processes relating to the budget and the Estimates. We achieved a balance between raising taxes and introducing expenditure cuts.

I want to return to the point Deputy Kenny made about who has a strategy. He spoke about the need for a reduction of €5 billion——

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I was referring to the figures available. Tell us what you are going to do.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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As part of his solution to saving €5 billion he told me to spend an extra €1 billion on the capital side.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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If there are no tax increases, how does the Taoiseach propose to encourage——

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I presume this makes for a total of €6 billion. The Deputy also stated that the rate of VAT should be reduced. The difficulty in respect of cross-Border trade does not relate to VAT.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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The problem is that the Taoiseach has no plan.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The exchange rate between sterling and the euro is causing that problem.

(Interruptions).

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I do not want to become involved in an argument with Deputy Kenny. That is not the game I want to play.

(Interruptions).

Photo of P J SheehanP J Sheehan (Cork South West, Fine Gael)
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The Taoiseach wants Ireland to have the highest rate of VAT in Europe.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I want to be straight and outline where we are at.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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The Taoiseach will be borrowing €20 billion and there will be no tax increases.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Kenny does not have a strategy.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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The Taoiseach and the Government did not know what they were doing six weeks ago.

(Interruptions).

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The Taoiseach should be allowed to conclude, without interruption.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I wish to make a point in passing. Fine Gael's finance spokesperson has stated we should have a deficit of 5.5%. For the past six weeks, Private Members' motions have decried every cutback and economy we have been had to introduce and make in order to achieve a balance.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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That is because they were wrong.

(Interruptions).

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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The Taoiseach has gone the wrong way.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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What I have stated is a fact. Those in Fine Gael are speaking out of both sides of their mouth. However, they can do so because that is the luxury of being in opposition.

In August I was criticised by Fine Gael's finance spokesperson for not concluding the pay agreement. In September I was congratulated by him for concluding it.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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What does the Taoiseach propose to do now?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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He then stated in October that there should not be a pay agreement.

(Interruptions).

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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What does the Taoiseach propose to do now?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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My position is simple. We will continue to examine the operation of our pay arrangements in partnership with the stakeholders and not throw away partnership as Deputy Kenny suggested.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I never said that. The Taoiseach's assertion is completely false.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The only way this matter will be satisfactorily resolved——

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Such comments are beneath the Taoiseach but they are typical of him. This is the way he usually operates.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The difference between Deputy Kenny and me is that——

(Interruptions).

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The Taoiseach should be allowed to conclude.

Photo of Dinny McGinleyDinny McGinley (Donegal South West, Fine Gael)
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The Taoiseach should be ashamed of himself. He should resign.

(Interruptions).

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Those on the Government benches have gone mad.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The difference between us is that I believe the social partnership process is a problem-solving process, not a problem avoiding process.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I also believe that.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I recently engaged in discussions with IBEC and the Irish Congress of Trade Unions, ICTU. Collectively, we will bring forward an approach that will best guarantee our way through this problem.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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That is what I said should be done.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We have done so for the past 20 years, in good times and in bad. We are the authors of the partnership process, which Fine Gael has always decried. We will again prove them wrong in respect of it on this occasion.

(Interruptions).

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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The Taoiseach does not know what is going on.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Deputy Gilmore should be allowed to put his question to the Taoiseach.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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If Deputy Cowen could do his job as Taoiseach and provide leadership for the country in as good a way as he attacks the Opposition, we would all be better off.

Deputies:

Hear, hear.

Photo of John CreganJohn Cregan (Limerick West, Fianna Fail)
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The same applies to Deputy Gilmore.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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People are aware that we face a number of major problems. The figures published yesterday indicate that the abyss over which we are teetering is even deeper than previously thought. People expect the Government to show leadership. In recent months, however, those opposite have been behaving like bewildered bystanders instead of displaying the courage, conviction, imagination, innovation and leadership expected from the Government.

The worst aspect of the current recession is that people increasingly believe that not only do we face serious economic problems but also that the Government is not up to the job of dealing with such problems.

Deputies:

Hear, hear.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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The Government sent out mixed messages in recent months. We were informed that the Taoiseach would give a state of the nation address but this never happened.

Photo of Jimmy DevinsJimmy Devins (Sligo-North Leitrim, Fianna Fail)
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Who said such an address would be given?

(Interruptions).

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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The Minister for Finance then introduced a budget, the figures relating to which were wrong. Last week we were informed that an announcement would be made in respect of an economic strategy but the Taoiseach has now stated that such a strategy is already in place. The only difficulty in that regard is that the rest of us do not know the nature of that strategy.

We were informed yesterday that the Government's revenue from tax will be €2 billion less than it calculated only seven weeks ago in the budget. The Minister for Finance indicated on radio this morning that there will not be a mini-budget and that taxes will not be increased. I presume, therefore, that the shortfall in the tax take will be balanced by the introduction of cuts in expenditure. In the budget, the Government set down its intention to save €2 billion and we are aware of the consequences to which this will give rise for pensioners, the unemployed, class sizes etc. Obviously, it is now contemplating making savings of a further €2 billion. The only problem is that the Minister for Finance has now indicated his intention to wait until the figures for December emerge in order that the Government will be in a better position to judge what it is going to do at the end of the year. It is a case of live horse and you will get grass.

When will the Taoiseach publish a strategy — written in plain language and easily understandable — that will outline the direction in which the economy is going and the leadership the Government intends to provide in respect of this matter? He might also indicate what are the November unemployment figures, which are due to be published in 15 minutes.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am not seeking to attack the Opposition. I am defending myself from attacks by the Opposition, which I am entitled to do. Those opposite are entitled to attack me and I am entitled to defend myself and the position of the Government in respect of its policies. That is fair enough. Let us keep it simple.

We have a strategy in place. In order to ensure that spending would remain within the parameters set down, we introduced changes in July. This happened when the figures for June indicated that spending estimates would be off by €3 billion. The changes to which I refer will have the effect of ensuring that expenditure for this year will be brought in on line with the parameters set down. We made a decision with regard to what we would spend this year and adhered to it. However, the Opposition opposed that decision and the changes to which I refer.

The second step in our strategy was to bring the budget forward to October. The purpose behind this was to being to the attention of the public the fact that our situation was deteriorating sharply. In his Budget Statement the Minister indicated our estimates for taxes and spending for 2009 but also stated that we would continue to respond as the situation developed. That is what we will do.

The position internationally is deteriorating. Ireland is a casualty in this regard as a result of the open nature of its economy. We are responding to these changing circumstances. As already stated, our first action is to control spending for this year and next year. There will be a significant decrease in the rate of increase in expenditure next year. We have introduced cuts in respect of all Departments with the exception of the Departments of Health and Children, Education and Science and Social and Family Affairs. Despite the fact that they claim they want order brought to the public finances, those in Opposition opposed all of the economies and cutbacks we have made or introduced.

We are also determined to boost the economy. I have already explained that because we have a national development plan and are implementing it, the boost to which I refer is being taken for granted. In previous years we could pay for the capital investment programme relating to the national development plan from our surplus reserves. However, we are now in a position where we will be obliged to borrow in order to fund that programme. I have no difficulty borrowing for capital purposes. This is the correct thing to do in current circumstances in order that we can make the economy more competitive and when the upturn comes, we will be in a position to return to a period of growth as soon as possible. Strategically, this is the right thing to do.

The simplest way to remain within our budgets and avoid all the difficult decisions that must be made in respect of current spending would be to suspend the capital investment programme and then I would have no difficulty showing Deputies that the budget is well within the Stability and Growth Pact guidelines. We are not prepared to suspend the capital investment programme because it is vital that it should remain in place. Deputy Kenny suggested that we have cut it out of sight. That is not the case. It has only been cut by approximately 10%.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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I stated that it is being cut by €1 billion. I did not say that it is being cut out of sight.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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It was originally a programme worth €9 billion, based on 4% growth. We will now have a programme worth €8.2 billion based on a contraction in the economy. We could not show a greater commitment to the capital investment programme in current circumstances. The amount to be spent on it would only be increased by €800 million if the economy was growing by a far greater rate. This is a strong commitment by the Government.

Before we made our decisions, there were calls that we should prioritise our spending. The National Development Plan 2006-2013, which is predicated on annual growth in the economy of 4%, will not be implemented within that timeframe. However, we should continue with its implementation, even if over a longer timeframe, because it is the right thing to do for this country.

Photo of Noel DempseyNoel Dempsey (Meath West, Fianna Fail)
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Hear, hear.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We need to build up the capacity of the country and to do so as quickly as we can and as public finances allow.

Also in regard to the strategy, we have brought forward incentives in the Finance Bill. The Minister for Finance outlined these incentives on Second Stage and in amendments tabled for Committee Stage. These are significant incentives which will allow multinationals to increase investment in research and development and assist those starting a business.

Photo of Noel CoonanNoel Coonan (Tipperary North, Fine Gael)
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Young people are not interested in starting a business.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Finance Bill will help to secure and advance our enterprise economy while maintaining and enhancing pro-employment business tax reliefs which will support jobs.

I recognise that in a recession we will not be casualty free. There are people who are losing their jobs and the prospect of more people losing their jobs is great. We must, to the greatest extent we can, bring about a competitive position for our economy in the context of the resources available to us. This means we must continue with a public investment programme of the size of which I have spoken, namely, up to 5.5% of GNP in a recession — far in excess of what was contemplated by previous Administrations during boom times — as a percentage of what we are producing. The difficulty that will arise in this regard — we must be clear about this — is that we will need to make further economies on the current side. There is no way around that.

Photo of Ulick BurkeUlick Burke (Galway East, Fine Gael)
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The Government already did that.

Photo of Noel CoonanNoel Coonan (Tipperary North, Fine Gael)
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More hardship.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We have to make that decision strategically, and we are doing it.

On the banking situation, which is fundamental as a strategy in terms of bringing about the prospect of economic recovery, we are continuing our engagement with the banks. We swiftly introduced a banking guarantee which meant we did not have the calamitous situation of a collapse in our banking system. We continue to strive to ensure we have an appropriate banking system and we are determined, if there is State investment in the sector, that the taxpayer will get a good deal and liquidity will flow to business. We are asking the private sector to make its contribution in this respect also.

It was suggested some weeks ago that we should go on behalf of the taxpayer and borrow in full for such a recapitalisation, not as a last resort but as a first option. We must take into account the demands on current and future taxpayers in terms of borrowing. It is only fair to say, as I have indicated already, that the Government and I are in the process of bringing forward further ideas, strategies, options and initiatives that will accentuate the positive in respect of our economy.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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What are they?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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It has been suggested that everything that has happened during the past ten years was illusionary.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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That has been proven.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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That was a fine speech.

Photo of John CurranJohn Curran (Dublin Mid West, Fianna Fail)
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It is called leadership.

Deputies:

It is waffle.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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It is, however, riddled with inconsistencies and contradictions. The Taoiseach says the Government has a strategy. This strategy has never been outlined. We are asked to believe there is a strategy.

(Interruptions).

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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What we can deduce from the Taoiseach's rhetoric this morning is that the Government is going to rely on the capital programme, and that is great. However, the problem is that the Taoiseach in that same reply is telling us that the national development plan will not be achieved within the period set down.

The Taoiseach has also told us the Government has contracted out its responsibilities to an bord slash which he has asked to reduce and cut back on the capital programme.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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That is correct. It is in its terms of reference.

Photo of Dan NevilleDan Neville (Limerick West, Fine Gael)
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The Government is not up to the job.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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Is the Taoiseach saying that an bord slash is not being given a responsibility or may not come back with a recommendation to cut capital programmes? There is no point in the Taoiseach coming into the House and saying the Government's strategy is that it is going to continue with the capital programme while at the same time a particular group is being told to come back with recommendations to assist in reducing the capital programme.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Minister for Finance did that.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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No.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Yes, the Minister did.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach stated that economies must be achieved.

Photo of Paul Connaughton  SnrPaul Connaughton Snr (Galway East, Fine Gael)
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They could be spread over 20 years.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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We can all add; this is not complicated. There is less tax revenue coming in to the State. We heard the figures in this regard yesterday. The Minister for Finance says there will be no new budget and no additional taxes. There will, therefore, be what the Taoiseach calls "economies" or "adjustments", which basically amount to cuts in expenditure. I want to know how this will be achieved. Will the Taoiseach and Minister for Finance come before the House at some stage and tell us what is the plan in this regard or will they allow the next couple of weeks to run ahead and then, during the Christmas and New Year period, allow individual Ministers and the Minister for Finance to do this by way of departmental decision without any presentation in this House of what is being done?

It is all very well for the Taoiseach to say the Government is engaging in a strategy. We do not know what that strategy is as it has never been outlined by Government. In so far as we get glimpses of it occasionally from speeches the Taoiseach makes in the House and radio interviews by the Minister for Finance, all we get are contradictions. The Taoiseach cannot one minute say we have a capital programme and then say we must cut back on it.

Photo of Noel DempseyNoel Dempsey (Meath West, Fianna Fail)
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No bigger contradictions than across the House.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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With respect to Deputy Gilmore, there are no contradictions. An bord snip referred to by Deputy Gilmore is an advisory body. We will make the decisions.

(Interruptions).

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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Where are the Ministers?

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The Taoiseach, without interruption, please.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Do Members want to have a serious discussion or not? On the question relating to public service numbers and expenditure programmes, the Minister for Finance has appointed a public official in his office and four others to go through every item of expenditure relating to public spending on the current side. Members should read what the man has to say. The group's remit is to examine items of expenditure on the current side. It will come back with ideas and initiatives in that respect and the Government will make the decisions.

Photo of Ulick BurkeUlick Burke (Galway East, Fine Gael)
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That is the strategy.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We do not contract out Government responsibility——

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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The Government does so in respect of the Health Service Executive.

Photo of Dan NevilleDan Neville (Limerick West, Fine Gael)
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And the National Roads Authority when it suits.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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——as we do in social partnership. Whenever we hear good ideas around the table, we will take them. We will even take them from the Opposition if we can get them. The Government's plan is simple. I have outlined it. Through our budgetary strategy we need to provide stability in the public finance position. We have not yet achieved this because we have a deteriorating economic situation.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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That the Government created.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We have seen, through the balanced approach taken, the virulent opposition from all sides in respect of every aspect of what the Government must do to bring about that stability, which is a prerequisite for any prospect of recovery. Without it, recovery will be prolonged. If we want quick recovery, we must accept that budgetary stability is an absolute prerequisite. On whether it is comprehensive, "No" is the answer. We have never suggested that budgetary stability on its own is a comprehensive response. As I indicated, we are maintaining, at a time of recession, our capital investment programme to the tune of €8.2 billion in respect of direct Exchequer spend. An additional PPP provision of €800 million will bring us to a spend of €9 billion next year. That is an important contribution by the Government in terms of maintaining economic activity in productive purposes at a time when private sector activity has receded considerably. They are the facts.

On what else the Government can do, we are working to ensure we provide a credit initiative in the banking system.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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That is a drastic strategy.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We are trying to ensure that recapitalisation, if it is to take place, is done in a balanced way which does not require Joe taxpayer to put it up as the first request, which was the view of the Opposition.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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Hear, hear.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The Government never even heard of Allied Irish Bank.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Labour Party opposed the bank guarantee scheme. One can only imagine the precarious banking system of which we would be speaking if we did not have that scheme. The plan for economic renewal will be on the basis of social partnership. We will work with the social partners, those who employ and represent workers in this country and with the voluntary pillar and will devise our own approach in that regard over a credible timeframe. That is what I believe in. The Fine Gael Party does not believe in it and the Labour Party does believe in it. I do know if the former Democratic Left Party believed in it, but the Labour Party believes in it.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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That is rubbish. The Taoiseach should withdraw that remark.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I will not withdraw it because that is the approach of Fine Gael.

(Interruptions).

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I must contend that the so-called arch strategists of the Opposition, who told me in August——

Photo of Dinny McGinleyDinny McGinley (Donegal South West, Fine Gael)
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The Taoiseach's own crowd do not believe it. He should look behind him.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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——-I am expected to accept a strategy on pay policy——

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Please allow the Taoiseach to conclude.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am expected to accept a strategy on pay policy which even the Labour Party said last week was confusing. Even the Labour Party, following its big day in Wexford, said there was confusion.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Shout everybody down, Taoiseach.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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It is Members opposite who are shouting.

Photo of Dinny McGinleyDinny McGinley (Donegal South West, Fine Gael)
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The Taoiseach should take a look at those behind him.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Members opposite cannot take it. They can give it but they cannot take it.

(Interruptions).

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The bottom line is, I am not taking it from them.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Shout them all down.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The bottom line is — I can produce the statements — that Deputy Bruton in August criticised the fact that we did not conclude the negotiations, in September congratulated me on bringing them to a conclusion and now says I should not have an agreement in place. Members opposite are now suggesting we should cut pay by 10%.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The time allowed for Leaders' Questions has concluded.