Dáil debates

Wednesday, 29 April 2009

10:30 am

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Today we have seen the publication of the ESRI report on the economy, which illustrates the appalling economic catastrophe the country is now suffering. Its figures show that 300,000 jobs will be lost between this year and next. The economic decline forecast for Ireland is twice as bad as in any of our competitor countries and the rise in unemployment is also twice as bad as any of our competitor countries. This underlines once again that the vast majority of the difficulties faced in this country are the result of the policies over which the Taoiseach, as Minister for Finance, presided in recent years. It is a damning indictment of policy in this country, showing policy failure by policy makers, by regulators and by the property sector.

The tragedy is that the Government is persisting with policies that will not address these challenges. It contemptuously ignored warnings as they were delivered to it, and now Ireland stands alone as the only country that is attempting to deal with these catastrophic times by raising taxes and cutting investment. This is not a strategy that can address our problems. The recent budget showed a Government that is not willing to face up to the reform agenda this country needs. It showed a Government that is turning to ordinary people to pay for mistakes in policy. The central drive of the recent budget was to heap extra taxes on ordinary workers.

This coming Friday, 1 May, which is International Workers Day, will see a single person on the average industrial wage in Ireland pay tax at 51%. How can the Government think this is a strategy for recovery? The Government is bereft of a strategy for job protection or job creation. What are the figures we will hear later today for the latest month's increase in unemployment? This is a barometer which measures the extent to which we are destroying ordinary lives. I ask the Taoiseach what level of increase we have suffered in the last month.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I do not accept many of the points in the question put by the Deputy. Of course we are facing a difficult situation, and we have budgeted for a contraction of 7.7% in the economy. The figure according to the ESRI is 8.3%, although it is more optimistic about next year than we have budgeted for. There is no question that we are in difficult times. I am glad to see the ESRI shares the short-term analysis put forward by the Government. It acknowledges that the measures taken to ensure the sustainability of the public finances are appropriate. We have taken measures to maintain the public finances on a sustainable path and I am pleased the ESRI recognises this. There is obviously a difficult but important balance to achieve in terms of ensuring sustainability in our public finances while avoiding further contraction of the economy. However, it acknowledges the need to ensure sustainability in the public finances, and the corrective action we took in the budgets was necessary if we are to have the prospect of growth in the mid-term. Not to take these actions would defer the return of growth. It is important to acknowledge that this is also part of the ESRI's analysis.

I do not for one moment underestimate the impact of such a contraction on employment. The countries that are most affected by the current global crisis are small, open economies. The Asian tiger economies have been hit to the same extent as we have. To answer the Deputy's question, the live register total for the week ending 17 April 2009 will be 384,113. Within the constraints of the public finances, we are doing everything we can to help people who are losing their jobs. That is also part of the social partnership talks that are taking place at the moment.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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These statistics, as the Taoiseach knows, reveal that the unemployment figure in the first four months of the year — up to 17 April — has risen by 94,000. That is on top of an increase of 120,000 in 2008. It is rising twice as fast for young workers as for older workers. Behind those statistics dwell some grim facts — business people seeing their lives' work destroyed as they have had to close their doors; and families terrified that their jobs will be the next to go as the ESRI tells us that another 300,000 are to be added to the total. That would put unemployment levels above 600,000. These are appalling figures.

People's confidence is sapped because they see a Government without any strategy for employment. What is the Government's strategy? The Taoiseach may say that Fine Gael's strategy does not have all the answers. However, we have set out clearly a major investment in the infrastructures that are needed for the future and which will not cost the Exchequer a red cent because it will soak up investment that is out there looking for a home, money that needs a home and which can transform our economy instead of lying wasted in international shares. We have proposed a reduction in PRSI for those who are expanding employment. We have proposed a cut in VAT to give a break to people, particularly in labour intensive service areas, who are trying to get things going again. We have suggested small business loans to target the businesses that are struggling the most. The Taoiseach may say these are not the correct options, but what is the Government's strategy?

Consider the situation in the countries with which we are competing. In the United Kingdom, for example, the Government is reducing tax burdens for small businesses and giving VAT breaks. Canada is introducing accelerated tax allowances to encourage private investment. The United States Government has a major infrastructural investment in the green economy. Every economy has a strategy based on protecting jobs and defending employment. Where is the Government's strategy? What we saw in the recent budget was the very opposite, offering a blinkered view of the world. The Taoiseach and his Government are smarting from criticism from their backbenchers that they are out of touch and paralysed, that they are unaware of what businesses need, are not responding to that need, and that a cosy circle is dictating policy. This is nothing to the fury the Government will encounter from ordinary people who are seeing their life prospects and those of their children going up in smoke.

We need a comprehensive strategy that has reform and job protection at its heart. The Government is yet to produce that, but it is what the country is crying out for. People are already saying that the Government, which brought us into this, cannot lead us out of it. The Green Party is saying that in regard to the banking sector. More and more people are now saying it about the Government.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I do not accept what Deputy Bruton has to say.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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That is the problem.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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A strategy and plan are in place, as outlined in the budget.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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Would Deputy McGuinness agree with that?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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What we have had from the Deputy's leader is the prospect of addressing a redesign of the tax system without increasing income tax, which has no credibility whatsoever.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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What is the Government's jobs strategy?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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In regard to our jobs strategy, first, as a prerequisite to economic recovery, we must get our public finances into order. Second, we have increased the number of placement schemes available for people who are out of work. Third, we are trying to ensure reductions in costs. We are already seeing such reductions, as well as improvements in competitiveness in terms of a reduction in wage costs.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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That is no thanks to the Government.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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People in the private sector are taking decisions in order to maintain employment in the more difficult environment in which they now operate. That is happening throughout the economy.

Photo of Bernard AllenBernard Allen (Cork North Central, Fine Gael)
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What is the Government doing to protect jobs?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Opposition seeks to contend that in the short term, there is a way to mid-term growth without making a change in regard to our public finance position. We have to take the corrective action currently being taken. Everyone knows that, but the Opposition is not prepared to accept it.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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It is the Government that will not accept reality.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Opposition is trying to suggest there is some other, painless way forward. We will do everything we can to bring the economy through these difficulties.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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The Government has ducked reform in the public service and reform of the energy sector. It has ducked everything.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Reform in the public service is ongoing in regard to control of numbers and providing opportunities for employees to leave in a planned and regulated way. We are also seeking to implement the reforms outlined in the task force report on procurement and a range of other issues. All these initiatives are in place and were discussed here yesterday.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Is that all the Taoiseach has to say about job creation?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The suggestion from the Fine Gael Party that there is a way of moving on without the necessity to provide for an increase in taxation is simply dishonest.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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We did not say that.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The party's health spokesman said at the weekend that we have not reduced public expenditure sufficiently. In what areas in health, education and social welfare has expenditure not been reduced sufficiently? It is time for Fine Gael to come forward. We have set out our position in the budget. We have indicated where the tax and expenditure changes for next year and the year after will have to be made and the size of those cuts. We have heard nothing from Fine Gael in this respect.

(Interruptions).

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach began both his replies to Deputy Bruton with the words "I do not accept".

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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That is the problem.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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He did not accept it last week either when the IMF told us that the bank bailout in this State would be more expensive for Irish taxpayers than for those anywhere else. The Taoiseach told us in so many words that the IMF had its figures wrong. The IMF later clarified the position and stood over its figures. Today we have an ESRI report telling us that the economic recession in Ireland is the worst for any developed country since the Great Depression of the 1930s. We are told that by the end of next year, almost one out of five people in the workforce will be out of work. The Taoiseach tells us this morning that there are now 384,000 people on the live register. How many will be on the live register by the end of next year, according to these ESRI figures? How many more people will lose their jobs before the Taoiseach loses his?

Does the Taoiseach believe that what is happening to our economy does not have anything to do with the way in which Fianna Fáil has mismanaged it in recent years? Does he still hold to that view? Does he still believe it has nothing to do with him and that it is something which has appeared like the Mexican swine flu, out of the blue and having nothing to do with the way the Government puffed the property bubble and did not face up to the problems in the economy? The Taoiseach tells us again today that he will not accept what the Opposition is saying. He would not accept it this time last year when we told him that an economic problem was coming. He would not accept it before last summer when we told him there was a problem in the banks. It took a long time for the penny to drop with the Taoiseach that people were losing their jobs and that businesses were going to the wall. Even as recently as last month, the Taoiseach would not accept in the House a Labour Party set of proposals to find work or meaningful activity such as education and training to deal now with the immediate problems of people who are losing their jobs.

The Taoiseach simply does not accept this reality. He seems to be in absolute denial that outside the walls and gates of this parliamentary area, people are losing their jobs and businesses are going to the wall. Those who are or were self-employed are telling us repeatedly that when they turn around, there is no help available to them. They cannot turn to anybody in a State agency and they cannot get credit from banks to keep their businesses going and retain their employees. We are now facing into the prospect, according to the Taoiseach's own admission, of 500,000 people idle and without a job to go to in the morning. He keeps looking across the Chamber at the Opposition parties and asking what we are proposing. We have repeatedly put forward proposals but the Taoiseach has paid only lip service to them. He certainly paid lip service to some of the Labour Party proposals in his Ard-Fheis speech. However, nothing is happening.

The Taoiseach must get it into his head that the key to solving our economic difficulties is protecting jobs and getting people back to work. The Government will not solve the problems in the public finances, the banks or the general economy without people going back to work. The ESRI report today and the live register figures provided by the Taoiseach are confirmation that every day, week by week and month by month, more and more people are losing their jobs and more and more businesses are going to the wall while the Taoiseach and his Government are stuck like the proverbial rabbit in the headlights, absolutely frozen and unable to act.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Gilmore can make all the contentions he like, even if the facts are different. As Taoiseach of this country, I accept fully and am acutely aware that people are losing jobs. Of course I am aware of that.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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Does the Taoiseach accept it is the Government's fault?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Government is taking the action that is necessary in the short term to ensure we can return the economy to growth. How does the Deputy expect jobs to come back into the economy without growth in the economy? The Deputy has referred to the ESRI report. The ESRI accepts that the balanced corrective action we are taking is the right thing to do despite, unfortunately, its very severe short-term effects. In an economy which is contracting by 8% this year unemployment is, of course, growing. We have factored in a projected 15% or 16% unemployment rate for this year and next year. Is that complacency on my part? Of course it is not. It is a fact with which we must deal. The ESRI is saying that unless this action is taken the prospects for growth will not reappear.

If one is to create and maintain jobs, one must bring back growth into the economy. The problem for a small open economy like ours, dependent for our standard of living on global demand, is that there is a global recession. Singapore, Korea and all the famous Asian tiger economies are contracting by anything from 8% to more than 10% this year. This is no comfort to us in Ireland but it is an indication of the global nature of the crisis and of the fact that the only way we can return to growth is by being more competitive and taking down our costs.

On 1 May, gas prices will come down by 12% and electricity prices by 10%.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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Why not 30%?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Those facts are clear. The ESRI has budgeted for a steeper drop in the cost of living this year than the Government has done. We budgeted for a drop of 4% and it says the figure will be 4.6%.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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It says the Taoiseach is wrong.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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It suggests that next year will not be as difficult as we think it will be. We have been open, honest and transparent in out budgetary policy and have outlined to the people that the steps we are taking are necessary.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Where is the employment strategy in all of this?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I do not enjoy taking these steps but they are necessary to get the country back to growth so that we will be ready when the upturn comes. Is it the Opposition's contention that we should continue with public spending on an unsustainable path? If that is Deputy Bruton's view there is no prospect of growth returning to the economy.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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The Taoiseach should admit he caused all of this.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The ESRI, which Deputy Bruton quotes this morning, speaks about the importance of maintaining as many jobs as possible. Thankfully, even in the current situation, we have 80% more in employment than 10 or 15 years ago. There are more than 380,000 unemployed, and every one is one too many as far as I am concerned, but there are also 1,800,000 people at work and we must try to maintain those jobs.

Photo of Pádraic McCormackPádraic McCormack (Galway West, Fine Gael)
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The Taoiseach is in denial.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We must help, to the greatest possible extent, those who are losing jobs or who cannot find work. That is what we are doing and will continue to do.

We are in discussions with the social partners about developing and evolving programmes, as we did in the 1990s when many schemes were developed. However, we must be straight with the people. We cannot grow jobs without taking whatever decisions are necessary to return to growth in the mid term. That is not possible and will not happen. We must take the necessary decisions now. We learned the lesson that deferring difficult decisions on public finance merely prolongs the problem.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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That is a fine bit of theory. Of course getting people back to work depends on economic growth but the Taoiseach's strategy is not designed to grow the economy.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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It is.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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It will shrink the economy and take more money out of it. The dithering approach of the Government, with one policy this week and another in two weeks' time, is adding to the decline in confidence in the Irish economy, both domestically and internationally.

People are losing their jobs, businesses are declining and there is a huge drop in consumer activity. Much of this is due to the lack of confidence in our economy. People need hope that there is a way through the economic recession and that we will get out of it. Unfortunately, it is difficult for people to have such hope when the Government does not appear to know what it is doing. All the signals the Government is sending out are affecting the confidence of people, both in their spending and in their hopes for employment.

The Government does not have a pro-employment strategy.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Social economy.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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Nothing in the budget will generate employment, support employment activity or encourage employers to take on new employees. There are no measures in place. The State agencies have not been re-geared to deal with the immediate problems facing people who are losing employment or are self-employed and cannot get assistance. In some cases, self-employed people cannot even get income continuance because they were not in the social insurance system. Those people are not getting help from the Government.

The Government does not have a jobs-centred strategy.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Hear, hear.

Photo of Eamon GilmoreEamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach can talk all he likes or as loudly as he likes but that is the reality. The proof is in the declining employment figures we see month after month. There are now almost 400,000 people unemployed and the ESRI report states the unemployment rate will reach 17%, almost one in five people, by the end of next year. That is a disgraceful record. It is not good enough. It is no longer acceptable that the Government washes its hands of this problem and pretends it has nothing to do with it. Every report from the ESRI and the International Monetary Fund and all international commentary now state that the worst performing economy in the developed world, in terms of employment and banking, is the Irish economy. The Taoiseach and the Government are responsible for that. They have dug a big hole for the Irish people by the way they mismanaged the economy in recent years and Irish working people are paying for that. They are losing their jobs, their businesses are going to the wall and their pay-packets are being plundered in order to bail out banks, developers and others who are the real cause célèbre on the Government side of the House.

(Interruptions).

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am defending my position. It is not a question of being loud or otherwise but of answering with the same gusto as the Opposition use in attacking me. I hope Deputy Gilmore does not mind me doing that. I am as entitled to defend myself, as he is to attack me.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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A bit of modesty would be appreciated.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I do not accept Deputy Gilmore's contention that it is possible to have a pro-jobs strategy on the basis of unsustainable public finances.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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No one said that.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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This is clever lawyer's talk.

Photo of Dermot AhernDermot Ahern (Louth, Fianna Fail)
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Deputy Burton is a clever accountant, as she never tires of telling us.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Opposition claims that the Government does not have a strategy or policy. In the past 12 months, through changes in income tax and expenditure, the Government took approximately €8 billion out of the emerging deficit. We were heading for a 15% deficit in gross national product.

Every one of those policies was opposed by the Opposition and yet it talks about the need to take corrective action to get the show back on the road. It opposed everything. It opposed our attempt to deal with the bank situation and to provide credit for Irish businesses.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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We were right.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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It now suggests we can have a thriving economy on the basis of an unstable banking system.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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Why did the Government not create a credit flow for small businesses?

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I did not interrupt while Deputy Gilmore made many charges against me. I never do. However, the moment I stand up to speak I am interrupted. Deputies may feel that is the way to debate but people see through that.

We are taking whatever steps are necessary to get us through this problem, and that is creating real hardship for people. Like everyone in this House, I am aware of that. We take these policy positions because there is not an alternative if we are to get our public finances back in order.

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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There is an alternative.

11:00 am

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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There must be a sustainable public finance position. Former Ministers for Finance know that. There is no point in playing around with that matter. We must take these decisions.

Of course we will provide hope, but on the basis of taking necessary decisions now and next year. The country will be then in a position to take off again when the international demand improves, as is predicted by international commentators. There is not an easy way through this. There is only a difficult way. We will take whatever steps we can to help people who find themselves in difficulties. The prerequisite for economic recovery is to get our public finances in order and that means making cuts in spending and raising taxes. It has meant examining other areas where we must consider taxation and where we will have to cut further spending. It will involve further reforms. We need the agreement of many people working in the public sector and other sectors to help us get through this problem. That is why we are talking to the social partners at present. We have to manage our way through this crisis, but each time the Labour Party, particularly, or the Fine Gael Party come forward with proposals there is always an easier and a handier way out.

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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There is a better way.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Unfortunately, there is not an easier way given the scale and magnitude of the problem we are facing. We will continue to do whatever we can to help the people through this problem.

Deputies:

The Taoiseach should talk to Deputy John McGuinness.

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
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Perhaps the Taoiseach should listen to our way.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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There will be plenty of people and plenty of opportunities on the Opposition benches to suggest there is a handier way out.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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There is a better way.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The fact of the matter is that there is not a handier way.

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
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Failure, failure and more failure.

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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We will continue with this consistent policy approach in the interests of making sure that we will have a return to growth and jobs and that we will help those who lose them in the meantime.