Mary Coughlan (Donegal South West, Fianna Fail)
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Before getting into the substance of my contribution to the House this morning, I want to acknowledge the fact that anything I or, indeed any Member of the House, has to say during the course of our statements on the economy this week cannot take from the immediate concern caused to individuals and families by the loss to the household of a job or income in the current economic climate. While we have put in place a strong matrix of State supports for jobseekers, the loss of a job or income to the household necessitates a significant adjustment to the weekly spend and lifestyle, and for those with mortgages and other financial pressures, can be a stressful and worrying time. This is the human side to the macro-economics discussions we are having this week and I want to take the opportunity to again assure people who find themselves under that type of financial pressure that there are support services available, such as MABS, to help them address their financial problems as and when they arise. It is essential that such issues are not ignored or left unattended as people strive to find new employment to support themselves and their families.

The Taoiseach, in his contribution yesterday, described as distressing the rise in the numbers of people becoming unemployed. Everyone in the House agrees, particularly given the speed with which numbers have risen. In my own Department for example, the rise in the number of redundancy notices and the change in our wider economy have been such that in recent weeks I have moved significant staff resources out of the employment permits section and into redundancy payments to compensate for the reversal of trends in both areas. This is yet another indication that the global economy has changed more rapidly, and more profoundly, than in any time in memory.

While it is important for us all to understand how, globally, we got to where we are today, in the absence of a co-ordinated global response, it is essential for Ireland, as a small and open economy, to take all necessary action to ensure a sustainable and vibrant Irish economy in the years to come. We must now prudently assess the fitness of our policies to meet the next phase of challenges, in the shorter and longer term. The scale of the adjustments now required represent a major political, economic and social challenge. Everybody will be affected and everybody will have to play their part in overcoming the challenge.

We all know that we are not alone in this challenge. Every country in the developed world is facing similar or more serious challenges. For example, Singapore, one of the most advanced economies in the world and one of our chief competitors for foreign direct investment, last week forecast negative GDP growth and deflation in 2009. The US, UK, France, New Zealand, Germany, Italy, Japan, Spain are also in recession. This is a truly global crisis.

That said, in framing any plan to see us through current events, we must be conscious of what we have going for us, namely, our young educated population, which is a key pull factor in Ireland's favour; our comparatively low debt to GDP ratio; our pro-business and pro-employment tax regime; our business regulation that recognises the need for control and certainty without overburdening enterprise; and our continuing commitment to investment in infrastructure, education and, critically, research and development.

Last December, building on these strengths, we set out our framework for sustainable economic renewal, entitled Building Ireland's Smart Economy. This sets out a clear roadmap for Ireland's move back to economic growth and prosperity, with investment focused on those areas where we can build on our existing strengths, address our weaknesses and ensure that we are best positioned to take advantage of the eventual global upturn. What we need now is to balance our response to the current crisis with, on the one hand, firm measures to restore stability to the public finances and regain confidence in Irish banking and, on the other, measures to underpin Ireland's recovery and future prosperity. There are four elements to this — continuing our public capital programme; supporting the enterprise and knowledge economy; reducing our cost base, especially energy prices; and assisting those who have lost their jobs.

Over the past two decades, we captured a significant amount of mobile investment from the US and elsewhere, disproportionate to the size of our economy, and we successfully targeted sectors that were likely to be the sources of future employment, product development and wealth. Equally, in the modernisation and development of our home grown enterprises we have successfully scaled up many infant industries that are now taking up positions of strength in the global marketplace. The talent, energy and ingenuity in Irish entrepreneurs and our enterprise base have set a strong foundation for the future of this country.

There has been a significant cultural change in Ireland over the past couple of decades. Twenty years ago it was widely held that economic growth in Ireland was seriously inhibited by a lack of an entrepreneurial culture. In recent years, Ireland has been rated by the Global Entrepreneurship Monitor as one of the most entrepreneurial countries in the EU. The success of our pro-enterprise strategies have been reflected in the high level of business start-ups in recent years, the number of small businesses in Ireland having increased by about 50% over the last decade or so. Ireland is actually in fourth place across the OECD and second in Europe for the number of early stage entrepreneurs.

A striking fact is that indigenous internationally trading companies supported by Enterprise Ireland employ as many people, if not more, as IDA assisted overseas companies operating in Ireland. The focus of the majority of these Irish companies is on the high-skill, knowledge intensive sectors necessary for a "smart economy".

This bodes very well for the direction we want Ireland to take. Our overarching goal for industrial policy is for Ireland to develop indigenous companies of such range and depth that rather than be net foreign direct investment recipients, we become net foreign direct investors, with the return on those investments supporting world leading research and development activity at home. The creation, ownership and exploitation of the ideas of tomorrow is at the heart of our smart economy plan.

Ireland's path to achieving this goal is still at a vulnerable stage, however. There are threats to its attainment which we need to address now more than ever, particularly for export orientated companies competing globally. Our higher cost base is one such issue and it is clear that we need to restore our relative cost competitiveness. It is for this reason that addressing competitiveness issues is a key task for the Cabinet committee on economic renewal and why we are taking a number of measures across Government to ensure that we identify and address cost issues in our economy.

For example, the Government has now given a commitment to publishing a whole-of-Government response to recommendations contained in the reports of the Competition Authority. This, in conjunction with the merging of the Competition Authority and the National Consumer Agency, should yield dividends for the economy as a whole, where both the individual and enterprises as consumers will benefit from increasing competition and a reduction in sheltered sectors of the economy. Other measures, such as consolidating the various inspections programmes to reduce the number of inspection visits to business, will help reduce the compliance burden on business as well as producing efficiencies for the public sector.

Our reliance on the importation of fossil fuels means that our energy costs are among the highest in Europe, a fact that is of significant concern as we work to attract and grow businesses competing globally. We are, however, working to ensure that the actions to address the issue are progressed as a priority, including increasing renewable electricity generation to 40% of our overall needs by 2020 in a cost efficient manner, and the necessary upgrading of the grid and provision of backup power generation to make this possible. We are also working to ensure that a fundamental review of energy prices and tariff methodologies is undertaken, to take account of all energy consumers and conscious of the need to support economic competitiveness. Energy companies need to keep a very watchful eye on their own operating costs, ensuring maximum efficiency and productivity across their operations, particularly in a climate where high energy costs can cost jobs elsewhere in the economy and act as a disincentive for investment in Ireland. In effect, I want to let the enterprise community know that we hear what is being said about energy prices and understand the reality enterprises face meeting these costs. We are now looking closely at how energy prices are set and we will be making sure that customers — business and consumers — benefit from the changes on the global markets.

The issue of pay in both the public and private sectors is being addressed by the social partners through the partnership process. It is a process which has served us well in the past, from the dark days of the 1980s, and is continuing to provide a vital mechanism for the reform needed at the current time. However, the average rate of wage inflation was 50% above the EU-15 average for the period 2004-08 and this has to be addressed in a meaningful way if we are to recover lost ground. Labour costs are a significant factor in terms of cost competitiveness and while we still strive to grow and attract more higher skilled and higher wage jobs to our economy, at this vulnerable stage of our economic development, this is a factor which cannot be ignored in the current climate.

In 1958, acknowledging that Ireland was a small economy which is exposed to the "perpetual flux of world economic forces", T. K. Whitaker wrote:

One must be prepared at all times for fluctuations and upsets. A readiness to adapt to changing conditions is a sine qua non for economic success.

This is as relevant today as it was then.

The Taoiseach is today reaffirming this view in Davos, where he is meeting with other world leaders to discuss the shaping of the post-crisis world. He is also meeting with many key business leaders to confirm to them directly that Ireland Inc. remains open for business and that there are many concrete reasons for companies to invest here. Our stable, pro-business environment remains in place and we are taking steps to make further improvements towards reducing our cost base and making Ireland a more competitive economy for business.

It is worth repeating our positive attributes lest they get lost in the sea of bad news reports. We have a young and well educated workforce and we have a strong entrepreneurial spirit. We have a free and open economy. Investment in research and development-related operations, our quality of life, low tax wedge on labour as well as competitive rates of corporate tax, a supportive regulatory environment for the development and expansion of enterprise and increasing levels of educational attainment are all areas where Ireland performs strongly. Our enterprise support agencies stand ready to assist ideas and nurture business potential. Information and communications technologies are giving new opportunities to both individuals and economies to reinvent themselves. Ireland has developed a reputation as an attractive location for high-end, skill-intensive manufacturing operations and we continue to build on this advantage.

Many nations have pinned their future on building a knowledge economy. There are many pillars to a knowledge economy. These range from high levels of educational attainment, a modern industrial base and high investment in research and development to an innovation system that connects up the different parts of the economy to this objective. Most of all, however, we possess both the ambition and the confidence to build such an economy in Ireland. We are imaginative, creative and adaptable. We are innovators and problem solvers. Irish people have historically left these shores, travelled and helped to build some of the world's leading economies. We did that here, too, as we built the Celtic tiger economy. I firmly believe we will do it again and that we will emerge stronger from the current challenges, with an economy firmly back on the path of sustainable growth.

Seymour Crawford (Cavan-Monaghan, Fine Gael)
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With the permission of the House, I wish to share time with Deputy Fergus O'Dowd.

I listened with interest to the Tánaiste's speech and I welcome the fact that she recognises issues regarding the cost of energy, labour etc. However, one would almost believe she was talking from the perspective of somebody in Opposition or a person outside Government.

The first job the Government has to do is to convince international observers that a credible plan is in place to get the public finances back in order within a reasonable timeframe. It is clear that the events and failures in recent months have damaged Ireland's reputation internationally. The Government must not only take the blame for that, but now take the lead in rectifying the damage. It is unreal to see how far Ireland has dropped in the view of international commentators, from the days of the Celtic tiger to literally now being seen as a basket economy. A few weeks ago there was general consensus that tough measures would have to be taken. Whatever about union leaders being vocal against it, there was general acceptance among ordinary people that these measures were needed and would be accepted. Unfortunately, Government indecision in this regard does not help.

Representing a Border constituency where little or no international industry has ever been placed our job losses have not received the same publicity as Dell in Limerick. Nevertheless, job losses have the same effect on individuals and families whether it is a single job from a retail shop or a massive exodus from factories which will still open but only employ 10% of their previous workforce. To the Government and the Tánaiste and Minister for Enterprise, Trade and Employment, who has just left the House, I state that we in the Border areas deserve as much recognition if not more than any other area in that we lost out on so much due to the troubles in Northern Ireland.

The Government not only laughed at Fine Gael's logical demand for a 1% decrease in VAT rates to help in some way to improve our competitiveness but it further increased VAT to 21.5%. This happened at a time when the British Government lowered its VAT rate to 15% thus creating a major exodus to Northern Ireland from not only the Border area but even from the deep south.

Issues such as this together with a lack of leadership create fear and a lack of confidence even among the well-known entrepreneurs on which counties such as Monaghan relied through the years. Small businesses are finding it difficult in the marketplace because of the collapse of sterling. Equally, they are having great difficulties because of the failure of the banking system. This is caused because the Government has been slow to finalise the capital structures within the banks and get agreement to release the necessary funding for industry.

In recent years County Monaghan has lost 1,100 jobs in the furniture industry and hundreds in the timber frame sector. Not only did a mill close some years ago but businesses in the retail sector are also closing after hundreds of years. It is still difficult to estimate the recent damage done in the food sector. In blunt terms, increasing charges and indirect taxes together with the increase in the minimum wage has left our industries, including tourism, uncompetitive.

It is difficult to listen to the Tánaiste blaming the retail sector in the Border regions for not competing and bringing down their prices when she and her Government are the main problem. She admitted that we have among the highest cost factors in Europe. No matter how difficult the present proposals are to deal with, it is important to bring them forward and implement them and get on with the job. The indecision and incoherence of the Government is leading us further into depression while at the same time we watch President Obama move forward at speed with certainty and providing hope.

It is interesting to hear the Tánaiste speaking about small businesses. This morning, I was phoned by a small business in Monaghan which must close because of planning regulations. Some people in positions of power believe they are almighty and this is not acceptable to me.

Fergus O'Dowd (Louth, Fine Gael)
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This is an extremely important debate at a critical time for the national economy and the people. I agree with the point made by my colleague, Deputy Crawford, on the Border counties coming as I do from County Louth. We have had a significant loss of jobs, particularly in the retail sector. Superquinn in Dundalk closed recently and shops are closing every day. We need a more structured and credible approach from the Government on the cost factors which are driving small businesses out of business. One aspect of this could be to re-examine the rateable valuations and a reduction in rates. We should tell local authorities to cut their rates to stimulate business and make it less expensive for people to operate on the main streets of our towns.

We need to examine the cost of telecommunications and energy. At present, the price we pay for electricity is based on a price of $146 per barrel of oil when the real price is closer to $40. There is no reality between what we pay for major contributory cost factors such as energy and the actual price being paid internationally for these products.

My job is to speak about transport. A report was commissioned by the Minister and published this week. It spoke about the problems in Dublin Bus, particularly the lack of services which will occur in Dublin. Dublin Bus will shed more than 270 jobs and it will cut back on its routes and services. In 2000, the Government, through the late Seamus Brennan, published proposals for opening the bus market in Dublin to allow competition and competitive pricing on routes. Nine years later, this has not happened. The people of Dublin are losing out on services to Dublin Bus which is not able to manage its own funds.

This report shows that more than €2 million could be saved annually on one of its 14 key routes. Finglas was examined and it was stated that if services were run differently, more effectively and more cost efficiently they could be increased at a reduced cost. It is a disgraceful situation that Government policy is held to ransom by antiquated and unacceptable operations in the semi-State sector. It is time Dublin Bus was opened to competition. This would mean consumers would have more choice, prices would be lower and taxpayers would pay less for services.

Yesterday, the capital project for roads was cut by more than €280 million. This year, spending on national primary routes will be €280 million less than what was spent last year. The document circulated today, to The Irish Times if not to the Dáil, discusses increasing expenditure on capital projects to historic and international high levels. It does not make sense to cut back on capital projects which are labour intensive, will reduce congestion on our roads and will allow us to plan for the future.

This recession will end. There is doom and gloom everywhere but internationally, from time immemorial, economic cycles continue. While we are at the bottom of this cycle — perhaps it will get worse than we ever thought it could because of mismanagement by the Government — it will come around again. When the recovery does come our infrastructure, particularly transport infrastructure, must be in a position to benefit from it. We should spend on capital projects, cut back on inefficiencies and waste across the public service, and get rid of the 40 quangos as proposed by my colleague Deputy Leo Varadkar. Savings of almost €200 million could be made by switching to generic drugs. Many significant changes can be made which would improve our competitiveness.

There is shock and awe at the mess the Government has made of the economy. In the 18th century we had was is called the "South Sea bubble", and perhaps the Ceann Comhairle has heard of it, where investments were made in a project on the south seas and billions were lost on the Stock Exchange in Britain. The entire economy collapsed. The housing bubble was our South Sea bubble. The Government relied on people selling houses to each other to build a boom that could not last to get money that could not continue to come in to it because it had to end. The disaster we now have was visited upon the State by an inadequate, arrogant and uncaring Government which did not plan or save in the good times for the bad times we are in.

Mary Harney (Dublin Mid West, Progressive Democrats)
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I am happy to contribute to this debate on the economy. Rather than squabbling, this House must be united in our purpose of getting the country back on its feet again. This does not mean there is no role for critical analysis or constructive criticism. However, we must distinguish between constructive criticism and destructive cynicism.

In the past 20 years in Ireland we have shown that we have the capacity to win at home and in foreign markets. We have the capacity to take this country literally from its knees to become one of the most successful countries in the world today. This remains our position notwithstanding the economic challenges which confront the economy. Nobody has a greater stake in the country's success and future than our people, regardless of where they work, whether in the public or private sectors, whether they are public servants, politicians or business people, or unfortunately, unemployed, or pensioners. Nobody has greater capacity than our people to make sure that this country returns as soon as possible to economic growth.

The results of the latest world competitiveness survey are outlined on page 23 of the Government's smart economy framework document. Ireland ranks seventh out of 182 countries as a good place to do business, it is fifth out of the same 182 countries as an easy place to establish a business and is the third cheapest location for a business start-up. It is a member of the eurozone, a stable currency that enables us to sell our goods into a market of almost 500 million people with fewer transaction costs. We must export 80% of what we produce by way of goods and services which makes this one of the most open and export-led economies in the world. Ireland's stock of foreign direct investment is five times greater than the OECD average. Only 11% of the population is over 65 years of age, compared with 18% in the United Kingdom and 16% to 19% in most of the mainland European countries. Over 85% of those aged between 20 to 24 years have completed at least second level education, the second highest percentage in the European Union, and 40% of those aged between 25 and 34 have a third level qualification. I could continue to cite extremely favourable statistics for this country.

We do have to ensure that our public finances are in order. The solution to the economic problems we face does not lie solely in our hands but unless we deal with the issues within our domestic capacity we will not be able to return to economic growth when the world's economic conditions change. We can manage our public finances internally in a sustainable way. It is not sustainable to run budget deficits of 11% to 11.5%. The Government therefore has identified the need to reduce spending in 2009 by €2 billion. That will be a challenge because already one month has passed and decisions made within the next week will perhaps take some weeks to effect. For the rest of this year we will be challenged to find that €2 billion but we must find it. That gives urgency to the decision making process.

The Taoiseach and the Government want to bring those involved in social partnership with us in this collective national effort to return to economic growth as quickly as possible. In the mid-1980s when we almost went under and Ireland was described on the cover of The Economist as the "basket case of Europe" — I still have a copy of that edition — the collective effort of many stakeholders, not least public representatives, helped to bring about national recovery. In addition to the policies pursued in the intervening period the industrial peace that came from social partnership which is fundamental to our system of government has had significant benefits in making the country an attractive place, not only for outside investment but also local investment.

We must, however, acknowledge and learn from our mistakes. We let competitiveness slip not only in wage levels but also the cost of energy. These are gravely negative factors making Ireland less competitive for indigenous and foreign investment. There is no doubt that we over-lent and over-invested in property. We must learn too from what we did in the 1980s when we had high debt, high tax and spending and high unemployment. We do not want to see a return to the vicious spiral of high unemployment fuelled by those factors.

Investment is mobile and will go wherever the returns are reasonable. Among the factors influencing foreign investment in this country was that we gave one of the best returns in the world as the US Department of Trade and Commerce showed. We know from events in banks and stock exchanges around the world that high risk attaches to investment. Those who take those risks are entitled to expect a reasonable return. The manner in which we tax transactions, risk taking and enterprise must focus on delivering a good return while remaining competitive.

We have seen recently that the failure to enforce appropriate regulation has a negative impact on the performance of our corporations and the image of, and confidence in, our country. Confidence is essential to winning investment and fundamental to the success of any economy. We have done a great deal in the past decade to change the regulatory environment but law alone will not achieve this. We must change the culture. Maybe because this is a small country we cannot be as dispassionate and tough as we should be. Most people here are terrified of the Revenue Commissioners. I have been very impressed with the manner in which they have enforced the tax law in recent years. People must fear and respect other regulators. If regulation is not enforced without fear or favour those who invest in our society, as shareholders, citizens, pensioners, employees, those honest business people, are damaged. That is why when I was Minister for Enterprise, Trade and Employment, with support from the Government, we established the independent office of the Director of Corporate Enforcement. We removed from ministerial direction the appointment of inspectors to companies. That should not be a political function, no more than the prosecution of criminal offences or the granting of planning permission. The office, headed by a respected public servant, for whom I have high regard, Mr. Paul Appleby, has enforced company law in recent years. People in this House have often criticised him for being over-zealous. Now we see the consequences for all our citizens of not enforcing regulation.

We face a tough challenge. Many are concerned and worried. We must inspire confidence and work together with a unity of purpose to get the country back on its feet. Ideas from wherever they come, whether an individual inside or outside this House or a political party, are important to the Government. We want to hear good ideas and act on them.

I wish to end on a positive note. One of the ways to measure the progress of any country, and particularly its health system, is life expectancy. In the past ten years we have added over three years to life expectancy. This is unique in the developed world. A child born here today has a life expectancy greater than one born in the United Kingdom, Finland or many other countries, and can expect to live as long as a child born in Germany. According to Professor Walsh this is due in equal part to better health interventions particularly for cardiovascular disease and enhanced prosperity. There are many good stories about what has been achieved here. Working together we have the capacity to return to economic growth and to see similar success soon again.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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The Taoiseach yesterday reverted to his former role as Minister for Foreign Affairs. He had much to say about the global causes and effects of the recession in the big bad world on poor little Ireland. He set his sights on the distant horizons of New York, Berlin and Tokyo for the sources of all our troubles. Even when he addressed the banking crisis he set his remarks in a worldwide context. It was a smokescreen. The Taoiseach said nothing about the sordid clique of property speculators, bankers and politicians in this country, whose insatiable greed and gross mismanagement have brought the Irish economy to its knees. There was not a mention of Anglo Irish Bank, the property bubble, or the fatal reliance of the Government on revenue from that property bubble.

The Taoiseach told us that "there is little point in looking back at how some of this might have been anticipated or avoided". I believe there is every point in doing so, because the lessons of the past must be learned if further disaster is to be avoided. We are not asking the Government to wear sackcloth and ashes, but a straightforward acknowledgement of what was done wrong would help to instil some confidence in its ability to give leadership. More importantly, it would be the first step in rebuilding the economy on more secure foundations and in helping to ensure that it serves all the people and not the privileged.

We are in the biggest economic crisis in this country since the 1930s. People are very concerned about the future, but they are also very angry and I do not think this has been stressed enough. People I meet every day are incensed at what has happened because they know where responsibility lies. We have to learn the lessons of those failed policies if we are going to find a way out of this crisis. The Government must prioritise jobs, infrastructure and public services. We are not seeing a comprehensive strategy for recovery coming from the Government. We are debating the economy over two days without being given right of access, as elected representatives of the people, to the framework document being discussed between the Government, unions and employers. We had to wait until it was leaked to the newspapers this morning to see it. That is an insult to the people who elected us.

The framework document is aspirational and vague, and all will depend on the details that are filled in over coming weeks and months. However, I fear we are seeing a book-keeping approach from the Government when what is needed is a job-creating approach. We urgently require a plan to create jobs in the short and medium term. Jobs are being lost for the simple reason that people do not have money to spend. We can see this in the number of companies going into receivership in both the retail and manufacturing sector. Consumer spending must increase to save these jobs and to start returning revenue to the Exchequer in the form of VAT. There needs to be a stimulus package that protects the wages of those on low and medium incomes, reduces VAT and ensures that reductions in oil prices are passed on immediately.

With the unemployment figure currently at 300,000 and thousands of jobs being lost every week, the Government's options for raising revenue will continue to be seriously curtailed unless a strategy is in place to put more people in employment, thereby increasing direct revenue returns and lessening the pressure on public resources through social welfare. This means developing an export led economy. Over 90% of current exports are from foreign owned companies here, not indigenous companies. Enterprise Ireland, the body tasked with improving our export figures, is in desperate need of an overhaul. The body received over €273 million in funding in 2007, but it sponsors just 624 companies. To put this in perspective, over 8,000 Irish companies applied for new licences from January to June last year.

Sinn Féin put forward a series of proposals before the budget that would have generated up to €2 billion in revenue and would ensure that those who have the most, pay the most. For example, all discretionary tax reliefs should only be available at the standard rate of tax and the PRSI ceiling should be removed. Those on higher income have the opportunity to contribute more. All those on lower incomes are paying PRSI on the entirety of their income. We should be paying it commensurate with our ability to pay, based on income.

Sinn Féin has proposed a range of other measures, including a social housing construction programme to meet the needs of those on local authority waiting lists and to address the dramatic fall in construction employment. We have proposed the fast-tracking of other infrastructure projects. For example, where is the network of primary health care centres once promised? Where are the child care facilities? We need improved public transport if we are to attract jobs. Instead, we are getting cuts in buses and in jobs. We have proposed a moratorium on home repossessions and a requirement on the financial institutions to negotiate down unaffordable mortgages. This would provide relief for hard-pressed families and allow them to participate in the economy again without the fear of losing their homes. That fear is real and present in every constituency in this State today. We have proposed a major programme of retraining and reskilling workers, especially those in the construction industry who have seen mass redundancies and many of whom have little or no transferable qualifications.

The Government stepped in directly to bail out the banks. Why was there no intervention in flagship Irish industries such as Waterford Crystal? Such interventions are now urgently required. The Government should reverse the giveaway of the massive Corrib gas resources off the Mayo coast. What are the chances that the Government will have the bottle to tackle that? It is worth billions, yet it has been given away to multinationals which have ridden roughshod over the local community. These resources belong by right to the Irish people and we need them now more than ever.

We need to see aid to indigenous small and medium sized industry on a par with what is provided for foreign direct investors. These industries are anchored in our communities. They need credit and they need help with research, product development and marketing. Banking must be first and foremost an essential service for the economy. When that service is destroyed because of the greed of top bankers and the negligence of the Government, we get the financial crisis in which we now find ourselves. A State bank should be established to provide credit for economic development, to encourage saving and to utilise capital for productive investment, not speculation. Anglo Irish Bank is not that bank. The economy can no longer rely on a banking system which has been corrupted by the grossly inflated profits of top bankers and shareholders.

In conclusion, I stress the need to defend vital public services in health and education. Little has been said about the cuts that have already taken place and that have damaged our health and education systems. These cuts are penalising the less well off, those who are being thrown on the dole queue, the people waiting up to 11 weeks to get jobseeker's allowance, the families struggling to meet medical bills and the older people existing with minimal services. We in Sinn Féin will stand by these people and we will work shoulder to shoulder with others, including the Government, to defend the vital services built up over decades, as long as the Government is prepared to ensure that those services remain and are built upon. Taxes paid by working people in this country represent the essence on which the economy has been built and has thrived. People deserve the reward of certainty and not the current uncertainty that has instilled such fear and gloom across society.

The Government should respond to the proposals of all parties presented during this debate. I welcome the commitment of the Minister for Health and Children, at the conclusion of her own contribution, that the ideas of all parties should be taken on board by the Government. I do not want a Thatcherite response of "out, out, out" across the floor of the Chamber. We deserve a considered, costed and written response to the ideas we have mooted. We put these ideas to the Minister prior to the budget on 14 October and we reiterate them today. We deserve a response. The people we represent deserve it, and everyone looking for a resolution to the current difficulties deserves to have the Government pay serious attention to the voices, ideas and proposals of all parties in this House.

Billy Kelleher (Cork North Central, Fianna Fail)
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I wish to share time with Deputy Flynn.

Brendan Howlin (Wexford, Labour)
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Is that agreed? Agreed.

Billy Kelleher (Cork North Central, Fianna Fail)
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I am delighted to have this opportunity to speak on the issues that confront us. As we speak, social partners are in detailed discussions based on a framework document entitled Framework Pact for Stabilisation, Social Solidarity and Economic Renewal. I am delighted they have agreed on a framework document and that they can now engage in detailed discussions to advance proposals put forward by themselves and the Government on how to address the challenges facing us.

Every Member is aware of the great challenges facing us, some of which were caused by internal problems and others which, it is important to note, were caused by global events over which we have no control. Some Deputies seem to believe the banking crisis was caused by Anglo Irish Bank alone and some individuals involved with that institution. Let us be under no illusions that the financial banking crisis is a global one. I recently read reports from the United States indicating people have made apologies for allowing Lehman Brothers to go to the wall and for necessitating the bailing out of other financial institutions. The fact of the matter is that the global financial crisis started in the United States in the sub-prime market and filtered into all economies in the world, culminating in a credit crisis. This, in itself, has compounded the difficulties in the Irish context.

We are already facing challenging times because of our over-reliance on the construction industry. However, a view is being circulated by some Members of this House that the construction industry just put money in developers' pockets. For many years, craftspeople and others working on building sites throughout this country enjoyed gainful employment with reasonable remuneration. It is important to acknowledge that, while there was over-reliance on the building industry, it employed many people for many years. The number of people who came here from the newly acceded states of the European Union increased dramatically over recent years. This shows the full extent of employment generated by the building industry.

We are now running into major difficulties, however, and these difficulties feature across the broader economy. Nevertheless, we must bear in mind what we have achieved as a nation to date. It is very disappointing to hear some Members talk as if Ireland has achieved nothing in the past 40 or 50 years, or even since our independence. The fact is that Members on all sides, along with the social partners and the people, can be very proud of what we they have achieved in recent times. We made the transition from an agrarian society, whose main export was its people, to a society with full employment, a labour force of over 2 million people, increased public expenditure and considerable investment in capital projects, infrastructure and roads. All these developments are clear. We can be slightly cynical in this House at times and dismiss them as never having been achieved in the first place.

We have come from a very low base and must therefore keep firmly in view what we have achieved and realise where we are when dealing with the challenges. We can do this collectively. I genuinely believe the social partners were very responsible in difficult times in the 1980s and also in the good times in the 1990s. We now face a crossroads but the confluence of events and circumstances internationally is making the challenge greater than ever. Decisions that will be made by the Government and social partners in the coming days will have a profound impact on the generations that come after us. The decisions made will be the most difficult this generation of politicians and those involved in social partnership will ever have to make. I hope they make sensible proposals that are fair and equitable and distribute the burden of pain across all sectors, such that the weak and vulnerable will be protected and that those who can afford to do so will carry a heavier burden. All political parties would endorse this view.

We do not want to undermine what is happening in Government Buildings with the social partners. Obviously people have stated positions and want to negotiate on that basis in the knowledge that those positions will not be in the public domain until such time as there is a final conclusion. Deputy Ó Caoláin will be well aware of how lengthy and difficult negotiations can be. People change positions and must be encouraged to do so. This takes time so we must give them the space and opportunity to make proposals that are fair to their members and that also deal with the crisis we are facing.

The most immediate impact of the global downturn was the bursting of the construction industry bubble. This is now affecting the broader economy. Every day there are job losses and company closures, which comprise the most immediate impact of a global downturn. For this reason alone, we must increase the number of training programmes and expand FÁS's capacity to deal with people as they become unemployed. This will place a great burden on the Exchequer. I urge all those involved in the State agencies dealing with the unemployed to put in an extra little bit of time and effort. While we know they are under a lot of pressure, we depend on them fundamentally to create the courses and training programmes for the unemployed.

The mistakes we made in the 1980s in respect of unemployment, namely, throwing people on the scrapheap, must not be repeated. We must learn this lesson. We had large-scale unemployment but did not deal with the unemployed and provide them with training opportunities and educational courses. The Department of Enterprise, Trade and Employment will try to determine the programmes necessary to deal with this issue.

We have 2 million people employed. Those on fixed, secure incomes could enjoy a higher standard of living this year because of a reduction in inflation or potential deflation. Everybody must recognise that some are in a more privileged position than others, but every effort must be made to deal with those at the coalface who find themselves unemployed.

The social partners comprise the mechanism for a resolution. I urge every Member to encourage the social partners, irrespective of who they represent, to make a deal that will meet the challenges confronting us.

The financial institutions guarantee scheme involved a fundamental decision on the part of the House. Some Members did not support it but, had we not established the scheme in September, we would be facing a very serious crisis, simply because a stable, financial banking sector is fundamental to any economy. On the perception that we are bailing out the banks, let us be under no illusions that the banks are owned by shareholders, many of whom are walking these streets. They either have shares or pension funds in the banks and it is therefore very important to note we are not just bailing out the banks but also trying to ensure we have a stable, viable banking system. I wish the social partners well and I know the contributions of the Deputies opposite will be taken into account in their discussions.

Beverley Flynn (Mayo, Fianna Fail)
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I thank the Minister of State for sharing his time.

I welcome the commitment of the social partners who are engaging with the Government to try to bring about a solution to the very difficult economic crisis in which we find ourselves. We should recognise that we require a five year recovery programme. It will be very difficult to achieve an adjustment of €2 billion in 2009.

I would like to comment on a few main areas in the time available to me, the first of which concerns the banks. I feel very strongly that the banks must now act very responsibly in their dealings with businesses. Reference has been made to the fact that the banks have been bailed out. Some €6 billion has been committed to the two main banks in this country under the recapitalisation programme. Reduced interest rates are not being passed on to the business community and not enough flexibility is being shown by the banks.

Given that the Government is asking for a five year period in which to bring about economic recovery, it is not unrealistic to ask the banks to consider a five year recovery programme to deal with many businesses that I believe are viable and solvent and which could work through the difficulties if reasonable flexibility were shown to them in the five year period. I ask that this be done because all anecdotal evidence suggests banks are not lending money. There are many banks in the Irish economy that are not lending money at all and those that are appear to be doing so on a very restricted basis. We all know cuts must be made over the next five years but the other half of the equation is that we need to stimulate growth in the economy. Where will this growth come from if we do not invest in business and all sectors?

I have heard much criticism in this House of the construction sector and of our over-dependence thereon over recent years. It is true the sector played a greater role than was economically necessary and desirable but, in seeking to bring about a revival in the economy in the next five years, we cannot afford to ignore any sector. The construction sector employs thousands of people in every part of the State, including blocklayers, electricians and carpenters, who are in need of support. It is not all high-flying property developers in the construction industry. We must protect existing jobs throughout the State. Investment in infrastructure, particularly the building programme, must support these jobs.

For those unfortunate enough to lose their jobs, the Government must take action to ensure they receive their social welfare payments without undue delay. This is vital to the dignity and security of persons who find themselves in that difficult position.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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I propose to share time with Deputy Enright.

Brendan Howlin (Wexford, Labour)
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Is that agreed? Agreed.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Two years ago, there was an Exchequer surplus of €4 billion, even after the Government had squandered as much money as possible on projects such as PPARS and electronic voting. The list goes on. The only commitment given by the Government at that time, in the wake of these instances of wastage, was that it would get it right the following year by ensuring it spent all the money available to the Exchequer. Now, 24 months later, we are going into debt at a rate of €40,000 per minute. The Government has spent recent months playing jigs and reels with the social partners in its efforts to secure savings of €4,000 per minute. What about the additional €36,000 per minute we are obliged to borrow? The Government is engaged in abacus economics.

A conversation I had last week with a person from a rural village in County Roscommon offered an insight into the current state of our society. He observed that one cannot get a pint because the pub is closed, one cannot buy a postage stamp because the post office is closed and one cannot buy a newspaper because the newsagent is closed, but there is no difficulty in buying an apartment. The Government facilitated the unsustainable increase in prices in the commercial and residential sectors. My colleague, Deputy Bruton, repeatedly warned the Government about this and emphasised the need to save for a rainy day. However, nothing was done.

Last Tuesday, I had lunch with Senator Anne McEwen from the Australian Parliament. Her Government, she told me, announced its second stimulus package this week, the first having been introduced before Christmas. Both these packages were financed from the reserves built up by the Australian Government during the good years, a concept completely alien to the Government of this State. We are not even informed of its intentions.

Young families who are mortgaged to the hilt are feeling the brunt of this downturn. The blame for this lies firmly with the Government. In 2006, the Taoiseach, who was then Minister for Finance, was privately advised by economic experts that the property price explosion was unsustainable. At the same time, he publicly encouraged young people to invest their future in housing. Why would he not do so given that 35% of the price paid for every house goes directly into the Government coffers? Banks are now setting unattainable deadlines for the repayments of loans. Innovative action is required to address this problem. In return for their recapitalisation, the banks should write off a percentage of property-based loans where it is evident that current repayments cannot realistically be made.

The Government has failed to recognise that the small business sector, which is currently haemorrhaging jobs, is of greater significance to the economy in terms of the employment it provides than multinationals and the State sector combined. Companies that have been in operation for 50 years are going to the wall. Fine Gael has proposed that such businesses should be exempted from PRSI where they are creating a new job with no net cost to the Exchequer. We must also, at the very least, reverse the increase in the VAT rate and allow credit-starved businesses additional time to make their VAT payments and flexibility in regard to tax clearance certificates. Moreover, the Government and its agencies must pay small businesses within the current 30-day deadline. The Government, through the banks, must provide small businesses with the essential capital required to operate on a day-to-day basis.

The Government must also examine the issue of cost savings. Last year, for example, even though the number of asylum applications had decreased and accommodation costs had declined, there was an increase of €15.5 million in the cost of housing asylum applicants. We must deal with the bottlenecks within the system. For example, there is great potential to grow the international education sector, which is currently worth €1 billion. However, we are still awaiting the finalisation of issues in regard to regulation. We have a crazy situation where a person from outside the European Union who wishes to set up a small business here cannot do so without obtaining permission from the Department of Justice, Equality and Law Reform.

Olwyn Enright (Laois-Offaly, Fine Gael)
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I will focus mainly on the difficulties being experienced by those in receipt of social welfare or attempting to access social welfare benefits. Before doing so, I wish to make clear my abhorrence that we are effectively speaking in a vacuum in this debate. The Dáil is the seat of democracy in this State, or it is supposed to be, but it is being treated like a debating society where we can only speak in generalities about what is happening in the real world. Despite the absence of any concrete proposals from the Government, other than what we obtained courtesy of the The Irish Times today, I wish to be constructive in my contribution to the debate.

However, it must be emphasised that it is time the Government stopped trying to have it both ways. Last week, we had less than half a day to debate the situation in regard to Anglo Irish Bank. It is clear the Government wants this House to write it a blank cheque for whatever it wants to do, without offering any engagement with Members. Given that the Government must have known this information would be leaked, it could at least have pretended to have some respect for the Dáil by leaving the documentation in our pigeon-holes this morning. It is clear where the Government stands in this regard.

Nobody underestimates the scale of the difficulties we face. We on this side of the House certainly do not. My colleague, Deputy Bruton, has warned time and again of the challenges ahead and offered various solutions to those difficulties. Fine Gael has made many constructive suggestions on what should be done in particular areas but, unfortunately, the Government has not heeded our advice.

I listened with interest to the points made by the Minister for Social and Family Affairs, Deputy Hanafin, in a radio interview this morning. I am relieved that she and her Government finally admit there is a significant problem in terms of the scale of job losses and that she is no longer accusing Members on this side of the House of being alarmist in making this point. However, I am unconvinced that she is delivering sufficient staff to deal with the crisis. Members of the Government have taken to using the phrase, "We are where we are." In other words, let us not examine how we have come to be in this situation.

The reality is that if the Minister, Deputy Hanafin, does not begin to act far more quickly than she has done to date, we will be in a much worse position. I asked her last October to assign additional staff to social welfare offices throughout the State, describing in detail to her the difficulties faced by both claimants and staff, all of whom are working extremely hard. Eventually, in December, the provision of an additional 115 staff was announced. Today, on 29 January, the Minister tells us these 115 persons are "coming in". In other words, they have not yet been appointed. Moreover, many of them still require to be trained. The Minister has indicated that she will seek to make an additional 100 appointments, on top of these 115. However, this will be insufficient to meet demand if 120,000 people join the live register this year.

If social welfare offices cannot deal with demand, every politician will advise constituents that the next port of call should be the community welfare officer. Social welfare offices are all dealing with separate schemes but community welfare officers are processing almost everything in the interim, including applications for rent supplement, mortgage interest supplement and exceptional needs payments, assessments for medical cards and exceptional needs payments for electricity, gas and so on. They handle dozens of claims every day. Each officer is supposed to deliver three clinics per week on average, but these are currently running way over time because of the numbers of applicants. Community welfare officers are unable to deal with the scale of demand. This is something the Minister must address.

One of the greatest fears people have at the moment — I am glad it is reflected in this document — is the fear of losing one's home. The Taoiseach said yesterday that the Government is acting to support mortgage holders who get into arrears in their mortgage repayments. I want to let him and every other Member know that the Minister for Social and Family Affairs does not collate the information on the number of people who have applied for the mortgage interest supplement. She does not know that figure. MABS has stated its concern that the increase in the number of applications is resulting in an increase in the number of refusals, which more or less correspond with each other. The regulatory provisions are being interpreted in an overly restrictive and punitive manner.

The Government is telling us in the framework document that it will assist those people. How will it do so? We raised this matter again with the Minister, Deputy Hanafin, many months ago and the Government did nothing about it. She said on radio this morning that the Government will deal with the issue of apprentices who have lost their jobs. Last June Fine Gael outlined how those in the IT sector could be brought in to assist in dealing with apprentices who have lost their jobs. The Tánaiste, Deputy Coughlan, announced at Christmas a plan to deal with this issue. Thousands of apprentices have lost their jobs. To date, the Government has assisted the grand total 97 people.

The Government needs to accept the scale of this problem and to act, and not only talk about how it will deal with it. It needs to listen to what is being said on this side of the House because constructive measures have been offered. The problem is that the Government waits until the issue develops into a political situation. It does not want to be seen to almost give in to the Opposition. It is not listening to what is being said and the solutions that have been put forward.

Dick Roche (Wicklow, Fianna Fail)
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I wish share time with Deputy O'Rourke when she comes into the House.

Brendan Howlin (Wexford, Labour)
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That is agreed.

Dick Roche (Wicklow, Fianna Fail)
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I will speak about an area where the Opposition has played an important role, that of Ireland's role in Europe and how critical it is to our current position. Modern states were created on the social market economy model, with freedom for private enterprise balanced by the safety net of the welfare state. That model has served the world, particularly Europe, successfully in the period since the Second World War, but it has failed to keep pace with the changing world around it. That is the current reality. The most profound change in the world has been brought about by globalisation and we see that in the financial crisis. A bank collapses in Washington and its impact is felt in Waterford. We live in a global village. The problem is bigger than any one country. It is systemic and global.

The under-regulated use of the so-called innovative financial instruments, poor risk management and poor national financial regulations at the heart of the financial system have exposed the international economy to real damage. All over the world lenders are unwinding credit, causing massive pain to businesses and households. Consumer spending is shrinking across the developed world. We see that on every street in Ireland in the destabilising impact of falling liquidity. Investment cannot be sustained by the private sector in the face of shrinking lending to businesses. Jobs are being lost across the developed world as credit is being withheld. We know that this is the case not only in Ireland but elsewhere. In this regard I would not necessarily include Australia as a model we should be following.

A small open economy such as Ireland is particularly vulnerable. The instability which is disrupting the world's largest economies cannot be avoided on this island. I want to make a simple point. EU membership represents for Ireland a vital support system at a time of economic turbulence. We are undoubtedly in a very difficult economic position but our situation would be immensely more difficult if we did not possess the range of advantages that EU membership confers. Most of the parties in this House have seen that as a fundamental truth. Most of the parties, Opposition and Government, have worked on that reality. That is why it is so vital now that we do not allow a shadow of a doubt arise as to our commitment to being at the heart of the European Union. It is why it is imperative that we dispel the undoubted uncertainty that our rejection last year of the Lisbon treaty has created and why the Government must finalise legal guarantees that last month's European Council agreed to offer to Ireland on taxation, defence and ethical issues and give the people of Ireland the opportunity to ensure that we will retain our position in Europe. It is why there is a challenge here, not only for the parties in Government but for all of the parties in the House to become part of the crusade to ensure that we stay at the heart of Europe.

Once issues of guarantees have been resolved and the concerns of the Irish people addressed, it will be in our best economic interest to ratify the Lisbon treaty. I suggest that we should do so handsomely by ratifying it with the same sort of numbers we ratified the original treaty to join the European Union. This will not provide the single solution to all of our economic ills but it will represent a clear signal that Ireland wants to remain at the heart of the European Union. If we are to make progress and if we are to rebuild in particular on the jobs front — I listened to contributions of the Deputies opposite — we have to stay at the very heart of the Union. We have to dispel the clouds that have gathered over this country's position in Europe since 12 June 2008. We have to be able to say to those people who will be involved in the future in foreign direct investment that Ireland is still open for business as the entry port to Europe.

The only hope of influencing the turn of world events is by working together with European Union colleagues. We can only ensure that Ireland's interests are represented in the international response to the crisis by being at the heart of the Union. Even the most deluded Eurosceptics must recognise that at this time. I cannot understand some of the rhetoric I listened to in recent days, not only in this House but outside it. People who resolutely have argued for the past 35 years that somehow Europe is inimical to us have blinded themselves to the truth that it is vital to our future. Those who refuse to see this essential truth put at risk our national well-being. This is not a time to consider ourselves as À la carte Europeans. Ireland needs to be a core member of the Union if it is to have an influence.

To take one example, the Union is currently working on the area of financial regulatory reform. I accept the analysis that regulatory reform in this country did not perform well and has not performed well internationally. The new supervisory arrangements will have to be supranational as well as national in character. The only way that we can influence the way they are constructed is by being at the heart of the Union.

Within the European Union finance Ministers and the Commission are currently working intensively to implement reforms that will address some of the problems the financial turmoil has exposed. We have to be part of that work, we cannot be semi-detached from it. Eurozone membership is another area of critical importance. It has been critical to providing the stability and security to the Irish economy at this difficult time. The single currency has provided a stable foundation in Europe in these times of financial turmoil. Where would this country be if we were not part of the European Union and of the eurozone?

We must not let a sense of national hubris cloud our vision. We saw plenty of examples of hubris last June as we came up to the referendum. The delusion that we could go it alone and that somehow we in Ireland were impregnable has been blown away by the perfect storm that has ripped through the international financial services. I am not suggesting that people should be convinced to vote "Yes" for Europe on the basis of fear, but I argue the case that we should be willing to vote "Yes" for Europe on the basis of the logic of the argument.

Yesterday's Financial Times reported that more than 80,000 workers lost their jobs across the United States and Europe in just one day. Some 80,000 families were cast into turmoil. Irish workers and their families can only be protected if we continue to attract investors. Members on all sides of the House have seen the misery, fears and concerns that exist about the threat of job losses.

However, just as currency traders choose safe currencies in troubled times, so too will major investors look for stability and security in making investment decisions. We have to maintain our position at the heart of Europe if we want to remain an attractive location for investors. I am fearful, as I believe are people who think about this, that our decision on 12 June last came at a very significant cost. It raised questions in the minds of people on boards who make investment decisions. We all know that reality to be the case. High value technologies are the area that we have to attract into this country because of our cost structures. Such investments will only be made if those who are making the investment decisions believe that we are going to stay at the heart of the Union.

Voting "No" last June was not cost free. It raised questions about this country and about where Ireland stands. It did real damage to us in the area where we are pursuing investment decisions. Admittedly, the so-called employment pipeline is quite full at the moment, but what has been the effect on investors who have not yet come to us? Goodwill that has taken 35 years to build up was lost among our European partners. How do we put a value on that? Goodwill is something that one cannot easily dispose of, yet we have done so. This all comes at a strategic cost. Less immediately measurable questions about our place in Europe have been placed in the minds of those who look from outside the EU for a place to invest. This has a cost in jobs. I shall offer the House a couple of examples. We know because we have had contacts from a number of investors in the United States — a small number of investors — wondering what are the effects of the decision of 12 June last. What we do not know, and what we can only surmise, is the impact of the doubts being put in the minds of those who have yet to make their investment decisions. Are we even in contention for investment?

Brendan Howlin (Wexford, Labour)
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The Minister of State has one minute.

Dick Roche (Wicklow, Fianna Fail)
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We must stop deluding ourselves on this score. The investment climate for the next few years will be challenging. If we raise doubts about Ireland's place in Europe, the outlook which is already bleak will turn yet bleaker. A stable currency, access to a single market, a competitive and well-regulated economy and predictable tax policies — these are key attributes that international and domestic investors prize and they will provide the pathway to a more prosperous future for our citizens.

These can be assured only by maintaining and upholding our membership of the European Union and by continuing to play our part in the developments in the European project. I realise the eyes of the nation are now more upon the immediate decisions that must be taken but we should not allow that reality to cloud us. We have another decision to make. As individual citizens, we may not be able to influence the money markets or individual decisions taken by investors but, as individual voters, we can assure our place in Europe and gain the opportunities that will come from being at its heart. We can do that later this year.

Brendan Howlin (Wexford, Labour)
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I call on Deputy Richard Bruton.

Richard Bruton (Dublin North Central, Fine Gael)
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I thank the Chair.

Michael Kennedy (Dublin North, Fianna Fail)
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Am I not sharing time with the Minister of State?

Brendan Howlin (Wexford, Labour)
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I was told, and the Minister of State announced, that he was sharing time with Deputy O'Rourke who did not come to the Chamber. I am afraid the full ten minutes was used by the Minister of State. I call Deputy Bruton.

Richard Bruton (Dublin North Central, Fine Gael)
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I thank the Leas-Cheann Comhairle.

I will take up a theme of the Minister of State, Deputy Roche, who said we are deluding ourselves. Listening to the Taoiseach yesterday was deeply dispiriting. He scoffed at every proposal that came from these benches, saying they were inadequate. He offered the Oireachtas no role in defining the nature of the framework or the challenges we must meet nor in how we must address them. He gave no hint that he or any of his Ministers bore any responsibility whatsoever for any of the problems we address.

The reality out there is seething anger about the way in which we have been driven into this deep recession, unprepared by Government and by those who were supposed to look out as regulators. They look in at politics and see the sham nature of debate in which the Government is not willing to open up any realistic analysis of what is going on. People are alarmed at what is going on in this country. They see gross incompetence and no consequences. They see golden handshakes for people who displayed incompetence or even worse. They see auditors marked absent when serious issues were happening. They see practices condoned that are outrageous: the extravagant set-up of this Dáil, with all its committees and those who are paid retainers to occupy places on them; the unjustified bonuses paid to public servants when the areas for which they have responsibility are manifestly failing; and the repeated refusal by anyone to accept responsibility for catastrophic failures that have occurred in this economy. That is what people look at and why they lose confidence that we have a Government that is willing or capable to make the changes for which this crisis calls.

The Taoiseach opened his address with one lucid paragraph:

In assessing how well we are prepared to confront the crisis it is reasonable to consider how well the nature of the problem is understood, how clear is the strategy that is designed to respond to it and how credible are the measures to be taken and how likely they are to succeed.

Having set out that lucid set of three items to be looked at, the Taoiseach totally ignored them in the rest of his contribution. How well is the nature of these problems understood by the Taoiseach? It was alarming that there was not a single mention of any public policy failure in the course of his address. A budget system that comes from the Dark Ages has seen money spent in appallingly inefficient ways. The undermining of a performance-oriented public service was done knowingly and deliberately by Government in its decisions on benchmarking and decentralisation and in the establishment of the HSE without any restructuring. These damaged the concept that high performance was important in the public sector.

The Government did not bother to analyse properly the challenges before it made catastrophic decisions. These include the fostering of a property bubble that was repeatedly supported by the Taoiseach as based on sound economic fundamentals; the gross failure of regulation right through this period to constrain irresponsible lending practices; and the destruction of competitiveness by the Government.

The source of our uncompetitiveness is due to factors for which the Government is responsible. Our over-priced electricity and waste systems and our inefficient telecom system are all areas the Government either manages or regulates. It has failed. There was the irresponsible fiscal stimulus that was pursued by Fianna Fáil Ministers in every election that occurred. We have the failed public service management system that saw, in the last year for which we have figures, 40% of set targets not delivered. There were no consequences for either Ministers or public servants. We have the failed system of public pay determination which, less than a year ago, had the Taoiseach coming into the House to tell us that he and his colleagues deserved €35,000 extra in public pay. That, for them, was at a time when they were presiding over catastrophic failures in the system.

If we want to get real and face up to these issues we must realise that those elements are at the heart of why we, exceptionally, are most unprepared for this challenge. We must realise why we have seen the greatest decline in jobs, the greatest problems in our public finances and why we see people with houses that will never regain the value of the price paid for them. People are petrified that they will be next to lose their jobs. We are most exposed because of policy failures and these were not once mentioned by the Taoiseach.

If we do not understand what got us into this hole, by God, we will not get out of it. Ministers must get real and face up to their own failures because resolving those failures is part of getting us out of this position. There is no point in the Government pretending that nobody in Government is responsible, that this is some sort of a once-in-a-lifetime calamity that has broken upon our shores from abroad, that there were great, sensible and sustainable polices here that were ruined by some forces from overseas. That is just not real and Ministers must know that. If they do not, they do not deserve to be Ministers. The Government has been living in a cocoon of its own making and that has done untold damage to our people.

People will accept pain and they will accept pay cuts but, by God, they require to see that the members of Government are squaring up to the revolution that must occur in the way business is done in this House, in the regulation of monopolies and in the management of partnership. We must see revolution right through the system and it must start in this House. We must renew politics. This sham debate of the past two days is undermining the last shreds of the confidence of people that the political system is aware of the challenges and is willing to square up to them. The scoffing we have noted from the Taoiseach is contemptible. It does not do his office justice. At this time of crisis he should be looking to get support wherever he can, from this House and from the social partners. People say on that side of the House that I and Fine Gael do not support social partnership. We do support social partnership and we want to see it facing up to the changes that must be made. Let us be very clear. It is not the shaping of an agreement of consensus that will get us out of here. It is the effectiveness of the measures that will get us out of here. Consensus and the procedure of getting consensus are not the vital element, rather it is the decisions and the effective change we bring to this country that will make the difference.

I shall return to the Taoiseach's second point, namely, how clear the strategy is that is designed to respond to this crisis. Nobody in this House, or on this side of it, can see clarity in the nature of this strategy. We got a table from a Department of Finance document called "Addendum to the Irish Stability Programme: Update". That makes two addendums and updates in the one. It contains a mere five figures, namely, €2 billion next year, €4 billion the following year, €4 billion the year following that, €3.5 billion and then €3 billion. That is the sum total of the strategy. That is not a plan or a strategy, it is a wish. They would like to see borrowing dropped by that sum in those years and, lo and behold, with one bound our hero is free. That is not a plan. That is not what can be presented to this House to have a serious debate about the choices we face. It is about time the Government wised up to this fact.

The framework for a plan is full of platitudes. It is thin enough gruel so everyone can agree to it and sit down and talk, but let us not delude ourselves into thinking this is a plan either. The plan for the smart economy, Lord above, is a poorly reheated stew of promises that have peppered almost every document I have seen in the past ten years from the Government. There are no timelines, no budgets and no responsibility is assigned. That is not a plan to create a smart economy so do not let us delude ourselves.

We are long past the time for the ritual dances that are going on here. We cannot pass off hopes as strategy. We must get down to serious revolution — I say this advisedly — in the way we do our business. Budget 2009 should be scrapped. There should be no attempt at running repairs or finding and tacking on €2 billion of savings. It needs to go right to the heart of budgeting. We need budgets that are not about the demands of agencies on Government but the needs of people. That would turn the budget 180°. The agencies that would get money would be those which are saying "I can do this next year" or "I will commit to deliver this to people next year". Only then would they get the money. We would tie performance rigidly to what they committed to, and that would be a revolution. We should withdraw the budget and begin that process.

Let us honestly square up to the changes we can make this year, next year and the following year by addressing this issue programme by programme. Let the Dáil for once be a real Chamber where we can have proper discussions about choices, where the views of committees are taken seriously. The PAC has long since told us we need to reform our Estimates procedure. Every party is on that committee — Fianna Fáil, Labour and Fine Gael — but it is contemptuously ignored by the Government. Let us begin to change the way we do business here and there is some chance we can offer leadership to the people, who are craving it at a time when they are petrified with fear given the way the economy is going.

If anything, the views of the Department of Finance are highly optimistic about the scale of the challenge we face. We need to have an honest debate about this and to articulate strategies, not just €2 billion for next year, but how we are going to confront this over a series of years. That debate has not started in this House and the Government stands condemned for failing to act.

Eamon Ryan (Dublin South, Green Party)
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We are here to debate what is an obvious crisis and also to look for ways out of it, which I believe exist. We should acknowledge the situation and what got us into it. We should acknowledge that cheap money and, yes, bad planning led to a property bubble which was one of the worst developments in the history of the State, and left young people with mountainous mortgages they will have to spend their lives paying off. We must acknowledge there was systematic failure in our banking system, in its basic task of assessing risk and also, it is becoming apparent, in terms of individual abuses which have undermined the confidence of the people of this country and those outside in the working arrangements within that banking system.

Richard Bruton (Dublin North Central, Fine Gael)
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Who in Government has accepted responsibility? Who put their hands up and said: "Yes, we failed"?

Eamon Ryan (Dublin South, Green Party)
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I am here today saying exactly that. There has been a systematic failure in our banking system and also our regulatory system which we need to address. We are setting the Director of Corporate Enforcement the task of going through with a fine-tooth comb any such practices——

Joan Burton (Dublin West, Labour)
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He has no resources to do that.

Eamon Ryan (Dublin South, Green Party)
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——and with legal precision instigate any court proceedings that may be necessary to expose such individual abuses so we can restore the confidence of our people and those abroad in our banking system.

Joan Burton (Dublin West, Labour)
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He has no resources.

Eamon Ryan (Dublin South, Green Party)
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That is an essential first step in the economic recovery we have to take.

Richard Bruton (Dublin North Central, Fine Gael)
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The Greens accepted a Fianna Fáil plan.

Brendan Howlin (Wexford, Labour)
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Allow the Minister to make his contribution.

Eamon Ryan (Dublin South, Green Party)
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It is not the Government going in to rescue bankers. We need to go in to rescue the banks because those banks and bankers will be needed. We do not need to create a pariah group in our society but we need bankers who can get back to the business they should be in, which is lending to encourage and support enterprise in our country. That is a first task in getting us out of the crisis the banking failure, the planning failure and the property bubble failure got us into.

I meet many people on a daily basis who tell me I am very unlucky to have gone into Government at a time of such difficulties. I must be honest and say that is not the way I look at it. In a strange way, it is a time for all of us, on either side of the House, to rise to the task of public service, which is an honourable one whether one is in government or opposition. However, being in government brings particular responsibilities.

I entered into government with my Green Party colleagues because I believed the long-term thinking embodied in our party's basic philosophy is exactly what is needed now. It was due to that long-term analysis that, throughout these recent years as a property bubble evolved and these banking failures became apparent, we saw it for what it was. We now see the way out of this difficulty. We are in government to serve the national interest. I am in government working day in, day out, night and day, because I see a way for this country out of this difficulty, based on the sustainable long-term thinking which we have been working on for 25 years as a party.

That is the answer I give to people when they tell me it must be shocking. It is shocking. The crisis is difficult. However, when one has a sense of where we have to go, it is not as shocking and helps to overcome the fear and the sense of uncertainty and inaction which comes with the crisis. Acting is exactly what we are doing now.

With regard to one of the major news stories today, it is interesting that the US Government has had its stimulus package accepted to get the US out of crisis. The key details of the package confirmed to me that the actions we are taking are in the right direction and are the right actions to bring economic recovery.

In considering what is new at the centre of that economic package which has been agreed in the United States, five points stand out. The first is the development of renewable energy, which will power that country and our country regardless of what happens in Saudi Arabia or Russia. Crucially, the development of the grid is centre stage. I seek to ensure that what I am doing day in, day out, is actually delivering such infrastructure and delivering the grid. We saw yesterday the ability of the Government and our people to get support from the European Union for a €100 million injection, which is important at this time when money is hard to come by, to build one of the crucial parts of that infrastructure, the connection between the north of Dublin city and north Wales, which is a vital and valuable lifeline for this country that will bring down our electricity prices and give us a secure supply. I look for the support on the other side of the House for EirGrid as we develop this crucial piece of infrastructure for us to move to the new economic energy future, which is the development of Grid 25. We are doing it.

I hear the talk about energy efficiency and the retrofitting of homes, which many people are now coming to, but which we have been actually working on for four or five years in opposition and in government. Last year, we tried and tested a working model of the best way to deliver these new energy efficiency packages for the home, and we found they work. In this cold winter, we will be able to go out to every single home, in every single county, and offer an investment that is better than any other and gives a better return than any other, to insulate each home and save hundreds of euros this year, next year and every year thereafter because it is an investment that is true, wise and risk-free.

The third big element of the package in the United States concerns the development of schools broadband. I have just come from a meeting with the Minister for Education and Science where we were tying down the details of how we roll out to our secondary schools the sort of high-speed broadband I believe is central to any new education system. We need to give our students the chance to learn how to learn, rather than to learn off. We can get access to information via the new broadband network. We need to give them the confidence and the ability, which they surely have, to use it in an innovative and flexible way. We are not talking about it, we are doing it. We are targeting schools, learning from there and going on across the country.

In terms of the package in the US, the US Administration is talking about ways in which it will try to cover those rural areas that currently do not have broadband. We are not talking about it; we are already doing it. Last week we launched a €223 million broadband programme which will cover every parish in the country that cannot get broadband currently. This will be delivered in conjunction with the private sector and will start in April. This is the action necessary to restore confidence and generate economic renewal. The fundamental message of the package in the US is that investment in science, research and development is its cornerstone. It is, similarly, the cornerstone of the economic plan this Government has set. The design for a smart, sustainable and renewable economy is based on two sound foundations. First, investment in research which is already under way. Science Foundation Ireland is leading the country into the future in this regard and this is the correct way to proceed. This is backed up and it is one and the same as the development of a green economy. A digital economy based on a clean power supply will be secure forever and a day, because it is our own. This is such a clear and clever direction in which to go that it may seem too simple. However, this is the plan and the actions emerging from it are substantial.

The plan will provide economic recovery and it can provide hope for our people. The green economy will provide real jobs, such as those for the people who insulate homes and the lawyers who sign the contracts for wind turbines. Factories and data centres will be able to work off cheaper power sourced from the energy future we are plotting. This economic plan will save money. As every kilowatt of electricity is generated, it will save money as well as creating jobs. Every house and school retrofitted is saving money as well as keeping people warm.

The plan is based on a vision which can raise people's spirits, which is perhaps more important than anything else in these dark and difficult days. A sense of direction and clarity about where we are going is vital. In this regard Ireland can be the silicon valley of Europe. We can set ourselves a bold vision of a green island with a green economy which fits into the broader direction in which the world is moving. We have a real-world plan which can save the country. We are not discussing the plan, we are implementing it every day. This action supports the people and provides a sense of courage for what will be difficult times, but not times which we cannot overcome. I look forward to the task and to continuing to work with my colleagues in Government.

Joan Burton (Dublin West, Labour)
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This morning on the RTE news I heard that the Taoiseach, Deputy Brian Cowen, is jetting off to the once-a-year schmooze-fest for the ultra-rich in Davos, Switzerland. It was interesting to note that during the week the International Herald Tribune and The New York Times have put this fundamental question in the context of Davos: could the much-maligned social welfare systems in Europe end up being the model of the 21st century? This has been suggested because of the extent of the bank failures and job losses, the wiping out of retirement savings and the loss of health cover. This has taken place in the US economy in particular, but also more generally in the private sector in countries throughout the globe. The conclusion in the editorials of these newspapers yesterday was that support is growing for what they call a European-style safety net and that Mr. Keynes's economics is back in fashion.

I hope the officials in the Department of Finance will note that the US President, Mr. Barack Obama, and his team are busy studying the Swedish solution to the banking crisis of the 1990s, along with the Dutch and Swiss health care models based on universal health provision. I am certain they will do so. These are the objectives of Mr. Obama. I refer to a quote from Mr. Kenneth Rogoff, the former chief economist at the International Monetary Fund, IMF. I am certain those in the Department of Finance will recognise him as a credible authority. He made an interesting point yesterday, stating that when the world's biggest economy, namely, the US, and the world's biggest emerging economy, namely, China, look for lessons in the same place, namely, Europe and the European social model, at the same time, it is clear that something is up. We are witnessing a paradigm shift towards a more European social state.

While the Taoiseach is up in the clear mountain air in Davos with its extraordinarily rich parties and its festivities for the super-rich, I hope he will be able to open his mind to the fact that Ireland needs a third way, that is, a mixed economy. This is inevitable with the collapse of the banking industry and I will discuss the blame for that presently. However, given the collapse of our banking and financial industries in the past five months, there should be a bigger role for the State in financial and banking affairs. That is inevitable and there is no point in the right-wing people in Fianna Fáil gnashing their teeth.

Yesterday, we saw a display of childish antics by the Minister for Transport, Deputy Noel Dempsey. It is clear the management of the banking crisis is beyond the capacity of the officials in the Department of Finance, the Minister for Finance, the Taoiseach, who only recently held the position of Minister for Finance, and the Merrill Lynch advisors. As we know, the Merrill Lynch advisors are not without their own problems.

We must have a framework comprising an individual or a group of people with serious national and international credibility to oversee the stabilisation of the banking system. It is possible we will need to create an Irish version of the Resolution Trust Corporation, RCT, established in the US to help solve the savings and loan crisis in the late 1980s. By way of parallel, Sweden set up the Bank Support Authority with a similar function in the early 1990s during its crisis. This idea has a good deal of merit, because once we get beyond the very immediate banking crisis, or once a clear strategy for doing so becomes apparent, the Minister for Finance and his officials will have a great many more pressing issues in their in-boxes than micro-managing the entire Irish banking sector. Furthermore, they do not have the expertise or the experience to do so. In any case, we are not there yet as we have seen from the Government contributions to the debate.

My proposal should be realised on a genuinely bipartisan basis rather than the usual old boys club of the Fianna Fáil golden circle. Last week, in contrast to the remarks of the Taoiseach, Deputy Cowen, Mr. Barack Obama stated that what we need is a clean break from business as usual. There are many difficulties involved, including the fair value price for assets. I will not elaborate on this, but it is the heart of the matter. If fair values are not calculated, there could be gross corruption in the system I propose.

There is a systemic problem requiring a systemic answer. In proposing such a resolution for the banking and finance sector, there should be a parallel mortgage protection agency framework. I realise there are proposals in the Government's framework document, but they are very tepid. A mortgage protection agency framework could sit within the National Treasury Management Agency and it could help people aged between 30 to 45 years who are married or in a relationship with two or three small children and living in large houses. It is possible in such cases that one parent has lost his or her job or perhaps both are working reduced time. Such people will not lose their house this month or next month, but nevertheless they are terrified of the consequences. We should say to these people, who represent the bedrock of the Celtic tiger, that there could be a mortgage protection agency framework. If the banks repossess houses they can do nothing with them. The Minister for State at the Department of the Environment, Heritage and Local Government, Deputy Michael Finneran, might buy them cheaply, but that is not a solution either. We need such a framework. The Labour Party suggests these two very workable and practical proposals, but they must be created on a bipartisan basis. We already have a start-up vehicle and resources available in the form of the National Treasury Management Agency.

The Irish economy needs a reformed banking sector and hopefully we will end up with at least two Irish-owned banks based in Ireland. While that certainly is a highly desirable objective, there must be a searching evaluation of the economic trade-offs between what is desirable in Irish banking and what should be the maximum cost to the Irish taxpayer and the maximum financial risk exposure to the Irish public finances. There is no doubt that last September the Government made one appalling mistake in the manner in which it structured the guarantee. Only history will tell whether this will turn out to be the most expensive decision by any Irish Government, which has put the fundamental finances of the State at some risk. Moreover, no solution is guaranteed as yet as we are not out of the woods in respect of the banking crisis.

As for Anglo Irish Bank, while I do not have time to go into that issue in detail, the abuses there must be addressed. An inspector must be appointed to recover Ireland's reputation and to send out a message that we are clearing out and cleaning out wrongdoing. That is important and will help in the restoration of our reputation in places such as the United Kingdom and the United States where, unfortunately, it has been shredded by the Government and its actions. However, the most important solution is to get investment going again in the trading sectors of the economy, namely industry, tourism and export services. Our small economy cannot prosper without getting investment and credit flows going again. The question is whether Ireland should adopt a strategy that belatedly will encourage higher-productivity indigenous industry. This issue must be considered.

Finally, the public sector did not cause this economic crisis. Fianna Fáil mismanagement did, particularly that of Charlie McCreevy, Deputy Bertie Ahern and, unfortunately, Deputy Brian Cowen, who inherited their policies on becoming Minister for Finance. Nevertheless, the public sector reform issue will form part of the solution. Members must stand back and be fair when evaluating the strengths and failures of the public sector in Ireland. The Government's facilitation, through benchmarking, of the creation of what is called in the United States a muffin ring or spare tyre of unnecessary administration in the Irish public service must be addressed. This applies to public administration in many areas, including local authorities, in which binmen and park workers have been sacked without preventing an increase in the numbers in middle management or the amount of reporting. This dilemma, which we have created for ourselves, must be addressed.

John Curran (Dublin Mid West, Fianna Fail)
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I wish to share my time with the Minister of State, Deputy Conor Lenihan. I welcome the opportunity to contribute to this debate and I recognise this is the most serious issue to be dealt with by Members since I entered this House. At the outset, I wish to express my disagreement with the previous speaker, Deputy Burton, who stated that Fianna Fáil mismanagement caused this crisis. For too long, Members have listened to arguments to the effect that events in Ireland differ from those in most of the rest of the developed world. If one reads the financial newspapers or considers what is happening in the United Kingdom, the United States, France, where this has been called Black Thursday, Russia or China, Ireland does not appear to have a particular issue. A global situation exists and due recognition must be given to that point. I agree with Deputy Burton on one point, namely, that the banking sector has been the catalyst for some problems and I refer to sub-prime lending in the United States in particular. However it is neither right nor fair to portray events in Ireland as being different from what is happening globally as that is not the position.

Confidence certainly has been undermined in the banking system both in Ireland and internationally and this issue must be addressed. At some point, a genuine debate must be held on whether we should establish what is loosely referred to as a bad bank, to absorb some of the debt or distressed or doubtful assets of such banks. However, doing so independently as a nation will not address this issue, which will require international support. As for the position regarding banking, Deputy Burton referred to Anglo Irish Bank. While I do not wish to pick on any individual bank, I question the policies and strategies of directors of banks in general, in which short-term profit on a year by year basis was advanced ahead of security and longer-term strategic decisions. Moreover, the existence of more immediate aims to address should not mean that the Government will neglect to consider these issues. If there was wrongdoing, those involved should be taken to task and there should be no place to hide.

In addition, regardless of whether one agreed with the guarantee system that has been provided, the State has a highly influential role in the banking system. One of the first things we should do, irrespective of whether any other supports are established, is that every bank that granted domestic residential mortgages that are less than five years old should conduct health checks on such mortgages. In other words, the recipients of such loans should be brought in and met by the banks. As a public representative, people visit my constituency clinic whose financial circumstances have changed. While such people may still be working, they may no longer enjoy bonuses or a partner may either have lost his or her job or been given reduced hours. While it would be prudent to so do, it should be obligatory to review, as a matter of urgency, any mortgage issued in the past five years, while adopting a flexible approach to rescheduling and so forth.

As for the economy, I was self-employed for a long time before entering this House and started a business at a time of recession. However there is one fundamental difference at present, in that well in excess of 2.1 million people are working. The challenge facing the Government is to try to maximise and maintain as many of those jobs as possible. While this will be a difficult task, that is the job at hand. In that regard, I have heard Members of the Opposition assert the Government has no strategy. It does have a strategy, which is to narrow the gap between revenue and expenditure, and the specific strategy for the current year pertains to the sum of €2 billion that has been mentioned. The difference is that the implementation of the strategy is being discussed with the social partners. Members on this side of the House fundamentally believe in social partnership. It has worked well for Ireland in the past during good times and as we now face more challenging times, where better to sit to implement the strategy than with the social partners? The strategy has been articulated clearly and repeatedly in this House by the Taoiseach. The figure of €2 billion for the current year has been given and the detail and implementation of that strategy is being discussed with the social partners. This marks the difference between Members on this side of the House and those on the other side, who do not necessarily agree with such an approach. While the Taoiseach has been the subject of criticism in this regard, the Government fundamentally believes that social partnership has worked in good times and the challenges now facing Ireland will best be faced through that mechanism. However, the strategy has been articulated clearly by the Taoiseach.

Conor Lenihan (Dublin South West, Fianna Fail)
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It is good that this debate is occurring against a background in which, literally within the past 48 hours, we have been inching towards a framework agreement with the social partners. As the previous speaker stated clearly, it is hugely important that our commitment to the partnership process be worked on and renewed. That process was born not of success, but of relative economic failure in 1987, when many people believed the outcomes for Ireland in respect of jobs and opportunities were rather hopeless. It was against such a background that the then Government, led by Mr. Haughey, engaged with the social partners with a view to stabilising our situation and putting us on a trajectory of growth.

Today, Ireland is a radically different place in which 2 million people are in employment, 600,000 more than was the case a decade ago in 1997. The social partners are willing to play their part in the financial and expenditure adjustments that must be made. This will not be an easy process merely because we are inching towards an agreement pertaining to a framework for decisions to be made in this regard. This will not make it easy because there will be intense negotiations and discussions through the coming year, 18 months or two years or for as long as it takes to ensure that whatever adjustments are made will be accompanied by broad consensus and agreement between the social partners and the Government. It is a great sign of leadership by Deputy Brian Cowen as Taoiseach to have stuck with this process, despite the negative voices from the Opposition and other sources from outside this parliamentary arena who, towards the end of last year, tried to urge him to abandon this entire process and throw it aside in favour of draconian cuts. Ultimately, it would have been done without consensus and agreement being formed, and would have led to a difficult situation in this country not unlike that which we can observe clearly in one of our EU partner countries, namely France, where widespread industrial disputes, strikes and unrest have been occasioned by a similar effort on the part of President Sarkozy. We wish him well, nonetheless, but we note that Ireland is quite different in its approach and wishes to proceed by way of consensus where that is possible. Consensus may not be possible in the year or two years ahead, but at least a framework has been established against which we can benchmark and look at what we are doing in a timely and proper fashion, consistent with our country's history and traditions of proceeding by way of consensus.

It is also important to recognise what the view of those observers who were urging us to abandon partnership at the back end of last year would have been if we faced into a deep winter of discontent featuring industrial relations disputes with large public utilities literally shutting down the lights and power supply. A much different form of criticism then would have been directed at the Taoiseach as to why he had not stuck it out. The Taoiseach and the Government have stuck it out with the social partnership experiment, which has been good since 1987.

I know from my experience in business working with a number of companies such as Radio 2000, Digifone, O2 and Radio Bohemia, and, indeed, as a company adviser, that the most important action to take in such crises as that which have assailed this economy and the world economy is to get costs down. That is the simple business response to a challenge of the kind we now face. We must get our costs down, both in the public and private realms. Often people like myself who have had experience in business can be rather glib about suggesting similar solutions to the public sector. However, we must be aware that in a private sector setting, as I often saw in those companies in which I worked, it is easy for management to click the finger and achieve the cost savings and, because it is a private sector employment setting, employees are often far more willing there to accept cutbacks because they know their jobs are on the line than those, for instance, in the public sector.

For that reason the Taoiseach has again been proved correct, that to negotiate and achieve savings in a public setting requires considerable patience and negotiation skills, in all of which, incidentally, I believe he is uniquely capable of as a former Minister for Finance and Foreign Affairs and Minister with responsibility for labour at the critical time when this partnership process was beginning. I applaud his decision to stick this out. We will all look back in a year or two and say how right he was to proceed in that way.

As I stated, it is easy to click the fingers in a private sector company as a senior executive and achieve savings across the board. It is much harder in the public sector, precisely because it is taxpayers' money and there is a more secure form of employment available to those who work in the public sector.

However, let nobody be under any illusions. The public sector, including the political class, will have to make sacrifices. The Cabinet and members of the Government have already done their bit in that direction by taking a 10% pay cut.

Finian McGrath (Dublin North Central, Independent)
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Up it to 20%.

Seán Ardagh (Dublin South Central, Fianna Fail)
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The Minister of State's time is up.

Conor Lenihan (Dublin South West, Fianna Fail)
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It is important to note that cut and to proceed accordingly to other realms and parts of the public sector to achieve similar savings, if possible.

There was a hint of criticism in the previous speakers comments on the Taoiseach's presence in Davos. We should not make any apology for his presence there. He is meeting senior executives from global companies who could potentially invest in this country.

Michael Ring (Mayo, Fine Gael)
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Time.

Conor Lenihan (Dublin South West, Fianna Fail)
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For instance, if I may finish on this note, there were hints of criticism of the Taoiseach's visit to China and Japan for trade and investments. It is hugely important that every member of the Government be engaged to the greatest extent possible in promoting trade and investment in this country at this difficult time.

Joan Burton (Dublin West, Labour)
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They should all leave the country permanently. It would do better.

Michael Ring (Mayo, Fine Gael)
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I wish to share time with Deputy Pat Breen. The Acting Chairman might tell me when my five minutes is up.

This has probably been the worst Government since the foundation of the State. I suppose it has been the most reckless Government. Not alone has it cost thousands of jobs, but it nearly has the country in serious difficulty.

When the economy was going well the Government was great for taking full credit for it. On many occasions at budget time the Fianna Fáil choir clapped the Minister for Finance on issues such as decentralisation and all that was going on in this country and many senior Ministers told me on many occasions it was the work of the great Fianna Fáil Party with the Progressive Democrats. The Progressive Democrats were to break the mould, but they broke the country. They were the ones who were telling us how wonderful they were and by God, they have brought this country into disrepair.

The people want an adjudication on this Government. What is really needed is a general election because they want to get rid of Fianna Fáil.

Seán Power (Kildare South, Fianna Fail)
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Deputy Ring did not accept the result of the last one. Why would he want another?

Michael Ring (Mayo, Fine Gael)
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The people are just sick and tired of them.

There are two laws in this country, one for the rich and one for the poor. The poor go to jail when they break the law and the rich get big bonuses. For example, we were paying people such as the Financial Regulator, to whom we were giving a big bonus and who is now retiring, who did not do his job. He came in to committees, and he certainly did not do his job. Neither did the governor of the Central Bank, and what do we do with him? We reappoint him.

The banks are in total disarray. They have let down the Government, they have let down the people and they have let down the country, and what has happened? The small men and women of this country, the taxpayers, must pick up the tab again for the banks. That is not right.

We warned the people of this country. We warned them about the Galway tent which was dictating policy. The Government was telling us that it did not need us, that it would get this country moving and was creating employment. I can tell the Minister of State, Deputy Seán Power, that they have created chaos in this country. What if somebody does not pay a price? The governor of the Central Bank and the Financial Regulator should have been sacked when we saw what was unfolding. Instead we are giving them bonuses and rewards.

I want to make a few positive suggestions. Currently there are 70,000 houses unoccupied. If, tomorrow morning, the Government was to get the 13% VAT on them, it would amount to approximately €2.7 billion. The Minister and the Government should immediately speak to the Construction Industry Federation about these houses at their present prices and give young couples and first-time buyers a €10,000 grant because the Government must act like the supermarkets and other outlets, and hold a sale as well.

Seán Power (Kildare South, Fianna Fail)
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Deputy Ring would accuse us of supporting developers again if we did that. He cannot have it both ways.

Michael Ring (Mayo, Fine Gael)
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The Government is supporting them because it is after bringing the Galway tent down to St. Stephen's Green with Anglo Irish Bank.

Seán Power (Kildare South, Fianna Fail)
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Bullshit.

Michael Ring (Mayo, Fine Gael)
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The Government has supported and protected them. The Minister of State, Deputy Seán Power, knows the Government has protected them and should not aggravate me now. It is the Government, the developers and Fianna Fáil who have this country the way it is. They looked after them long enough. Do not give me that rubbish now.

Fianna Fáil and the developers and the builders were side-by-side in the Galway tent, and one can see what they did to us. With them and Anglo Irish Bank, the taxpayer must bail them out and nobody has been prosecuted for it.

Deputy Power ought not vex me because it is the small person out there who has lost his or her job. These are people who are paying large mortgages. It is the taxpayer who must bail them out.

I want to finish my suggestion. Give €10,000 to the first-time buyers. At least some of that €2.7 billion would come into the coffers of the Government and the Government would be doing something good for young people and first-time buyers.

For the past ten years we had Ministers out there creating jobs in the public sector in every quango one could think of. In the case of the chairman and members of every quango, we should be told — there should be a record — of their salaries, expenses and what they are drawing down. The quangos have been the greatest scandal since the foundation of the State, and they continue. We should be closing the quangos and taking out these chief executives for the kind of money that they are getting.

Seán Ardagh (Dublin South Central, Fianna Fail)
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The Deputy has run over the five minutes.

Michael Ring (Mayo, Fine Gael)
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I am only sorry that I do not have more time because I want to deal with a few other matters. I will let my colleague proceed.

Seán Power (Kildare South, Fianna Fail)
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Income substitution.

Pat Breen (Clare, Fine Gael)
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I concur with Deputy Ring and my party leader, Deputy Kenny, who stated on Tuesday that the Government was bereft of ideas, decisions, direction and the courage to govern. No one denies the extent of the problems facing the economy. With a hole in our finances worth €15 billion, we must find a further €2 billion this year. The ESRI forecasted that another 120,000 people will be unemployed by the end of this year. Compared to our last recession, which occurred in the 1980s, this recession is ten or 20 times worse. The most jobs lost in a single year in the 1980s was 25,000 and, unlike then, our banks have serious problems.

Every day, streams of people attend my constituency office, the latest victims of the Government's inability to grapple with the enormity of the crisis. They come from all walks of life, including engineering professionals, the self-employed in particular, and manufacturing and shop workers. They never believed that they could find themselves in this serious situation. In the past 12 months, the number on the live register in my constituency of County Clare has increased by 59.8%. I could name all of the companies that have closed. For example, Molex Limited in Shannon will shed 150 jobs, but Dell was the largest case in the mid-west, involving 1,900 job losses, of which 400 people came from County Clare.

In these changed economic times, we also have a problem with the separation of the airports. Today, rumours tell of how Ryanair is about to reduce from six to four its number of aircraft based at Shannon Airport. This would result in routes from the airport being axed.

Turning to small and medium enterprises, small shops close every day in my constituency, resulting in four, six or ten people losing their jobs. Such closures are going unnoticed for a number of reasons. The Government must address our VAT rates, which are driving hundreds and thousands of people across the Border because they are less favourable than the United Kingdom's. There is a crisis in the farming community. Many farmers took on bridging loans because they wanted to undertake projects under the farm waste management scheme. Last night, the House was told that, more or less, there is no money to pay the farmers because the Government cannot do its sums. These factors exist against a backdrop of a Government that has shown no leadership and a Taoiseach who told the House that he intends to do it his way. The fear is that, by doing it his way, he might be biting off more than he can chew.

I understand that the Tánaiste and Minister for Enterprise, Trade and Employment will establish a task force on the mid-west in the next day or so and that its members will be announced shortly. However, Fine Gael has made proposals and taken the lead throughout the crisis. In fact, most of the ideas tabled by Deputy Bruton have been taken on by the Government. We in the mid-west also have ideas. Our party leader will be there next week to announce our initiative.

Unfortunately, our region has no ministerial clout and no one is prepared to stand up and be counted. Our former Ministers, people such as Deputy Noonan and Des O'Malley, were great, but no Minister is fighting for us now. If a task force is to be established, it must have the clout, teeth and resources to do the job instead of simply being a talking shop.

Leadership is about action, not position. Last night, the President of the United States of America, Barack Obama, announced a $825 billion economic stimulus package. Already, the markets have reacted positively. People will accept pain, but only if it is shared equitably. As Deputy Ring stated, the most vulnerable in society should not pay a price because of those bankers who have brought us to our knees by bankrolling their developer friends. People like Mr. Seán Fitzpatrick must be held to account for their actions.

We can no longer afford to go without actions or plans. We can recover, but leadership, which is absent on the other side of the House, will be required.

Seán Power (Kildare South, Fianna Fail)
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I wish to share time with Deputy Michael Ahern.

Deputies:

Is that agreed?

Michael Ring (Mayo, Fine Gael)
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We will agree to it.

Seán Power (Kildare South, Fianna Fail)
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It is nice to have some agreement. When the Minister for Finance introduced his budget in October, there was little appreciation of the enormous task facing the country. As we head into the end of January, there is a much better understanding of the challenges that lie ahead. We are experiencing a sharp economic downturn. As other Deputies have mentioned, it is occurring in most countries and is not confined to Ireland.

Pat Breen (Clare, Fine Gael)
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They are dealing with it.

Seán Power (Kildare South, Fianna Fail)
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Several factors have contributed to the situation, many of which were external but some of which were of our own making and from which we must learn lessons. At this stage, the country needs a prescription, not a post mortem. The Taoiseach and his Government colleagues have entered negotiations with the social partners with a view to agreeing on the necessary medicine, not just for 2009, but up to 2013. While agreement has not yet been reached, we are hopeful and I would like to acknowledge the maturity shown by all sides involved in the talks. No easy solutions are available, difficult decisions must be taken and there will be much pain. However, it is in the national interest that everyone make the necessary sacrifices. The more people who make those sacrifices, the quicker will be our recovery.

Retaining a good credit rating is vital. In light of demands placed on other countries and their borrowing requirements, it is important that we demonstrate a strategy to address our situation. I hope it will become clearer next week. We are a small country that depends on exports. It is important that we display our attractiveness for investment and as a good place in which to do business. The importance of our membership of the euro has not been emphasised enough, nor the protection it lent us during the recent turbulence in the money markets. Were we outside the eurozone, we could have experienced something similar to the Icelandic situation.

In recent days, much emphasis has been placed on the Government's plan to reduce expenditure, to which we are committed, but we must also be aware of the need to continue investing in infrastructure. Given yesterday's announcement of an investment of €1.44 billion in the national roads programme for this year, it is clear we are placing considerable importance on capital expenditure. It makes a great deal of sense because it improves our infrastructure, provides important employment and creates a certain amount of economic activity.

Several measures taken by my Department will be beneficial in terms of improving competitiveness and providing employment. The energy sector is pivotal to national competitiveness and continued economic and social prosperity. A key element of the Framework for Sustainable Economic Renewal is the investment in renewable energy, the promotion of the green enterprise sector and the creation of "green collar" jobs. Funding of €20 million was provided in October's budget for the home energy savings scheme, which operated on a pilot basis in 2008. This level of investment will support energy efficiency measures in more than 12,000 homes. Some €5 million was also provided for the warmer homes scheme and is to be supplemented by funds from the ESB and Bord Gáis Éireann. This investment will underpin the delivery of greater energy efficiency in the homes of disadvantaged persons through insulation and upgrading work, necessary parts of the scheme.

These and other schemes operated by Sustainable Energy Ireland provide an example of how the targeted use of public funding can help address Ireland's energy efficiency issues and deliver employment and enterprise opportunities while helping to meet carbon reduction targets.

Ireland's ocean energy resources offer significant potential to add to our renewable energy capacity. Ocean energy is in its early stages of development worldwide, but Ireland is one of the best placed countries to capitalise on this resource and to develop a viable industry. The overall objective is to provide the infrastructure so that Ireland will be a world leader in harnessing ocean energy. While spend was below target in 2008, as it took time to get the new scheme in place, it is expected that some €7 million will be expended under this heading in 2009.

A world class communications infrastructure is critical to our continued economic and social prosperity. The Government is setting the development of a knowledge society at the heart of our economic and social policies. If it is to be effective, Ireland requires a national broadband infrastructure of world class standards. This will attract the cutting edge knowledge-based industries needed to secure Ireland's future economic prosperity and competitiveness. Equally, this will benefit society and the consumer by delivering greater broadband coverage, lower costs and higher speeds.

I am pleased to say that broadband is now available in almost all parts of Ireland through a combination of digital subscriber line, fixed wireless, cable, mobile and satellite technologies. The Government announced last week its intention to ensure the availability of broadband throughout the country.

Many difficult decisions need to and will be made. There has been much doom and gloom in recent times, which is understandable. However, it is the Government's job to replace that with hope. We have shown in the past that we have the capacity to make this country great, not alone in economic terms but from a business and sporting point of view. Many sporting people have given great leadership to this country and have shown we can compete with the best. The situation need be no different when it comes to governing and tough decision-making.

I am delighted with the support of the social partners and wish them well in the negotiations. It is hoped that next week they will provide the agreement that will be the springboard for economic recovery of the country.

Michael Ahern (Cork East, Fianna Fail)
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I am delighted to have the opportunity to contribute to the debate on the economy. I am disappointed, however, that Deputies Breen and Ring have left the House following their attack on Government in respect of Shannon.

Paul Connaughton Snr (Galway East, Fine Gael)
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Deputy Ahern need not worry, we will tell them what he had to say.

Damien English (Meath West, Fine Gael)
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They can read.

Michael Ahern (Cork East, Fianna Fail)
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I am reminded, on hearing Members opposite speak about Shannon, of the remarks of a famous former leader of Fine Gael, the late Deputy Dillon, in regard to rabbits and hares hopping around the tarmac in Shannon. He was, of course, wrong. All pronouncements since then by Fine Gael in regard to such projects have been wrong.

Similarly, another former Member of the House, the late Deputy Jim Mitchell, spoke about a foggy boggy hill in Knock. Knock has been a tremendous success and a catalyst for growth and development in the economies of the north-west region of our country.

Tom Hayes (Tipperary South, Fine Gael)
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He had amazing influence on Shannon.

Michael Ahern (Cork East, Fianna Fail)
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I forecast that the predictions from the opposite side of the House will again prove to be wrong, as they always have been.

It is important that every Member of this House sets out the facts in respect of the economic crisis facing this country. This crisis is not the result of internal matters alone. It is often said that the construction industry and the bust in that regard is responsible for what happened in terms of the projected growth in our economy. The construction industry is responsible for approximately 4% to 5% of the reduction in GDP. What happened in the US and to the banking system worldwide could not have been predicted by anybody in the world, let alone anyone in Ireland. Economic forecasting is changing week on week. Geniuses in the economic field rather than politicians, are changing their forecasts week on week and we are not immune to this.

Also, we have been affected by differences in respect of the euro and pound and the euro and the dollar. We export 40% of our goods to Britain and the United States. Changes in currencies have dramatically affected our export value. The Government has taken action. It has been stated that the Government has been doing nothing for the past couple of months. The Taoiseach, Minister for Finance and other Ministers have been working with experts in their Departments and with other experts to address what has been happening in the banking world, a situation that has been shifting like the sands. I believe the decision in respect of the bank guarantee scheme brought about certainty in our financial system. The decisions in respect of the takeover of Anglo Irish Bank and the recapitalisation of the other banks will succeed in due course in returning to the market the liquidity necessary to refuel our economic and business world.

I regret I do not have time to address other issues. I have confidence in the Government ensuring that we return during the next couple of years to where we were one year ago.

Tom Hayes (Tipperary South, Fine Gael)
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I wish to share time with Deputies English and McGinley.

We are living in unprecedented times and in a new economic era. Also, we are living through social change brought about by economic turmoil. The seriousness of this situation does not need to be assessed.

We, as politicians, have a serious role to play in terms of assisting people to work through this difficult time. The world economy has caused us huge problems. However, we have a duty to do things that are good for our economy. Many of us lived through tough times in the 1980s, when interest rates were as high as 21% and 22% and inflation stood at approximately 18%. People were vulnerable and many had their lands taken from them when the ACC sent in assessors to farms.

The current situation, in terms of people's homes, is similar. People are in enormous debt. People in their 30s have debts of up to €300,000-€400,000 and many of them are losing their jobs. What can be done? We, as politicians, have a duty to stand up to the banks. Some weeks ago, we bailed out the banks. Anyone in their right mind will acknowledge that one's home is one's castle. People must be allowed to retain their homes, whatever it takes. Many friends of mine were in financial difficulties in the 1980s. At that time, a moratorium was placed on mortgage interest and capital sums were set aside for a while, thus allowing people to retain their land. The banks and the Government have a responsibility to help young people now in difficulty through no fault of their own. We must force the banks to allow people to keep their homes.

Another section of society forgotten about in this debate on the economy are elderly people in the community. Local authorities in my constituency do not have the resources to meet applications under the housing aid for the elderly scheme or the home improvement scheme, much lauded here week in and week out. Skilled tradesmen are joining the dole queues in every town and village throughout the country. We must challenge the social partners to ensure that skilled people who cannot get work are employed to assist older people by way of installation of windows, doors and so on in their homes. These people want to work; they do not want to be unemployed. There has been much talk about cutbacks. The reality is that we must get people working and keep the cycle going. The opportunity exists to ensure that skilled people such as plumbers, plasterers and so on obtain employment, perhaps through the introduction of a scheme that would allow them to assist older people with work in their homes. I ask that the Government consider this proposal.

Damien English (Meath West, Fine Gael)
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There is much I would like to say but, unfortunately, I only have time to touch on a few issues. I want first to follow on from what my colleague, Deputy Hayes, had to say in respect of utilising the skills of unemployed people, an issue I have spoken on many times in this House since last January during which time Members opposite chose to ignore the problems that were looming.

Many skilled people are now unemployed. The country cannot sustain unemployment levels of 400,000 people. We were told on budget day that unemployment levels might reach 8%. I said on that occasion they could reach as high as 15%, which is where we are rapidly heading. I regret our unemployment levels will reach 15%, which we cannot afford. This is wrong socially, financially and for so many other reasons.

We must use our imagination to match new employment initiatives and skills where jobs need to be done. The housing stock throughout the country needs to be totally refurbished, windows, doors, plumbing and so on. There are schools which need to be made energy efficient and so on. There is plenty of work the State could borrow capital to fund, to match up with the current cost of the dole to get things done with the money rather than have it go down the drain. Also, it is better for people to work, but I have detected no movement from the Government with regard to that area of activity. I hope it will be addressed in the plan next Tuesday because that is a practical area which would facilitate the better use of State money to get us through the current difficulties and leave us in an improved position thereafter.

It is a serious problem when people lose jobs and must face massive debt repayments, mainly mortgages. In some cases the State pays interest to cover some of the mortgage repayments. That is a good system but again, it is under pressure and perhaps will not continue. In other cases people lose a house and avail of rent allowance. Either way, there is a massive cost involved for the State which needs to be addressed. It might be worthwhile for the State to buy up some of those mortgages on a 50-50 basis, say, similar to the shared ownership schemes being administered by local authorities. Perhaps the State could buy a share of the house or do a deal with the banks, either the one it now owns or those it will buy in the future, to put a stay on such mortgages for two or three years to give people a breather. Then we can attempt to tackle the high wage costs and other areas.

We have to tackle the cost of business. Ireland has the highest costs in most categories, for example, energy, property debt, rents, water rates, fuel charges, council charges, contribution levies and so on. These are, in effect, all Government charges. While we cannot get rid of them all we can work on particular areas to try to make a difference and get business competitive.

We also need a job protection plan. I am fed up listening to talk about all those fancy tax incentives for research and development, future job creation and so on. That is lovely and it is needed, but we also need protection plans to keep the jobs we have. That means helping out existing businesses, should that be needed, perhaps with finance. As I have said on numerous occasions over the last six months, they might be given the services of professional people who are trained in finance, legal matters, debt collecting and so on, to help them reorganise so that they can come up with better business plans and therefore get credit from the banks. Let us help business. It needs help. It is not the big initiatives that will matter so much as the little ones.

Dinny McGinley (Donegal South West, Fine Gael)
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We all realise the seriousness of the situation. The latest report this morning from the Central Bank is more pessimistic that anything that has emerged in the past year, with its announcement that GNP will decrease by a further 5% this year. That is very serious.

We on this side of the House realised how serious it was long before Members on the Government side. Only a few weeks ago they were saying that these are not the 1980s. I was here in the 1980s and I know how serious it was, but there is no comparison with the situation now. In the limited time I have, I want to demonstrate how serious the impact is on my constituency in Donegal, where most of the indigenous industries are in very big trouble. The fishing industry, agriculture, construction and tourism are gone in every part of the country, and in Donegal. This time last year in Donegal there were 9,000 on the live register. The last figure published for the month of December was 15,264, an increase in one year of more than 70%. That is a concrete indicator of how serious is the situation in our county.

Donegal is a Border county, in the front trenches when it comes to the effect of exchange rate changes on the local economy. At present, there is almost parity between the euro and sterling and this presents a major incentive for people from my county and further south to avail of cheaper goods in Northern Ireland. I do not know how this may be addressed. Small businesses, many of which would have accounted for the 7,000 jobs lost in the last year, are hanging on by their fingertips. When the banks are being recapitalised, I would appeal for consideration to be given to the plight of such small businesses and at-risk mortgage holders, so that people may have some incentive towards economic survival.

There are opportunities in the shape of work that needs to be done. There are schools to be built in our county and roads to be built too. Yesterday the National Roads Authority revealed that the budget allocation for our county was to be reduced to €9 million, while last year we got €20 million and the year before €32 million. We wanted €30 million this year and met the NRA, but we are now down to €9 million. There is great scope for action in the shape of the slack that needs to be taken up. If we concentrate on improving infrastructure, schools, roads, bridges, and so on, at least it would re-employ some of these skilled people.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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I want to correct a mistake, as uttered at the time by the incumbent of the Chair in which the Acting Chair, Deputy Ardagh, is sitting. This morning somebody said the next spot was to be taken by Deputy Mary O'Rourke, but there was what was described as a "no show". I have never done a "no show", as it is not my scene. There was a mistake in the arrangements. This is my time, and I should like that to be on the record. Such a thing to say, that I made a "no show". I could not make a "no show" as it was not my time. However, I am wasting time now. My ten minutes is divided, with the permission of the House, as follows: four to me, four to Deputy Thomas Byrne and two to Deputy Michael Kennedy.

Deputies:

Is that agreed? Agreed.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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Since I have come into the House today the Opposition Deputies have been speaking about practical matters, such as schools and roads, of which I heartily approve. However, I was listening to them both earlier this morning and yesterday, and I never heard such a crowd of whingers in all my life as appeared on the Fine Gael benches. It was a big moan. I do not mean Deputy McGinley, but his cohorts. They do not seem to want a national agreement because they did their very best on Tuesday, Wednesday and Thursday to ensure that if they kicked up sufficient fuss, the Taoiseach, Deputy Brian Cowen, would give in and give them the document ahead of the people with whom he was in consultation. That would lead to some outcome, I can tell them.

The partnership process is one for which there must be respect. Equally, of course there is respect for the people of the House. I have lived through social partnership since 1987 and it works. It is one of main reasons why, economically, this country did well. I was so disappointed with the whingeing this morning. I listened to the Fine Gael spokesman on finance but it was nothing but a big whinge. I cannot believe he was as bad as he was.

Dinny McGinley (Donegal South West, Fine Gael)
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He is a brilliant economist and the——

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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We have a brilliant economy and we must keep it that way.

Dinny McGinley (Donegal South West, Fine Gael)
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——members of the public realise he is the best economist in this House.

Thomas Byrne (Meath East, Fianna Fail)
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If he was sitting there as long as Deputy McGinley he would not be as good at it.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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I wish to continue, if I am allowed. At times Fine Gael Members are fascinating. They have no plan. They say what we do wrong, but never indicate what they would do if they got into office. That would expose them in a very meaningful way.

I agree with Deputy McGinley concerning any possible fiscal stimulus in this package. I made a strong plea at our parliamentary party meeting last Monday, as I do now, for extra money to be given to the Department of Education and Science so that repairs to primary and secondary schools can be put in train. In a rural environment, when one sees a big sign for a new school, with the builder's name and men at work, one knows that it is good. It means that local children will get a new school, parents will be satisfied and men and women are at work.

Equally, there is need for a streamlined comprehensive and understandable scheme for eco-improvements to houses, whether it is solar panels or whatever, to enable skilled people to be employed in such work, leading to a cheaper heating environment for people. I fully agree with Deputy McGinley that it is a pity not to use such resources. The package to be concluded with the social partners will enable these matters to be dealt with. We are lucky that we have a Taoiseach of the strength of character——

Thomas Byrne (Meath East, Fianna Fail)
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Hear, hear.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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——to be able to withstand the slings and arrows of outrageous fortune and keep to his brief——

Michael Kennedy (Dublin North, Fianna Fail)
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And who also has the vision.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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——which is to have talks with the social partners and, I hope, to have them concluded satisfactorily. I will give way to Deputy Thomas Byrne.

Thomas Byrne (Meath East, Fianna Fail)
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I ask the Acting Chairman indicate when my time has concluded.

Deputies:

The Deputy will have four minutes.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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I was not a "no-show". Remember that.

Dinny McGinley (Donegal South West, Fine Gael)
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I do not know who stated it.

Finian McGrath (Dublin North Central, Independent)
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Deputy O'Rourke is definitely on the show now.

Thomas Byrne (Meath East, Fianna Fail)
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Fine Gael would want to get a grip. I agree with Deputy O'Rourke that for Fine Gael, yesterday was all about insults. It is all Fine Gael seemed to be worried about. What is keeping me awake at night is the jobs situation in this country, not insults or not being involved in the process.

Mary O'Rourke (Longford-Westmeath, Fianna Fail)
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Yes.

Thomas Byrne (Meath East, Fianna Fail)
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The process we are going through at present is the correct one to keep all sectors of the economy and society involved. I am delighted to see the builders involved in it because I am sure they will have many ideas on how to spend capital money and create jobs. We had many jobs in construction and we need more construction work to be done.

Last year, we saw a 2% reduction in national wealth. As Deputy McGinley stated we expect it to decrease more this year and probably next year. The impact on workers and their families is all too real. Unemployment is rising and people are having difficulties paying their debts, particularly mortgages. My constituency has the second-highest number of mortgaged families in the country after Deputy Michael Kennedy's constituency of Dublin North. Many of these people with mortgages are suffering and cannot pay them.

The Government and the social partners are discussing this crucial issue. Not only is it important for the families who are suffering but it is also important for the wider economy. At present, people's homes are not being repossessed in the same numbers as in the UK or the United States. However, if repossessions happen here on a large scale it will have devastating effects for the wider economy.

Through its public expenditure programme, the Government is responsible for a large number of jobs including public sector jobs, jobs which feed off these jobs and jobs created through the capital investment programme. Therefore, at the very least the capital investment programme should be maintained and restructured so it creates jobs. All aspects of the programme are designed to create jobs. If we can put money from the National Pensions Reserve Fund into bank recapitalisation, which is necessary, we should also be able to put a substantial amount of billions of euro from the fund into capital expenditure to create jobs and build roads, schools and sports and community facilities.

Getting the public finances into shape is crucial, as is maintaining our triple A credit rating at international level. This is the main background to what is happening at present in terms of a reduction in expenditure which the other parties do not seem to want. They want it in principle but when we get down to the practicalities we will have a motion in this House criticising it. Deputies Joe Behan and Finian McGrath will speak on such motions criticising cuts, as will the Opposition. However, this would not be to consider the reality of the situation. If the money is not there it cannot be spent. The Government's responsibility——

Finian McGrath (Dublin North Central, Independent)
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That is not true. There are other ways. I will put forward my proposals and Deputy Byrne should listen to my speech.

Thomas Byrne (Meath East, Fianna Fail)
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——is to spend that money as best it can. There will be cuts, as €2 billion must be cut from public expenditure this year. Private Members' motions will be tabled assailing the Government for doing what the Opposition has called on us to do, but in principle rather than practically.

We must maintain our credit rating. Fitch Ratings affirmed it last week but other agencies are keeping it under review. It would be extremely bad for this economy to lose our triple A credit rating and if we lost it the Opposition would table a motion on it. We have maintained it so far.

Yesterday, one of my constituents telephoned me and suggested a bond for economic recovery. I informed her that one can already invest in Government bonds, An Post savings accounts and prize bonds. However, perhaps these are not well publicised and that what is required is to publicise and attract money through a Government bond or a bond for national recovery with a tracker rate below the rate which the Government pays on the international markets. Many people would be prepared to put their savings into such a bond.

Michael Kennedy (Dublin North, Fianna Fail)
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I thank Deputies O'Rourke and Thomas Byrne for sharing time. I was supposed to speak during the slot mentioned by Deputy O'Rourke but there was some confusion.

I echo the same thought on the negativity emanating from the far side of the House which is bordering on the ridiculous. We have not heard one proposal on how to deal with the €2 billion savings needed in the public finances. Like the Acting Chairman, in my previous business life I was taught to believe that one can only make real criticism by having a viable alternative to put in place. I do not see any such alternatives coming from the Opposition. Having listened to Deputy Joan Burton again this morning, I believe she is becoming the queen of gloom and doom. This Parliament, along with business leaders, unions, farmers and all communities must play a positive role. We need to instill confidence in the public for the sake of our future generations.

We need to balance out the bad news and recognise that the glass is half full and not half empty. We should recognise that we have 2 million people at work, most of them with good disposable incomes. The negativity emanating from this House discourages people from spending. Yes, we need to cut out extravagance but we must encourage people who have disposable income to avail of the good value now pertaining in goods and services. Why not have the odd meal out in a restaurant? Why not have the odd break in an Irish hotel? Why not carry out that renovation to the house? Likewise, to any person who had planned to change the family car — why not do so? The economy needs it. We must make money go around and there is exceptional value to be had at present.

Yesterday was an exceptionally good news day. Did we hear much about it in the media? We had agreement by the social partners to engage in talks which we hope will be successful. The Intel CEO confirmed that Ireland is an ideal fast-track smart economy.

I wish all the participants in the discussions well. The country is depending upon them. I admire the philosophy of the Taoiseach and Government in continuing to engage the social partners to bring about the agreement which is badly needed. I hope the unions, business people, farmers and the Government will conclude their negotiations satisfactorily next week and will be able to state that they did it their way.

Finian McGrath (Dublin North Central, Independent)
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I wish to share time with Deputy Joe Behan.

Deputies:

Is that agreed? Agreed.

Finian McGrath (Dublin North Central, Independent)
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I am pleased to have this opportunity to speak on this major debate on delivering economic renewal and securing our public finances. I thank the Ceann Comhairle and his office for listening to the concerns of Independent Deputies with regard to speaking rights in the Dáil. I commend his efforts in asserting his authority in the Dáil and protecting the rights of the Independent Deputies elected to the Oireachtas. Inclusive politics always works and it is a marker for the future.

It is a pity Deputy Thomas Byrne is not in the House because I have always stated that I will support any sensible policy which will get the country out of this economic mess. This is not a time for playing party politics. We have a global situation as well as a local one, particularly with regard to banking. All Members of the Oireachtas have a national and civic duty to put their country first. We must put on the jersey, give our views and our best ideas, roll up our sleeves and get on with it. This is how I see my role as an Independent Member of this House.

It is time for patriotism and tough decisions in the national interest. However, tough decisions and patriotism do not include hammering senior citizens, the disabled, the sick and young children. We could have 120,000 more job losses by 2010. National income could fall by 10% in the same period while the tax deficit will soar to €8 billion this year and will rise further in 2010. We must ensure also that Exchequer borrowing falls below 3% by 2013. This is the economic reality and it is not good enough to come in to this House and whinge and moan.

I will support and propose the following ideas to resolve this issue. An employer PRSI exemption should apply to businesses which take on extra staff in 2009. We should introduce a freeze on commercial rates and other State charges for small businesses. Recently, Dublin City Council blinked on this issue. We should seriously consider making a major investment in training schemes for the unemployed. We should also provide a guarantee that during the recession nobody will lose his or her home. I welcome some of the proposals from the Department of Finance and sections of the financial industry. A temporary cut in VAT would boost incomes and shift the expectation of a fall in prices. We can also provide additional investment in building projects such as schools and urban regeneration, which has the potential to increase employment. We could provide incentives to kick start an industry worth maybe €25 billion, insulating homes. We should be brave and consider renationalising the telecommunications network. We should go for that.

I offer those ideas to show that Independent Deputies do not whinge. We may take stands but we also provide options. I have three sensible proposals in the construction industry. The national centre for the visually impaired in Drumcondra has a proposal for a €30 million project to develop services. This would be a good investment with local advantages and provide jobs. I understand that the Minister for Education and Science, and the Department are open to this. Belgrove national school in Clontarf needs major renovation. I strongly support the idea of creating a national team of economic experts who would meet to solve this problem. I always supported the 10% cut in Members' salaries but would also cut 50% of our junior Ministries.

People have walked away from the tax debate. We must accept that during the days of the Celtic tiger we did not broaden the tax base sufficiently.

I strongly defend the public sector. It did not cause the economic crisis yet every day in the newspapers the public sector is hammered. The PAYE workers have done a great deal of work for the past 11 years yet they are being blamed.

I welcome the fact that the partnership talks are going well because that assists the country in a bad time. The Government must think of the unemployed and the weak sections of society, roll up its sleeves and get on with the job.

Joe Behan (Wicklow, Independent)
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I thank the Acting Chairman and the Ceann Comhairle for the opportunity to speak on this important issue in a challenging time for us and for the country. The people are anxiously awaiting the results of the negotiations with the social partners. I support the Government's intention to agree the necessary savings for the next few years with the social partners. It is essential to have solidarity throughout society and support for the measures that must be taken. Some people assume that everyone earning a wage is willing to take a pay cut or to make sacrifices. I am not sure that is the case because many feel they have not earned excessive money as wage earners and PAYE workers. They look at those who have made large fortunes in the past ten or 15 years, during the life of the Celtic tiger and would like to see the most wealthy contribute before they do.

We should also be aware of events in other European countries. The trouble started in Iceland but there is widespread civil disturbance, protests, major strikes in France and other EU countries. We have to be concerned that governments around the world are not getting support from their people for the measures they must take. That is why it is important that this Government stick with the partnership process. We are relying on the success of the talks and wish the participants well.

The Conference of Religious in Ireland, CORI, expressed concern yesterday that the framework document does not adequately cater for the vulnerable sections of society. I will not accept or support actions that will affect the most vulnerable people, young, old or otherwise vulnerable. I would not have supported it within Fianna Fáil and will not support it outside the party. If the measures are fair and most people see them as such they will deserve support. We hope that will happen.

There has been mention of a national recovery bond and an opportunity for citizens to invest some of their pay in the State and its economic recovery, by way of a return similar to the special savings incentive account scheme in better times. I hope the Minister for Finance might consider that. The tax base must be widened. We relied on one-off taxes based on the construction industry and it is clear that while some enjoyed the fruits of that money we cannot rely on that. The tax commission and its yield will be important to ensure sustainable financing of the economy.

Many years ago I worked for a year for an American corporation based in Ireland. The company had a bonus suggestion scheme whereby employees who suggested savings in the workplace received a percentage of those savings as a bonus. Is there room for such an initiative in the public sector? People working at the coal face might be able to suggest savings and share in their benefits.

I wish the Government and all the social partners well in the negotiations. For all our sakes I hope they are successful.

Barry Andrews (Dún Laoghaire, Fianna Fail)
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I wish to share time with Deputy Michael Finneran.

I am delighted to have an opportunity to speak on this important issue. This is not the first time we have experienced a recession. Many Members recall previous ones but each one is different. In the 1980s there were high interest rates, and rates of taxation whereas there was a balance of payments problem in the terrible recession that blighted the country in the 1950s.

The circumstances that obtain now are very different. Arguably we are well positioned to recover quickly from this recession. This is an open economy as everyone knows, with a high level of exports. It is, therefore, like a weather vane in a gale having a pronounced reaction to a tough global climate but being well-positioned to be at the forefront of a recovery when it occurs. The steps the Government has been taking reflect the anxiety to be well prepared for a recovery in the global economy. The launch last December of the smart economy idea was forward thinking for the medium and long term. It tried to ensure that we would lay the plans for the development of corporate growth in areas that everybody knows will lead economies into the future. That is only one piece of the jigsaw. Our actions on bank guarantees and recapitalisation is another piece, as is the work on social partnership to deliver fiscal change.

There are other things to be done over the coming months, but we need to recognise at all times that much of the development of our economy is related to the sentiment, mood and atmosphere that is created. In this regard, I advise all commentators to measure their words when they are referring to the performance of the economy. At one stage we all said that we should not talk down the economy, and that was at a time when we did not anticipate how bad things were going to get. Now it is more important than ever that we do not talk down the economy, that we encourage people not to postpone expenditure to the degree that it is happening at the moment, and that we allow retailers an opportunity to get back into business, because many of them are suffering.

Fine Gael was telling us in October that we should follow the Spanish economic model. We were told that the Spanish Government was providing superb leadership at that time. We know now that Spain is in a much worse recession than Ireland. We were told to follow the UK model of recapitalisation and told to follow the UK policy of dropping VAT rates. None of these policies has worked. By taking a more cautious approach, while at the same time adopting the radical policy of the bank guarantee and a smart economy, we have charted a careful course that will stand to our benefit in the months and years ahead. If we had taken the drastic steps that had been suggested by other people in the last few months, we would have created more difficulties for ourselves.

The fact that we are sticking with the capital budget is a crucial element in the preparation for recovery. In Germany, Angela Merkel rejected the idea of a stimulus package as recently as January. It is a field day for opposition parties across the world, because this is a developing area, circumstances are changing all the time and governments are reacting accordingly. Angela Merkel is now proposing a capital stimulus package of 1.5% of GDP in Germany. We have a capital stimulus package, called the national development plan, which consists of 5% of GDP. That is not a knee-jerk reaction, but something for which we planned. Credit has to be given for sticking to this at a time when other Governments are providing stimulus packages that are far less ambitious.

I support the partnership process. We cannot get everybody in the country into the room. I know that the partnership process has flaws, but being unable to get everybody into a room is not an excuse to do nothing. Bringing the partnership process with us will restore faith in the economy, and will help us towards recovery.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I thank the Minister of State, Deputy Andrews, for sharing time with me.

The Government is on the right path to steer this country successfully through the national and international financial crisis. I have previously outlined to the House the Government's intentions in the various strands of the housing programme. I would like to focus today on the new proposal I announced recently on the long-term leasing of social housing units. Local authorities can and must be used as the real generator of economic recovery within the State. One of the ways that local authorities can do this is through long-term leasing of housing. I want to encourage local authorities to enter into long-term leasing arrangements, from ten to 20 years, to obtain properties to meet social housing need. I will provide moneys under the social housing investment programme for this purpose.

I intend to allocate €20 million to local authorities to enter into long-term leases in 2009. This €20 million would allow local authorities to provide at least 2,000 units and perhaps up to 4,000 units, through leasing arrangements this year. The same moneys would allow us to purchase something of the order of 100 properties. There is, therefore, a major difference between what we can provide in the leasing programme, as opposed to a building programme. This will obviously help meet housing needs, which rose by over 30% between 2005 and 2008.

This approach has been considered for some time in the context of providing a flexible response to changing housing needs, as part of the Government's policy of sustainable communities. The rental accommodation scheme, which is proving very successful and which has contributed to transferring over 18,000 households with long-term housing needs from rent supplement over the past three years, already uses availability agreements with private landlords to provide social housing.

If the general idea of meeting social housing need through leasing has been around for some time, then the current situation, in which there are a considerable number of unsold vacant and unfinished houses around the country, provides the opportunity for local authorities to obtain a sizeable volume of housing units at very good value for the State. Local authorities will be directed to seek properties that are compliant with current sustainable housing policies. In other words, the only properties used will be those in the right places, with the correct tenure mix and of the right design and quality to meet the housing needs concerned. I reject any suggestions that long-term leasing arrangements are a quick fix solution and I expect that the State will get very good value for accommodation in the current market. There has been an increase in housing need and this initiative will help housing authorities get more households off their housing waiting lists.

The local authority is the landlord under leasing, though sometimes it may enter into an agreement with a voluntary body to manage and maintain the house. It is a long-term lease only and the property owner will not be responsible for dealing with the tenant or maintaining the property. The private owner is the landlord under the rental accommodation scheme, which is generally under a short to medium-term agreement, while the housing authority makes the property available for social housing.

From the tenant's point of view, there will be little difference from the current situation. The local authority, or possibly a voluntary body, will be the landlord. The differential rents scheme will apply as normal, the house or apartment will be of good quality and meet all the necessary standards. The housing authority will assume responsibility for meeting the social housing needs of the household as is the case at the moment. The only difference is that the tenant will not be in a position to buy the dwelling concerned.

The move to avail of long-term leasing to provide social housing should not be viewed in isolation. The recently announced incremental purchase scheme will provide the opportunity for the household in the leased property to move house and purchase a dwelling, availing of the relevant subsidies and discounts. Under the incremental purchase scheme, the State will build social housing as normal but will set aside an amount for purchase. This is a very attractive scheme and will provide good opportunities for all social housing tenants, including those in leased properties, to purchase a new property at substantial discounts. The State will continue to build and purchase social housing as at present but over time the composition of the housing stock will change to allow for a greater number of leased units.

The State will be able to achieve genuine value for money through this initiative. This is because of the supply of vacant properties on the market, and because the State is able to take more than one unit and get even better value for money. The State can also take the risk and responsibility for ensuring that the property does not become vacant for long periods. In other words, it has a flow of households with housing needs to use up the supply.

The affordable homes partnership and the relevant local authorities are now about to engage in a significant marketing campaign to sell available homes. Consideration is also being given to alternative mechanisms for deploying, for other housing purposes, any affordable houses or apartments that ultimately remain unsold, including the possibility of introducing a deferred purchase scheme. This is being considered in order to ensure that unsold units are deployed in the most efficient and effective way.

Through the local authorities, my Department and the Government are facing up to the financial realities in which we now find ourselves, and are responding in creative ways which still allow us to make significant progress in meeting housing needs.

Andrew Doyle (Wicklow, Fine Gael)
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I wish to share my time with Deputy Carey and Deputy Connaughton.

There is no doubt that this is a critical national issue, but I question the value of the time being used to make statements on it. We are being asked to play a game of football, but the person who asked us to play wants to keep the ball stuck up his jersey like a kid with a new ball. I have heard good contributions from both sides of the House. If Deputy Byrne spent less time anticipating the Private Members' Bill we were going to produce and came up with a few more ideas, he would better serve the House.

We are lacking both confidence and credit. We are talking about encouraging people to spend but one cannot spend if one does not have the money to do so. There is value to be had but we are not able to avail of it. There will never be value like it. I welcome what the Minister of State, Deputy Finneran, said about the initiative pertaining to the leasing of houses. There is value to be had and it is on this initiative that his resources should be spent.

Deputy McGrath referred to the renationalisation of Eircom. There is an historical deficit with regard to broadband. When Eircom was being privatised, no provision was made to ensure broadband would be rolled out everywhere. People in the business tell me the initiative announced last week will be out of date before the installation. There is not much point in proceeding if it involves throwing good money after bad.

This country should go back to basics. We can do certain things very well. For instance, we can produce food in a more carbon-efficient manner than any other country and we have great potential in terms of renewable energy. With regard to ocean energy, we have the potential to become what has been described as the "Saudi Arabia of ocean energy". We have always been good at producing pharmaceutical goods and at pharmaceutical research and we should return to this.

When one hears that Google could not recruit 20 high-end engineers and had to go elsewhere, one must ask whether our education system is losing its edge. We were always able to anticipate the new wave. When Ford and Dunlop jobs were being lost in Cork, there was no Dell or Google, yet we were able to position ourselves such that we could invite such companies to replace the lost jobs. The companies that located here provided better jobs. We must return to basics and be in a position to anticipate the next wave.

Ireland has its foot in both camps in that it speaks English, is in the eurozone and is better connected to the United States than most other countries. It is able to trade with some of the countries that will not trade with the United States. We have a foot in Boston and Berlin, as somebody said. It is not rocket science to get 2 million people working.

Partnership talks, occurring by force rather than anything else, imply we are readjusting to become a more cost-competitive country. We need a kick start. I agree with Deputy McGrath that we should have a national recovery team and gather together the best brains in education, science and enterprise. We should set up a forum and pay its members nothing — they should be patriots. If the two Houses cannot do so, or will not be allowed to do so, the process should be part and parcel of all our thoughts. We can do this if we are genuinely interested in playing the team game.

Joe Carey (Clare, Fine Gael)
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The State faces a massive and stark challenge it has never faced before. If urgent action is not taken now to face this challenge, the country will end up bankrupt. It is time to be honest with the people and time that the Government that led us into this black hole put up its hands and accepted responsibility. Successive Fianna Fáil Governments failed to fix the roof while the sun shone, and now we find ourselves drenched to the bone because the Taoiseach ignored the fact that our economy was so dependent on the construction sector. He was the chief architect in the construction of the housing bubble.

We are now forced to borrow €55 million every day, which is simply unsustainable. Our banking system is in dire straits and our competitive edge is gone. There has been a total collapse in consumer spending and confidence. Some 22,500 people lost their jobs last month and joined the dole queues. This month in the mid-west, Dell announced the loss of 1,900 jobs, and Molex in Shannon and Element 6, formerly De Beers, also announced job losses. There was a 60% increase in unemployment in County Clare last year. Every day in my constituency office I meet individuals from every walk of life who have lost their jobs, including people who worked in the retail sector and the self-employed.

We need to lower the cost base and improve our competitiveness. Why do we have an energy regulator who is talking about lowering the cost of petrol, fuel and electricity next October? This is a whole year away; we should be stepping in now. The Government should be insisting that costs be lowered. Since 2001 the cost of electricity in Ireland has increased by 70%, yet it has only increased by 6% in France.

We need to deal with the potential for long-term unemployment because it is an economic disaster. It damages individuals because they lose their self-respect, and potential employers lose interest in them. Those who have been unemployed for a short time have a good chance of regaining employment while those who have been unemployed for a long time have a very slim chance of doing so. The Government needs to acknowledge the potential for long-term unemployment and tackle it now rather than retrospectively.

I ask the Government to consider the immediate introduction of a public works scheme, administrated by FÁS and our national voluntary sector, which already sponsor community employment schemes. A scheme such as this would have two strengths; it would use the vast set of skills of tradesmen and it would benefit the community and voluntary sector.

Paul Connaughton Snr (Galway East, Fine Gael)
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I wish well those involved in the social partnership talks. For obvious reasons, we hope there will be a good outcome.

In the 30 years during which I have been a Member of the Oireachtas, I have never seen such mishandling of an economy as I have seen this year. The social unrest we notice throughout the country today emanated from this House when the budget was brought forward to October. If ever the seeds of unrest were sown, it was on that day. I do not want to go over old ground; suffice it to say that on the announcement of the budget the Government believed a 1% levy should apply to a person earning €18,000 as much as it should apply to a person earning €99,000. We discovered the proposals for medical cards and found out the elderly just would not accept that carry-on. This unrest has permeated throughout society and people are now woefully frightened as to their futures. This is bad news for the Government and for us all. The Government took the credit for the good times and is now trying to place responsibility for the bad times on everybody else except itself.

The bank culture in Ireland is nothing short of disgraceful. When the Government recapitalises the banks and when €5 billion of hardworking taxpayers' money is pumped into them, the sort of carry-on we had to accept on the part of corporate bankers must come to an end. They must not be allowed to carry on as they were doing, as if they were gods. How dare any bank or bank manager not give every opportunity to those who are finding it hard to pay their mortgages to work their way out of their difficulties? There is no sign of a change in the banking culture. I know of several people who still had to approach banks on bended knees. I can only hope the people the Minister puts into the boardrooms will show, for once in our lives, that democracy, rather than the banks, runs the country.

Jimmy Devins (Sligo-North Leitrim, Fianna Fail)
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We all acknowledge that we are coming through a tough period as the impacts of the international recession begin to manifest themselves as daily occurrences. As we face the biggest economic challenge for some time, it is no consolation to know that we are not alone and that we share these difficult times with most developed western economies. If anything, this compounds our problems.

However, we must weather the storm of negative international economic factors by facing our problems realistically, keeping cool heads, adopting prudent responses and rebuilding well grounded hope and confidence in the Irish people and the economy. Guiding our thinking and actions will be the belief that we will come through this period of upheaval. We should not lose sight of the fact that we have confronted challenging economic circumstances before and have won through. There are factors we can and must influence and control, and we must lose no time in getting to grips with this task.

The challenge before us is to achieve a transformation of the economy in the current difficult circumstances. We must play to our strengths in so doing. We must have the right people, in the right place, doing the right jobs. As an open economy, Ireland must establish a positive enterprise environment, one which promotes the development of indigenous companies as well as being attractive for foreign direct investment. We must be an entrepreneurial economy with tangible competitive advantages, an economy which focuses on utilisation of the knowledge, skills and creativity of its people and their ability in translating ideas into useful processes, products and services. In achieving this vision, innovation must be the watchword.

In the course of this debate, my Government colleagues have identified that the key elements of recovery will be secured by stabilising the public finances, improving competitiveness, supporting both Irish businesses and multinational companies and assisting those who have become unemployed. In delivering these objectives, we must keep faith with our investment in Irish enterprise and continue to support high-value innovation in products and services that will create thriving companies and support significant numbers of dependable jobs.

We must build for the future by continuing our strategy of supporting research and development, incentivising multinational companies to locate high-value activity such as research and development capacity in Ireland, and ensuring the commercialisation and retention of ideas that flow from that investment. In the last two years, the Government has been implementing a strategy for science, technology and innovation, the key objective of which is to ensure that Ireland is to the forefront in generating and using new knowledge for economic and social progress within an innovation-driven culture.

We must hold fast to our plan in the conviction that we are on the right strategic path by investing in world-class research of the highest quality. We must maintain this investment, even in these economically difficult times. Countries that have taken this road have achieved sustainable competitiveness. Investment in science, technology and innovation is not a luxury. Rather, it is an essential part of building our international competitiveness and our future. It is not an easy road. It is built on turning the hard slog of our brightest minds into knowledge, ideas and technologies we can bring to the marketplace.

This State has trebled research and development expenditure in the past ten years from a very low base, reaching an intensity ratio of 1.56% of gross national product, GNP. However, we are nowhere near the leading countries in terms of such investment, including Sweden, Finland, Japan and Korea whose intensity ratio is more than double our own. In the last decade, China has more than doubled its intensity from a low base and now spends more than Ireland on research and development as a percentage of GDP. This is an indication of the competition we are facing and the urgency with which we must act.

As Minister of State at the Department of Enterprise, Trade and Employment, I am responsible for the development, promotion and co-ordination of Ireland's science, technology and innovation policy. Fundamentally, this strategy seeks to create a competitive edge for Ireland on the global market by building a new competitive advantage based on an increased capacity to generate, protect and use new knowledge by developing mechanisms to translate knowledge into jobs, exports and growth. The enterprises that will survive and grow are those that deliver innovation, quality and value, whether in goods or services.

To this end, the Government's strategy provides a co-ordinated suite of interrelated programmes. My Department funds investments through the enterprise agencies, Science Foundation Ireland, Enterprise Ireland and the Industrial Development Agency, IDA. IDA and Enterprise Ireland promote the use of research in enterprises and use this strong research base to commercialise the outputs of research through intellectual property licences and start-up companies. These two agencies are working closely with companies to strengthen the research and technological base of the enterprise sector in order to drive productivity, competitiveness, exports and jobs. Enterprise Ireland has developed a range of schemes to ensure that we have the capacity to capture and transform the ideas and advances coming from higher education research into commercial reality. Backed by this support, companies are opening up new markets with innovative products and services.

In order to tap into the capacity and talent available in our third level educational institutions, Enterprise Ireland has funded strong technology transfer to ensure the commercial outputs of publicly funded research are realised and to help industry collaborate with the third level sector to find solutions to the research problems it faces. We are growing our higher education research base through Science Foundation Ireland investments linked to industry needs and to the activity of the IDA and Enterprise Ireland. Taking advantage of the physical infrastructure provided by the Higher Education Authority on third level campuses, Science Foundation Ireland is providing world-class researchers working in strategic areas allied to the needs of industry. Science Foundation Ireland is also building large-scale research centres, known as centres for science, engineering and technology, and strategic research clusters with various industry partners. Thus, we are building a strong research base which is directly aligned to industry needs, while maintaining a strong connection with higher education in order to produce top-quality graduates armed with the skills the economy requires.

The success of this connected approach is clear. In 2008, some 56 IDA research, development and innovation investments, valued at €420 million, were won, almost one third of which involved collaboration with Irish third level institutions and research institutes. Enterprise Ireland client companies are opening up new markets with innovative products and services that are directly linked to advancements in innovation, research and productivity. Payback will come in helping Enterprise Ireland companies meet a target of securing €4 billion new exports in the next three years.

Delivering on its mandate to transform research and development activity in Irish enterprise, during 2008, Enterprise Ireland assisted 757 companies to undertake research and development investment. These include top companies such as the Kerry Group, lona Technologies, Trinity Biotech, Glanbia, Kingspan, Greencore and Datalex. New high-potential start-up companies yielded sales of €638 million and exports of €344 million and generated employment of 5,500 over a six-year period. The campus incubation programme, which funds centres for the incubation of emerging business ideas and enterprises, has put in place business incubation centres on every institute of technology campus in addition to six business incubation facilities in the universities. At the end of 2008, there were 240 companies located in such centres, employing more than 1,000 people.

During the last eight years, Science Foundation Ireland has focused on building a high-quality research environment in an effort to establish Ireland as an international location renowned for the excellence of its scientific research. The agency has been successful in this ambitious objective, with the number of research teams working in strategic areas having grown to 336 at the end of 2008. Science Foundation Ireland-funded projects involve interactions with more than 300 companies, both indigenous and multinational. In addition, 103 companies are involved in formal, cost-sharing collaborations. There is a degree of overlap between Enterprise Ireland research and development clients attracted to Ireland and Science Foundation Ireland investment such as IBM, Boston Scientific and Beckman Coulter.

The Government's investments in research and development through the IDA, Enterprise Ireland and Science Foundation Ireland are central to its science strategy. In any period of change, there are opportunities for those who are alert and visionary. It will challenge us to innovate, change and to reinvent what we do and how we do it. We must hold fast to our aim to be among the leading locations for business innovation and to be a country where there will be a critical mass of companies creating the products and services of tomorrow. We must provide the best environment for the commercialisation of innovative, leading-edge products and services. Despite the current circumstances, we will face up to the challenge of funding the necessary increased investment in this area in the difficult years ahead to ensure a secure future.

Lucinda Creighton (Dublin South East, Fine Gael)
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I wish to share time with Deputies Sheahan and D'Arcy.

Pat Gallagher (Donegal South West, Fianna Fail)
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That is agreed.

Lucinda Creighton (Dublin South East, Fine Gael)
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I have been perplexed as I listened to the debate on the economy yesterday and today. Calls have been made by Members on the Government benches for co-operation from the Opposition parties and many Members only fell short of calling for some sort of a national Government. However, any move towards any type of national Government to deal with the current economic crisis is utterly impossible for the simple reason that this Government has been paralysed by indecision during the past six months, ever since the effects of the credit crunch were felt domestically. Ever since the extent of the recession and the rise in unemployment became apparent, it has been clear the Government has been bereft of any solutions and has been incapable of taking any decisive action. The Opposition would be abdicating its responsibility, to a grave extent, if it was to support the inaction and blubbering we have seen from this Fianna Fáil-led Government in recent months.

We have a duty to hold the Government to account, which is what we have been doing and will continue to do. If the Government comes forward with positive solutions to the current financial crisis and, as Deputy Kenny, our party leader, said here yesterday, if the Government is prepared to take on board some of the proposals put forward by our party for us to work together in a constructive fashion to find a solution to issue, we will be more than happy to work with all partners across the House to achieve a solution that is in the interests of the Irish economy and particularly of the Irish people.

However, this economic crisis is a direct result of years of inflationary budgets, particularly and coincidentally those budgets leading into general elections, dire regulation of the banking sector and a property boom that was unsustainable. We reached a point where more than 25% of revenue into the Government coffers in recent years was represented by property related taxes. That is what has led us to this financial crisis. Deputies, particularly those at the Cabinet table, need to step up to the plate and accept responsibility for the role they played in leading us to this position.

I note the Minister of State, Deputy Barry Andrews, mentioned that commentators should measure their words in regard to the economy. We were told in recent months and years that we should not talk down the economy. We were accused of being unpatriotic and trying to undermine the glorious boom that was prevailing in the country at the time. Had Cabinet Ministers taken the time out to listen to some of the economic commentators and Opposition spokespeople who highlighted the problems and deficiencies within the system, perhaps the current economic crisis could have been avoided.

Given the level of public concern, fear, worry and anger, it is extraordinary that the Government is dealing with the current economic crisis in a decidedly anti-democratic way. It is important to consult the social partners and to try to reach consensus but it is completely unacceptable that the only discussions of any worth are taking place behind closed doors. We on the Opposition benches are not privy to any of the detail. We read about it, if we are lucky, through the pages of the national press media or leaked memos to the national broadcaster and so on. This is not acceptable and not what parliamentary democracy is about. If the Government wants co-operation from the Opposition benches, it needs to start co-operating with the political parties on this side of the House because we represent people. We have a direct mandate and we are here to represent the interests of those people in all the constituencies throughout the country who voted for us. We are accountable to the people and expect to be treated by the Government in a fashion that takes account of that.

I am worried the Government will make decisions which will be designed only to appease the social partners and which will not necessarily be in the long-term interests of the country. Raising taxes, and I stress this point, will not kick-start this economy. It is dangerous and detrimental to believe that raising taxes and imposing further burdens on businesses will assist in addressing the economic crisis or help us to get out of the mess we are in.

Tom Sheahan (Kerry South, Fine Gael)
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As a wise man in my parish once said, any man can notice and can spot somebody else's weaknesses, but it takes a great man to acknowledge his own weaknesses. The speculative demand for housing was pointed out to the Government in the Bacon report of June 2000. This is what has brought our economy and our country to its knees, namely the activities of the builders, bankers and the Government. In June 2000 Mr. Bacon said:

These various kinds of speculative demand forestall the movement of the housing market to stability. As this happens, there is a tendency to stimulate further speculative demand and in this way a 'bubble' can develop.

He said that nearly nine years ago.

We are having this debate because of the way the banks carried out their business and the development that took place that created the bubble. Irish banks loan money primarily to Irish builders and property developers to construct commercial developments and housing in Ireland. The types of housing projects or commercial developments entered into were hugely influenced by Government tax policy. Too many holiday homes, hotels and retail developments were constructed and many of these had a negative impact on the communities in which they were built. The property bubble which this created prevented many low and middle income families from acquiring a house. If the bankers were wrong to lend much of this money, the Government must share the blame, as it created the conditions which made it possible.

The question is what we do next. This is not a time to look for someone to blame. If there was wrongdoing in the banking system, those responsible should be brought to account, but that will not solve the problem we now face. The solution must benefit as many ordinary citizens as possible and it cannot be allowed to benefit only the banks and large property developers.

Currently people are afraid to purchase houses because of the negative sentiment being portrayed in the media. I want to make one point, which could help us to move forward from the current position. I would rather not knock everything. The Government should consider giving mortgage interest relief at the top rate for first-time house buyers on loans of up to €400,000. This figure should enable people throughout the country, even in Dublin, to locate a suitable property. This cost would be more than covered by the VAT and other taxes generated.

Pat Gallagher (Donegal South West, Fianna Fail)
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Deputy D'Arcy, a minute and a half remains in this timeslot.

Michael D'Arcy (Wexford, Fine Gael)
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That is okay.

Pat Gallagher (Donegal South West, Fianna Fail)
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The Deputy does not want to take this timeslot?

Michael D'Arcy (Wexford, Fine Gael)
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No.

Pat Gallagher (Donegal South West, Fianna Fail)
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Does Deputy Sheahan wish to continue?

Tom Sheahan (Kerry South, Fine Gael)
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Yes, I will. The Government should provide €2 billion for the shared ownership scheme. This would make the purchase of a house under the shared ownership scheme conditional on the current price being, say, 30% below the peak price, thus ensuring value for money. If the average purchase price of a house was €300,000 and the owner was to provide 50% of the purchase price, €2 billion would fund the assisted purchase of 13,500 houses, thus significantly reducing the housing waiting lists. The total spend would be approximately €4 billion and, therefore, the VAT generated would be approximately €475 million. This would not solve all our problems but would ensure that the man in the street would derive some benefit from the current low property prices.

Leadership on the economy must be given. Unpleasant decisions must be taken and the people of Ireland are ready and willing to take them if the benefits are explained clearly to them. I am looking for honesty from the Government. It should come out, tell the people what the state of the country is and lay it before them. It should tell them we must take steps A, B, C and D and then we will be out of this mess in three years.

Decisions must be taken quickly to reassure the people and those who might wish to do business with us. Each decision must be explained to the people. Those who are to be targeted in any savings to be made in the running of the country must not be the weak or the vulnerable. The Government must lead, and must be seen to lead, with authority but, most of all, it must be honest with its people.

Pat Gallagher (Donegal South West, Fianna Fail)
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The Minister has ten minutes.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Last evening, a framework for a pact for stabilisation, social solidarity and economic renewal was agreed with the social partners. It was a very significant step in uplifting this country and renewing the economy. That is what all of us are concerned with in the House today. It is not merely about looking back and seeing how we got here, but about listening to the people who are working, to those who are employing and giving leadership. It is about listening to Members of the Oireachtas, yesterday and today, who had any valuable suggestions. Such suggestions can be taken on board in preparing our policies and plans and in the difficult decisions we must take.

Talking about stabilisation, social solidarity and economic renewal might sound very grand but it is really about keeping the almost two million people who are in employment in the jobs they have. It is about helping the more than 300,000 people who have lost their jobs to be able to return to work and do that quickly. It is about ensuring that we support those people who are dependent on social welfare to be able to continue and that we give them the hope and optimism they need. It is about ensuring that people who are in business and enterprise can get credit and loans and can benefit from the upturn when it comes but allowing them, in the interim, to be able to continue to employ people and continue to be able to work, to manufacture or to provide any of the good work they are doing around the country. It is about renewing and regenerating this economy and about ensuring that we can have those small businesses doing well. We have 250,000 small businesses in this country that employ over 800,000 people. They deserve to be supported because they are the backbone of our economy.

It is also about regenerating to ensure that when the major multi-nationals, the Intels, the Dells and the Microsofts, are looking for places to invest we have the relevant skills for them so that they will wish to come here.

Liz McManus (Wicklow, Labour)
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A lot of them are not investing in Ireland.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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It is also about ensuring that we train and educate and are ready for the upturn.

There are many very good news stories out there. When one thinks that Intel and Microsoft let 11,000 people go throughout the world, out of that number only 17 jobs were lost in this country. That says a great deal about us having the right skills for those companies. No jobs are to be lost in Ireland in Intel. That is a great commitment by Intel to this country. Only a small number will be lost in Microsoft which also employs thousands in this country. There is a real message for us in this. Using this time to upskill, educate and train, and to do so in the skills that are needed by these companies, can help us to benefit from future investment. We have all the other assets, such as the young workforce, our corporation tax rate and our involvement in Europe. This is a good opportunity.

There is much hope and I believe that is why people sat around the table yesterday and agreed to, at least, a framework for the pact. A question was asked about who are the people who are agreeing this. Obviously, the Government is the leader, in addition to the political leaders of this country. The social partners represent employers, employees, community groups and voluntary groups. Every interest is at heart, including every other leader in the Oireachtas who has a contribution to make. In particular, there is every person out there today who is willing to make a sacrifice to help others. Everybody one meets these days says "yes, we are willing to do it". They are willing to take the pain.

It is in that spirit of renewal that new hope can come with the beginning of this new year albeit that things are very difficult for many people. They are particularly difficult for the over 300,000 people who have come onto the live register, having lost their jobs across a range of areas, particularly during the past year. We talk very often about the people who worked in the construction industry because it is more visible than others. However, there are those who worked in associated areas, such as furniture making or hardware, people who were architects, solicitors or engineers. For these people and their families it is very difficult. I am conscious that many of them have never had to access social welfare in the past and would never have had any contact with social welfare offices. We have changed many of our processes and have brought in 115 extra staff. I have requested more staff and I am very anxious to ensure that we deal with these people and treat them with the dignity and speed they deserve. I know there are delays in some offices. In very many others we are ensuring that the processing times are kept low. Two and a half weeks is now the average processing time for jobseeker's benefit——

Róisín Shortall (Dublin North West, Labour)
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There are delays of ten or 11 weeks in some places.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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——and five and a half weeks for jobseeker's allowance. I know the staff in all our offices throughout the country are working flat out to try to help these people and support them. None of them wants to be on the live register or unemployed. They want the opportunity to get back into work. One of the key ways of achieving that is to ensure that the economy beyond the employment sector is kept strong. By that, I mean our expenditure — ensuring that our income is right and that we have a strong banking sector. We have made many decisions about the banking sector in this House over the past few months but now we must see that these decisions feed into ordinary people's lives and into ordinary businesses so that they can get loans and credit and can help to regenerate their own areas.

Given the very big gap between income and expenditure, we must implement very hard measures this year. It was not easy for anybody to sit around the table and say, "yes, we agree", to €2 billion coming out of the economy. For that sum to come out, this year, is a lot to ask. We must look at those areas that are a significant element of our expenditure and our budget. The commitment that people are showing and their willingness to engage with this is a sign of real leadership.

As a Minister, of course it is easier to be able to spend. It is much more difficult for a Government to say that it must take money out of this sector or that. Leadership has been shown right across the different groups and the unions and also by individuals out there, in the making and supporting of those decisions in order to regenerate the economy.

What about the individual, the person who is 18 or 19 years of age, who comes in to sign on? The last thing we want is for him or her to become dependent on social welfare and to become long-term unemployed. We have two pilot projects that are working very well. They are in only two areas at present, although I look forward to expanding them. The aim is to ensure that when an 18 or 19 year old comes to sign on to the live register, he or she is immediately referred to a course that is relevant to his or her needs. Some of these people still have literacy problems. Some are more capable and are better able to take up other skills but——

Róisín Shortall (Dublin North West, Labour)
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Two miserable projects.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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——at least by doing that immediately we ensure that these people are not merely signing on and getting welfare and perhaps becoming dependent on it at a very early age.

Róisín Shortall (Dublin North West, Labour)
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It is for a tiny number of people.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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There are other groups that we can ensure will benefit from the same approach. We are making a prudent move and ensuring that it works properly in the first place. We will see what the needs are and how the project works in the pilot areas and then expand it elsewhere.

There are many other sectors we can look at and we are doing so. Some employers are struggling to hold onto their companies and are forced to put their employees on three-day weeks. There are very good opportunities for those people who have two days to be able to upskill, use FÁS training and use the capacity that is in the institutes of technology and VECs through PLC courses. Apprentices who have not been able to finish their on-the-job work element can come back in and finish the education element of their training. The co-operation we are seeing between all the different agencies is something that will benefit those individuals. The Cabinet sub-committee and the working together of the Tánaiste, the Minister for Education and Science and myself will ensure that we see a flexibility in Departments that, dare I say, we have not seen before. People are willing to make changes to ensure we target all of these individual groups.

Ensuring that people have the skills needed for the future is another key element. It is not just about giving people a course for the sake of it, although all education is valuable. However, the future skills group has in the past been very good at identifying for us that we need skilled people in the areas of pharmaceuticals, medicare devices, life sciences and maths. That group is at present reviewing what will be the needs for the future. There is a constant message about the value of science so we can lead into research and development, which is at the core of the smart economy and the core of our future plans for this country.

For students filling in CAO forms this weekend, my first advice is always to do what they would like to do. However, there is key advice for young people, which is not to be influenced by the recession economy they see today, because when they finish their education, we will be out of this recession and those young people will be coming into a workforce that will need their skills. The second piece of advice is that the skills they will need are in the sciences and maths, which is where the investment is and where the training will be available. I ask them to seriously consider those areas for their futures.

In agreeing the framework, I know that in the next few days, with all of the leaders and the willingness of a public who always had a real fighting spirit and great drive and determination, we can agree a process that will help us to make serious savings in expenditure but at the same time to regenerate an economy and give back to the Irish people the hope and optimism they have always had. It has been sliding in the recent past but I know we can do that over the next few weeks because of the willingness of the people.

Pat Gallagher (Donegal South West, Fianna Fail)
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I call Deputy Róisín Shortall. I understand she is sharing time with Deputies Liz McManus and Jan O'Sullivan.

Róisín Shortall (Dublin North West, Labour)
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It is regrettable the Minister for Social and Family Affairs has left the House so quickly after speaking because I want to highlight the absolute hypocrisy of what the Government is discussing with the social partners. I have a copy of the draft framework document, which I managed to get last night. It talks of reducing public expenditure while showing "solidarity with those now losing their jobs". This is from a Government that has just cancelled three months of payments for all jobseeker's benefit claimants and that just yesterday laid before the House new regulations cutting the entitlement of part-time workers to jobseeker's benefit. What hope is there for the country if this is what they mean by solidarity?

The draft framework document also talks about reviewing the mortgage interest supplement scheme. Just before Christmas, however, the Minister who has just left the House awarded herself new powers to curtail the amount of assistance provided. Is that what they mean by solidarity?

True solidarity would target cutbacks at the top and work down from there. True solidarity would target cuts at wasted expenditure and the scandalous tax breaks that are available for the better off. Why should anyone take a pay cut when they see top banking officials and businessmen engaging in dodgy dealing, threatening the very basis of our economy and getting away with it? Why should anyone take a pay cut when they see top public servants getting large bonuses and others receiving golden handshakes and plum pensions after they have been forced to resign their positions? Why should anyone take a pay cut when they see every cent invested in the National Pensions Reserve Fund last year, all €1.69 billion of it, lost on the stock markets while the fund managers take over €20 million in fees? In fact, in the past year almost €5 billion of taxpayers money has been lost from this fund. Why should anyone take a pay cut when they see that many landlords do not pay tax on their rental income, when rich artists do not pay tax on their book or record deals and when high earners continue to get massive tax relief on their pensions? Why should anyone take a pay cut when our Ministers remain among the best paid in the world despite the absolute failure of their developer-led policies?

Do not get me wrong. The country is in an economic mess and pay cuts and tax increases have to be part of sorting out that mess. However, it strikes at the very legitimacy of government to start that process by targeting those who have been prudent and responsible, who bear no responsibility for the mess and in many cases are least able to afford it.

Yesterday, the leader of the Labour Party said in this House that "the nucleus of a modern economy is trust" and that this requires trust in the political system. If the country is to recover, there is a need for the Government to show a sea-change in its thinking in this regard. It must target those who can best afford to contribute to the economic recovery. Its failure to do so will mean this recovery plan has no chance of succeeding.

Liz McManus (Wicklow, Labour)
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There are 8,000 people on the dole in County Wicklow, which is unprecedented, with almost 2,500 of those in Arklow. There is an emergency meeting tonight about the crisis, particularly in Arklow. People will be asking what the Government will do to ensure job creation and the retention of jobs. I am glad the Minister, Deputy Hanafin, will not be at that meeting because following her speech, frankly, she would be torn apart.

The people are entitled to an answer to their question. I do not believe the Government is meeting the crisis with any kind of coherence or conviction. We all know we face stark choices and that we need strong, innovative leadership. The Government says the economy will shrink by 4% and the likelihood is that 420,000 people will be unemployed. Getting people back to work should be a priority yet the policy is all about cutting back on our potential to increase jobs.

The recent budget was supposed to provide the solution to our difficulties, taking €4 billion out of the economy. Now, the Taoiseach is again obsessing about public finances, cutting them back by another €2 billion. Cutbacks lead to fewer jobs, so people are justifiably asking how such massive reductions in spending can possibly help to restore prosperity and protect jobs. It does not make sense. That is at the heart of the issue in terms of good Government.

There is a place for savings and cutbacks but only within an overall economic recovery plan that harnesses every resource to keep people at work. What is most disturbing about the framework document that The Irish Times kindly published for us is that it is full of vague aspirations. Other countries are getting their act together. We need only consider the record of President Obama to see our Government's performance is quite dismal in comparison. Last week in his inauguration speech, President Obama talked about the greed and irresponsibility on the part of some, and he also referred to the collective failure to make hard choices and prepare for a new age. Within a week of taking office, he has succeeded in getting his national stimulus plan, involving $819 billion, approved by the US House of Representatives.

There is no such honesty or self reflection from the Government, and no such action. Instead, the Government has been scrambling around in the dark. After creating a culture of greed and excess, it is hoping to blame it all on others. Yet, this is the time when a way needs to be charted out of the tough times. We can save jobs and we can get the economy moving again. As Deputy Eamon Gilmore said, we need to see the opportunities instead of the obstacles.

For example, thousands of people are losing their jobs in the construction area. The idea of having a national insulation program is a no-brainer in that it saves on fuel costs and helps to meet our climate change commitments. However, it is not in place yet. This morning, I tried to ascertain if there was any substance to the scheme in terms of a recognition that this work could be set out and done immediately. As usual, all we here is rhetoric and promises. We were promised that the money has been put by for the roll out of the national insulation scheme, but it has not yet taken place. If one inquires when the scheme will commence, one is told it will be next April, which is not good enough. There are people who could be working on the scheme but who are not because the Government is lethargic and drifting and it does not understand the sense of urgency in securing people's jobs. People are expressing a sense of anger because their jobs are under threat, or because they have lost their jobs. The Government should wake up and listen to what people are saying.

Jan O'Sullivan (Limerick East, Labour)
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I fully agree with the remarks of Deputy Shortall. There is no evidence that those who can afford to take the cutbacks in our society are doing so. Unfortunately, the opposite appears to be the case. I believe we must have a base line for the protection of front line services, otherwise we will store up sizable problems for the future. I argue for protecting programmes, especially those relating to children, whether in public health or education, to ensure we do not create problems in future by cutting back on basic services, especially those in the health service.

This morning I attended the Joint Committee on Health and Children. We were told there is not enough money for the basic school dental programmes, for basic immunisation programmes and other such programmes which protect children. If we do not protect front line services there will be serious problems as we work through the present difficulties. I strongly argue in favour of certain levels below which we should not go and for certain front line services which we should protect.

I refer to a matter in my constituency, but the point could be applied elsewhere. The Limerick region is about to lose approximately 2,000 jobs at Dell, along with a substantial number of ancillary jobs in other companies. There are other job losses in small businesses and so on affecting other parts of the country. There is a regeneration programme for Limerick, but apparently there is no money for the roll-out of the programme. It seems a local stimulus package such as the Limerick regeneration programme is a way in which we can match people who are about to lose their jobs with opportunities in the community. A plan is already in place in Limerick which will provide jobs and training for a large number of people. It makes good sense to implement this regeneration programme and to provide jobs and opportunities for those who are about to lose their jobs, instead of those people signing on and causing a drain on the resources of the Minister for Social and Family Affairs, Deputy Mary Hanafin.

I support the model to be implemented in Limerick. There is a regeneration plan and a task force set up as a result of the Dell job losses. This model could be replicated in other communities throughout the country. If we do not provide such stimulus packages then the economy will continue to contract and increasing numbers of people will be on the dole. It seems any sense of a plan for the future to generate employment is absent in all of the Government's plans.

Pat Gallagher (Donegal South West, Fianna Fail)
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I call the Minister for Agriculture and Food, Deputy Brendan Smith who, I understand, is sharing time with Deputy Mary Alexandra White.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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As we are aware, there has been a significant deterioration in economic conditions, and especially in the public finances in the past twelve months. This deterioration in economic conditions has had a significant impact on the economy. The economy contracted in 2008 and will continue to do so this year. A major factor weighing on activity is the correction in the property sector and this has exerted a negative drag on overall economic activity. This has spread to other sectors of the economy with retail sales falling sharply. This, in turn, has had negative implications for employment levels, and the pace at which numbers on the live register had increased is especially worrying. The substantial loss in economic output has resulted in a steep fall in tax revenue. The tax shortfall in 2008 alone was €8.1 billion.

Compounding our domestic economic problems, there has been a major deterioration in the global economic environment. The origins of this can be traced back to developments in the market for USA sub-prime mortgage debt, in which difficulties began to emerge during 2007. What started as a major disruption to the operation of a specific credit market has spread to global financial markets, intensifying over time, and culminating in severe global financial problems. Internationally, the impact of financial market turmoil has been to reduce access to credit and to weigh on confidence, pushing the major world economies into recession. The eurozone countries, the United Kingdom, the USA and Japan are all at the verge of, or are in, recession.

The deterioration in the international climate has weighed on our ability to achieve a suitable rate of economic growth. Exports are the life-blood of a small, open economy such as ours. The record appreciation of the euro against sterling has had a major negative impact in this regard. While our exposure to the United Kingdom economy is not as intense as it once was, I recognise the pain experienced by Irish exporters, especially food exporters, at this time. The Government is implementing a range of policies to support our competitiveness objectives, aimed at improving competition in product markets. These include major investment in research and development. In addition, the Government is maintaining capital investment at twice the EU average. This policy has both short-term and long-term benefits, supporting jobs and improving competitiveness and productivity in the longer term.

As a result of the dramatic changes in the international economic situation, the Irish fiscal outlook in the coming years will be considerably more difficult than anyone could have envisaged. Restoring sustainability to the public finances can only realistically be done over a period of adjustment of up to five years. Given the scale of the emerging position, taking action over a shorter period of time would impose substantial economic and social costs and would be neither sensible nor appropriate. The Government has agreed to put in place a five-year plan to restore balance to the public finances by 2013.

To achieve this plan, we must work together. The farming pillar has been part of the social partnership process since its inception in 1987. It has been through good and bad times during the course of the seven agreements put in place in the past 22 years. A return to the spirit of agreement that prevailed in the first partnership agreement, namely, the Programme for National Recovery, is now called for. That agreement was put in place at one of the most difficult economic times for the country with high taxation, record levels of unemployment, punitive interest rates and poor public finances.

Róisín Shortall (Dublin North West, Labour)
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Does that mean it is our patriotic duty again?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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That means providing the country with the appropriate leadership, which was the case at that time and is the case now. That agreement laid the foundation stone for a dramatic improvement in the quality of Ireland's economic and social life.

Róisín Shortall (Dublin North West, Labour)
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What utter hypocrisy.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The Labour Party disagreed in 1987. Deputy Shortall's party left Government and left the country in an appalling state in 1987. The Labour Party ran out of the Cabinet in 1987.

Róisín Shortall (Dublin North West, Labour)
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The Minister would not know what fairness was if it bit him on the nose.

Pat Gallagher (Donegal South West, Fianna Fail)
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I ask that the Minister continue without interruption, please.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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That agreement laid the foundation stone for a dramatic improvement in the quality of Ireland's economic and social life. It was not easy and involved a huge level of sacrifice by all. It took a considerable period of time to make a difference, but in the current climate it represents an example of what can be achieved working together, in partnership, for the good of the country.

Róisín Shortall (Dublin North West, Labour)
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That is hypocrisy again. All the talk of working together is hypocrisy.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The Deputy's only contribution is that everything is hypocrisy.

Róisín Shortall (Dublin North West, Labour)
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The Minister should stop pretending that the Government intends to do things fairly. It has never done so in the past so why should it do so now?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I do not come before the House to listen to codswallop from Deputy Shortall, which is all I have ever heard from her over the years. That is her only contribution.

Róisín Shortall (Dublin North West, Labour)
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The Government created this mess and until it recognises that, nothing will change.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I believe that the agriculture, food and fishery sectors can play a crucial role in the revitalisation of our economy. The agri-food sector is our pre-eminent indigenous manufacturing sector. It is strongly export oriented, with exports amounting to more than €8 billion, and has a very low import content in its inputs. It is also labour intensive. This is precisely the type of industry that we need at this time. However, to thrive in a very difficult environment it is vital that the sector is as efficient and competitive as possible at every step in the chain from farm to fork.

In recent years, the Government has supported a range of measures designed to assist the sector in meeting the demands for sustainable and competitive production. Although finances are more limited now, the Government's overall strategy will be to continue to focus resources on measures to enhance the productive capacity of the sector. Despite necessary reductions in public expenditure, the Department of Agriculture, Fisheries and Food will spend €3.4 billion in support of Irish agriculture, fisheries, food and forestry during the year. This significant transfer of public funds is tangible evidence of the Government's commitment to the sector. All public expenditure will be under close scrutiny to ensure it is used to the best possible effect, and this will include expenditure by my Department.

For more than 30 years the Common Agricultural Policy has played a major role in supporting the Irish agri-food sector, through both direct budget transfers, supported by EU taxpayers, and access to high-value European markets.

Róisín Shortall (Dublin North West, Labour)
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The Minister cannot even get his sums right. The amount in question is €400 million.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The completion of the negotiations on the CAP health check late last year was an important development for the sector. My main aims in the negotiations were to achieve an increase in milk quotas while maintaining the market management mechanisms in the milk sector and to gain access to unspent single payment funds.

I was happy to have succeeded in achieving those aims, while at the same time managing to reduce considerably the proposed level of modulation to ensure modulated funds remained with Irish farmers and in Ireland. We now must consider the longer-term situation and focus on the upcoming review of the EU budget and the shape of the CAP beyond 2013. This should be done within the context of the broader outlook for farming and the food industry in the future. While that future clearly is marked by many uncertainties, particularly in light of the current international economic situation, there will be significant opportunities arising from growing world demand for food and bio-fuel. It also is known that there will be major challenges from climate change, increased competition on world and EU markets, the financial crunch and other factors. We must ensure Ireland has the capacity to cope with the challenges and to exploit fully the opportunities as they emerge. As I stated, to do so, the entire sector must be highly efficient and competitive. It also must be innovative, produce the products that consumers demand and focus relentlessly on quality and safety. If this is done, I strongly believe our export-led and labour-intensive agrifood sector can contribute significantly to our economic renewal in these difficult times, and to our long-term growth in the future.

In common with virtually all the world's advanced economies, we face substantial economic and fiscal challenges in the immediate future. For its part, the Government is making the type of decisions that will help lay the foundations for recovery. For a small open economy such as Ireland's, sustainable increases in living standards can only be achieved through supplying goods and services to the wider global economy. Therefore, we must ensure the economy is in a position to take advantage of the global recovery, when this emerges.

Róisín Shortall (Dublin North West, Labour)
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Does the Minister take any responsibility?

Mary White (Carlow-Kilkenny, Green Party)
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I thank the Minister for sharing time. Life is short and three minutes is short but I am glad of the opportunity to speak in this debate. We must prioritise the stabilisation of the public finances. As everyone is aware, we are spending €55 million per day at present. In a matter of only four months, incredible statistics have been produced for an incredible time. Confidence in the economy can only come about through the basic notion that Ireland Incorporated has its financial house in order. The Green Party has been highly critical of the practices and culture in the banking world and to retrieve that confidence in Ireland, both at home and abroad, we must send out the strongest signal that financial regulation is implemented and no fraudulent practices are left untackled.

Róisín Shortall (Dublin North West, Labour)
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How does the Deputy propose to do that?

Pat Gallagher (Donegal South West, Fianna Fail)
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Deputy Shortall, please.

Róisín Shortall (Dublin North West, Labour)
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This is all just rhetoric.

Mary White (Carlow-Kilkenny, Green Party)
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However, we also must look to the positives, by focusing on the knowledge economy and the green economy. We must consolidate our prospects in the knowledge economy through investment in third level education, support for research and development and investment in infrastructure and public services to make Ireland an attractive location for skilled workers and this is being done.

We must build a green economy. Government supports and schemes, as well as the current work on identifying areas in which the green economy needs greater support from State agencies, are vital. As a small country, Ireland can adapt quickly and make the most of the foresight of some of our European colleagues such as Germany, which has created more than 200,000 jobs in renewable energy, as well as the potential for indigenously-produced biomass to provide 10% of its fuel needs by 2020. The framework for sustainable economic renewal is an important blueprint to help us. In addition, the forthcoming Commission on Taxation provides us with an opportunity to create a more equitable and environmentally conscious tax base. The ESRI has stated that a shift from labour taxation to environmental taxation has a positive impact on employment and a more progressive taxation regime regarding wealth must accompany such a shift.

Finally, as a nation, we are a gutsy people who often are at our best when our backs are to the wall. We can turn this situation around, while being mindful of the opportunities. Seneca, who observed that life is very short and anxious for those who forget the past, neglect the present and fear the future, is a man for our times. Were we to learn from the past, be mindful of the present and fearlessly plan a way forward for the future, the old Stoic might approve of our actions.

Pat Gallagher (Donegal South West, Fianna Fail)
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Arising from an order of the House made this morning, the Minister will have five minutes. I call on the Minister for Finance, Deputy Brian Lenihan.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Do I not even have ten minutes?

Pat Gallagher (Donegal South West, Fianna Fail)
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The Minister has five minutes.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I welcome the debate that has taken place in the House over the last two days. It is clear from the contributions by Deputies from all sides that there is a recognition of the scale of the difficulties we face. That is encouraging because the manner in which we respond to our current economic difficulties will have a crucial bearing on the length and severity of the downturn.

The agreement the Government has reached with the social partners on a framework for stabilising the public finances means we can move forward on the basis of a shared analysis of the economic crisis we face. I welcome in particular the acceptance by the social partners of the need for immediate expenditure savings of up to €2 billion this year as a credible response to our parlous fiscal position and their commitment to work with the Government over the next five years to bring the general Government deficit below 3%.

Róisín Shortall (Dublin North West, Labour)
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The Minister should provide details.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Deputy Shortall should note there is much tough talking yet to be done on the detail of how those savings can be achieved.

Róisín Shortall (Dublin North West, Labour)
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There is plenty of rhetoric but not much detail.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The Deputy could try making a suggestion.

Róisín Shortall (Dublin North West, Labour)
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The Minister should try being honest about the situation. What attempt will she make to look after the unemployed?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Government has had its discussions on the matter and has identified clearly the need to make reductions in our payroll costs. It also shares a determination that all sectors of our country should contribute in accordance with their ability to so do and conversely, that the most vulnerable are insulated from the worst effects of this recession. The importance and value of agreement at a time when many other countries are experiencing industrial unrest and social unrest should not be underestimated. It sends out a powerful signal to international investors and to the markets that we are capable of managing our way out of the most serious economic downturn in 80 years.

However, time is of the essence. The latest figures confirm that economic activity has gone into reverse, with gross domestic product, GDP, declining by an estimated 1.4% last year, which constitutes the first decline in a quarter of a century. This year, GDP is projected to contract by 4%, which would be the sharpest decline in activity ever recorded. Looking towards next year, a further albeit more modest reduction in activity is forecast. In other words, successive years of contracting activity are in prospect, something which has never happened before.

Ireland faces an extremely difficult set of economic circumstances and it is clear we are in for a difficult number of years. The reversal of our economic fortunes stems, in the first instance, from the correction in the new house building sector. This year, completions of new housing will amount to approximately 20,000 units, compared with approximately 90,000 units completed in 2006. Because of its importance to the economy, lower levels of activity in this sector exert a major drag on overall activity and the effects of the housing market correction now have spread to other sectors of the economy. However, there is no point in believing this is the sole cause of our current difficulties.

Internationally, an economic slowdown has been under way for some time, reflecting the impact of financial market turmoil which first surfaced following the collapse of the market for sub-prime mortgages in the United States. The effect of this has been to restrict access to credit and to weigh on confidence in our main export markets. The global financial crisis intensified dramatically last autumn, reinforcing the global economic downturn. As a result, the outlook for the global economy has deteriorated significantly in the space of just a few months and international forecasting agencies are revising downwards their projections for world growth. The European Commission published revised forecasts last week showing that growth in the United Kingdom, the United States and the euro area will decline significantly this year. In fact, this will be the first year since 1945 in which activity in the world's advanced economies, as a group, will decline. This is not something which is unique to this country. While we have unique and distinctive problems, they form part of a wider international pattern, which we must recognise and learn from. We are in a truly global recession, the scale of which has not been seen for a very long time.

From our perspective, the deterioration in the international economic environment will affect our export performance, which is the life blood of a small open economy such as ours. Exchange rate developments, especially recent movements in the euro-sterling rate, have been most unhelpful. Most exposed are small and medium-sized firms, whose competitiveness position has been adversely affected by the weakness of sterling. Given our land border with the sterling area, movements in the sterling rate have elevated cross-Border shopping to levels not seen for a long time, with adverse implications for our Exchequer position. Contrary to some of the suggestions made in the House yesterday, changes in the VAT regime in both jurisdictions have had little, if any, impact on cross-Border shopping decisions.

Róisín Shortall (Dublin North West, Labour)
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It simply is that more people are travelling north.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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A number of speakers referred to a loss of confidence among the international investment community. I am acutely aware of this and the need to restore that confidence is a top priority. I will put into context the deterioration in the public finances. Tax revenues last year were nearly 14% below 2007 levels with those tax heads most closely aligned to the housing and international financial markets being worst affected. Lower levels of tax revenue mean we are not collecting enough revenue to finance the level of public expenditure we have seen in recent years. As a result we are borrowing significantly to fund for day-to-day spending, as well as totally funding our capital expenditure through borrowing. In the absence of further policy action, a Government deficit in the range of 11% to 12% of GDP is in prospect for each of the years to 2013. That position is untenable.

In the first instance, we must eliminate borrowing for day-to-day spending. The first step towards that goal is the €2 billion savings, the details of which will be announced next week. Next year, we need to make a further adjustment of €4 billion and a proportion of that must come from tax. The Commission on Taxation will report in the early autumn and that report will inform our deliberations on next year's budget.

We need to broaden our tax base. The most recent projected Revenue data covering approximately 2.4 million income earners on their records shows that 38% are entirely exempt from income tax, and the top 20% of income earners pay 77% of all income tax. Of these the top 2.5% of income earners pay one third of all income tax, the top 6.5% of income earners pay a half of all income tax and the top 12.5% of income earners pay almost two thirds of all income tax. For the information of Deputy Shortall, that data shows how progressive the income tax system in the State is.

Róisín Shortall (Dublin North West, Labour)
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What about all the high earners who are not paying any?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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We have a strongly pro-enterprise system of taxation——

Joan Burton (Dublin West, Labour)
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Those paying that tax are public servants, by and large, married to other public servants. We have had that discussion previously.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——and, in budget 2009, I re-affirmed the Government's commitment to the 12.5% rate of corporation tax and to maintaining and enhancing our pro-business tax policies. In addition, the recently passed Finance Act introduces a number of very significant changes to the research and development tax credit scheme as well as a number of other pro-business tax measures. It is important that we maintain that element of our tax system so that we can continue to attract investment into this country and nurture our indigenous sector.

We have agreed with the social partners that whatever taxation measures are to be introduced will be informed by the principles of fairness with a higher proportion falling on higher incomes and that they will support the productive sector of our economy so that we can keep Ireland competitive.

Róisín Shortall (Dublin North West, Labour)
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We will believe it when we see it.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Deputy Shortall has seen it already in the statistics I have already put on the record of the House——

Róisín Shortall (Dublin North West, Labour)
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We will believe it when we see it.

Brendan Howlin (Wexford, Labour)
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Allow the Minister make his contribution.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——on the progressive character of the burden of income tax in the State.

Joan Burton (Dublin West, Labour)
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Will the tax exiles pay tax?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is also important that we do not——

Joan Burton (Dublin West, Labour)
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Will the tax exiles——

Brendan Howlin (Wexford, Labour)
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Please, Deputy.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——lose sight of the very significant fiscal stimulus——

Joan Burton (Dublin West, Labour)
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——in Fianna Fáil pay tax?

Brendan Howlin (Wexford, Labour)
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Allow the Minister to continue.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——that is being provided through the measures taken in the October budget to protect incomes at the lower levels——

Róisín Shortall (Dublin North West, Labour)
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The Minister put them at ease.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——as well as through the maintenance of an historically high level of public capital investment.

Joan Burton (Dublin West, Labour)
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Would the Fianna Fáil tax exiles pay tax?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Capital investment, in particular, provides a significant fiscal stimulus while at the same time boosting the productive capacity of the economy and thereby providing the basis for future gains in living standards. We are also continuing to invest heavily in education, skills and training.

Productive investment in infrastructure and in the skills of the population will help us to restructure the economy to target the next wave of economic growth. The Framework for Economic Renewal launched by the Taoiseach last December sets out our agenda over the next few years of how we will re-orientate and re-prioritise the business of Government to achieve the goal of building a smart economy which will help underpin our economic future. The Government is working to reposition the economy to be able to achieve sustainable, export-led growth when the global economic climate improves.

On a more positive note, the recent interest rate reductions by the ECB — 2.25% since October — will provide some timely support to the economy. In addition, weak global demand has resulted in a sharp fall in commodity prices. Oil prices, for example, have recently fallen below $50 per barrel from their peak of nearly $150 per barrel in July last.

These and other developments have resulted in an easing of inflationary pressures. This is to be welcomed as it supports the real income of consumers. Most analysts expect inflation to turn negative in the first quarter of this year, and for the year as a whole CPI inflation will decline by approximately 1.75%. In the short term, declining prices are for the most part a positive development, although it would not be desirable to see the emergence of a position where declining prices began to feed into expectations of further price reductions.

Turning now to the issue of competitiveness, many of the contributions focused on the need for improvement in this regard. The Government is well aware of the importance of competitiveness for our economic well-being and our goal must be to maintain our position as an attractive destination for inward investment and to position the economy to be able to take advantage of the global recovery when this emerges. We must be cognisant that national competitiveness is a shared responsibility, not only of Government but of all society and the social partners. Becoming more competitive will require each of us to play our part and work together to this end.

Notwithstanding the need to underpin the sustainability of the public finances, the Government will continue to take steps to support competitiveness. In addition, the Government is prioritising productivity enhancing investment under the national development plan. Capital investment spending is being maintained at 5% of national income, which is very high by international standards. That is the real stimulus package that was maintained in the budget last year and it will assist the economy in a difficult year. Investment in education, skills and training is also being maintained at high levels in line with the Government's strategy of re-positioning the economy further along the value-added chain.

A well functioning financial system is a fundamental element for any economy and the Government has provided decisive action in this regard. The guarantee scheme, which the Government put in place on 30 September last year, continues for a period of two years. The scheme was put in place to remove any uncertainty on the part of counterparties and customers of the systemically important credit institutions. Our objective was to maintain financial stability for the benefit of depositors and businesses and in the best interests of the Irish economy.

It is generally accepted that international capital market expectations on capital levels in the banking sector have altered. Though Irish banks are capitalised above minimum European regulatory requirements, high loan provisions or write-offs, whether already acknowledged or expected in the next few years, mean that the markets expect banks to have a higher level of quality capital. This expectation was reinforced when the UK carried out its recapitalisation scheme, targeting this higher level. Other European countries have followed suit.

Significant falls in the share prices of Irish banks pointed to the belief by the capital markets that the Irish banks were undercapitalised. The Government's plan to recapitalise is intended to stabilise the Irish financial system and secure its funding base. The recapitalisation of Allied Irish Bank and Bank of Ireland announced in December last included a credit package under which the banks committed to, inter alia, providing at least an additional 10% capacity for lending to small to medium enterprises in 2009, an additional 30% capacity for lending to first-time buyers in 2009, assist householders who are in arrears on their mortgages, and introduce a €100 million fund to support environment-friendly investments in terms of reducing energy usage facilitating switching to renewable energies with a view to reducing Ireland's carbon footprint. Discussions are ongoing with the two banks on the recapitalisation, the details of which remain to be finalised. Discussions are also continuing on the capital requirements of our other financial institutions.

Everybody in this House is aware of the nationalisation of Anglo Irish Bank and the reasons for this, and I do not need to elaborate on them today. Suffice it to say that the immediate impact of the legislation, which was signed into law on Wednesday last, is to provide certainty to all of the bank's depositors and other customers, across all of its operations in Ireland and internationally, that the bank is secure and stable and will continue to conduct its business on normal terms. The day-to-day running of Anglo Irish Bank will continue as normal and all employees remain employed by the company. All borrowers from the bank remain subject to the same terms and the new board of Anglo Irish Bank will place a particular focus on ensuring that all debts are fully pursued by the bank in a commercial way, as any other bank would. The Government is committed to providing a platform for a well regulated, profitable banking industry of high repute in Ireland that operates in a national and international financial services environment.

We are in the midst of a sharp global recession the likes of which has not been seen for a very long time. The turmoil internationally has been exacerbated by a correction in the construction sector and we have seen an increase in joblessness as a result. All of this has placed significant strains on the public finances but it is also important to remember that notwithstanding current difficulties, our medium-term economic prospects remain positive and our economy has the capacity to grow once the current difficulties are overcome.

To overcome these difficulties will require a collective act of will on the part of all of us to tackle certain fundamental matters. First, we must — I pledge myself to — continue to redouble efforts to stabilise our banking and financial system in the great world financial turmoil in which it now operates. It is fundamental that we stabilise the banking system and that we ensure that it is restored as a system that provides credit to consumers and small and medium sized businesses throughout the economy.

Second, it is essential we improve our competitiveness and, as part of that, we must address the question of the public finances, the shortfall in revenue and the need to economise to ensure that Ireland can pay its way and that we as a State do not live beyond our means — that is fundamental.

While the plan submitted to the European Commission in Brussels envisages a five-year timescale, the reality is that the decisive action must be taken now, this year and in 2010 so that a credible signal is given to the international community that Ireland will sort out its problems. Ireland can sort out its problems and as a Government, we are determined that we will do so.

The announcement that will be made next week is simply an initial announcement, a clear demonstration of intent on our part. It will be followed up by the work of the expenditure control board who will advise me, and in consultation with the social partners and the Government decisions will be taken.

The Government will take firm decisions on further controls on public expenditure in the balance of this calendar year. They will lead to a better opening position on next year's Estimates. It will be essential to review both day-to-day and capital spending in that context.

When we receive the report of the Commission on Taxation, the Government and, I hope, the public generally will reflect on the nature of our tax system, note its highly progressive character and understand that the burden must be fairly shared by all——

Róisín Shortall (Dublin North West, Labour)
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And the Government will look after the vulnerable, I am sure.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——if we are to have a just and equitable tax system. We will certainly protect the vulnerable.

Róisín Shortall (Dublin North West, Labour)
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Just as the Government did in the budget.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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This year's social welfare increases are being paid at the same time as a fall in the cost of living. If this is not protecting the vulnerable, I hope——

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Hear, hear.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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——some Deputy will explain to me exactly what "protecting the vulnerable" means.

Deputies:

Hear, hear.