Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I move:

That Dáil Éireann:

supports the expenditure measures announced by the Government to restore greater balance between revenue and spending;

affirms its confidence in the economic strategy of the Government to restore the economy to growth as soon as possible;

and

calls on all sections of our country to follow the lead of the Government and show the social solidarity needed to tackle this unprecedented economic downturn.

I move that Dáil Éireann affirm its support for the Government's action in tackling the current economic and fiscal crisis. The measures we announced yesterday are exceptional but these are exceptional circumstances. There is an ocean of advice about what we should do and we have listened to that advice. However, in the end, it is for the Government and Oireachtas to act in the interests of our nation and State.

The economic position facing us needs little elaboration. Growth is forecast to decline by 4.5% this year and export growth will be negative. Unemployment has increased significantly and will, as anticipated by forecasts, continue to rise, as we can see from today's figures. The maintenance of jobs must be paramount and restoring competitiveness is central to this goal. The action taken by the Government will be supportive in this regard. The one bright spot is that inflation will ease considerably, reflecting reductions in interest rates and lower oil and other commodity prices. All of this helps to boost income in real terms.

We will have to borrow approximately €18 billion this year at steeper interest rates to finance capital spending and plug the revenue hole in current spending. The national debt will rise to more than 45% of gross national product and spending on interest costs alone will reach €4.5 billion or 12% of the total tax take in 2009. This cannot go on. Thankfully, the establishment of and investment in the National Pensions Reserve Fund means that our net debt is much lower. This, together with the cash balances built up by the NTMA, allows for a better funding position than would otherwise be the case.

Nonetheless, we must do three things to restore our public finances and our economy. First, we must get our cost base down as quickly as possible and become the highly competitive economy we once were if we are to achieve future export-led growth. Second, we must keep up the real value of our investment in our national productive capacity. Third, we must do this fairly and in a way that reinforces social solidarity in responding to the current economic and fiscal challenges.

As we have to get our cost base down, we have to focus our energies on spending at this stage. The simple arithmetic is that social welfare spending comes to €20 billion of the approximately €55 billion the Government spends on current goods and services. The pay bill accounts for another €20 billion and the balance of €15 billion is all other day to day expenditure on public services, grants, administration and consumables.

There is limited scope to reduce social welfare given the need to protect the vulnerable. We must also recognise the pressures coming from higher numbers being unemployed. We have been driving and continue to drive greater efficiencies in the delivery of the €15 billion that is not pay. More such planned savings will be made. This leaves the public pay bill. There simply is no alternative but to seek major savings on pay.

Increases in indirect taxes at this stage would undermine already weak consumer confidence and drive more shoppers North of the Border. Further increases in income tax would affect our ability to produce goods and services. Altering company taxation would drive away foreign direct investment and capital taxes are not the money spinner they once were. The choices are stark and the options few. We must reinforce confidence in our ability to bring current spending back into line with revenue and do all this in a way that does least harm to our capacity to recover when the international position improves as inevitably it will.

There are those who, instead of advancing constructive policies, prefer to focus their energies on trying to fix the blame rather than the problem. There are those who look on and claim, "I told you so", suggesting that we are the authors of our own misfortune. The facts tell a different story. We are experiencing an international recession of unsurpassed severity, prompted in turn by the worst crisis in international financial markets for 60 years. Every major world economy is suffering or will suffer this year. Our problem is compounded by unhelpful exchange rate movements and our reliance in the recent past on the domestic market and housing sector as the driver of growth.

There is no use in beating ourselves up over this. We have to get on and do what we can in a united way. Perhaps as a Government we were over-ambitious in trying to meet the understandable demands of our people for more and better public services when the resources were available. The position has changed.

I can recall few cries in recent years from those opposite for less spending, lower social welfare increases, higher taxes or more levies. If this side of the House can acknowledge the past, surely those opposite can stop pretending they were on the side of the angels at all times. All of us in these Houses will have to stand shoulder to shoulder with those who will see their net incomes reduced by limiting our demands on the public purse.

The common goal of solidarity underlies the Government's response. We gave careful and considered thought to the measures we have taken. The social partners were fully engaged with the process and the Government is determined to see this through with the assistance of this House and the nation generally.

Kathleen Lynch (Cork North Central, Labour)
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I ask the Minister to conclude.

Arthur Morgan (Louth, Sinn Fein)
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With the consent of the House, there is a precedent for moving a motion to allow the Minister to complete his contribution, subject to any time constraints he may have.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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While I am in the hands of the House in this matter, I note Deputies are anxious to adjourn and have their nourishment.

Kathleen Lynch (Cork North Central, Labour)
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Under Standing Orders, the debate will adjourn and the Minister will be able to resume at the point in his contribution where he concluded.