Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I am glad to avail of this opportunity to discuss public expenditure and, in particular, the Revised Estimates for 2009, which have been discussed by the relevant committees in recent weeks.

It will be useful to outline the economic context of the Revised Estimates. Our economy has been hit by substantial external and internal shocks and we are expecting a cumulative loss in national income of approximately 13% between 2008 and 2010. On the external side, the fall-out from the deepest and most widespread international recession in more than half a century is having major repercussions in Ireland, particularly given the globally integrated nature of our economy. Domestically, the adjustment in the residential construction sector to more sustainable levels of output will subtract nearly 4% from economic activity this year, accounting for roughly half of the anticipated annual decline in GDP. Arising from this are spillover effects to other sectors of the economy, as reflected in the weakening labour market in recent months.

Our approach is to position the economy to benefit from the global recovery as it emerges. Our export sectors are proving robust and our labour force continues to be highly skilled and flexible. We are continuing to invest in education at all levels in order to ensure we have the skills demanded by our increasingly knowledge intensive economy. Our international cost competitiveness is improving, due in part to wage flexibility in both the public and private sectors. This is a significant achievement which many countries would wish to emulate. Adjustments have been made to work practices and other labour market costs to safeguard employment.

The Government remains committed to providing a pro-enterprise environment and maintaining our relatively low tax burden on business. We are also maintaining capital spending at a high level by international standards to allow us to continue our investment in productive infrastructure. Through implementing the correct policies now we will safeguard our recent progress, much of which has survived the downturn, and secure our future prospects. Strong, sustainable public finances are key to ensuring confidence in the Irish economy and the actions taken by the Government to date to address the budgetary difficulties will ensure this.

The Government is committed to restoring order to the public finances and the allocations presented in the Revised Estimates for Public Services in 2009 play a key role in this. These Estimates reflect the necessary expenditure measures introduced by the Government over the past year while protecting possible vital front line services as much as possible. I will not recap the various measures that were adopted other than to say that there were four stages of budgetary adjustment since July 2008, including the October 2009 budget, the further savings secured in February along with the public service pension levy and the supplementary budget in the spring.

The process of adjustment for this year has been completed and amounts to a cumulative fiscal correction of 5%, one of the highest in western Europe. That the Government secured it within one year is a tremendous achievement. Given the scale of the international downturn, the adjustment was essential. It is obvious that international confidence in the country has recovered because of the steps taken by the Government, notwithstanding the banking sector practices that came to light. These actions were essential to stabilise the public finances and to ensure that the general government deficit does not exceed 10.75% of GDP in 2009. While this is a high-level deficit, it represents the most appropriate target for the year, given the current conditions in the Irish economy.

As Deputies are aware, the supplementary budget also set out a plan to bring the general government deficit to within 3% of GDP by 2013. This strategy has received the backing of the EU Commission. As the House knows, the special group on public service numbers and expenditure programmes, SGPSNEP, is reviewing the scope for reducing or refocusing the existing range of expenditure programmes. Given the scale of the expenditure adjustments now required, no area of expenditure can be excluded from this process. Not only are spending programmes being examined, but the overall efficiency of the public service is being considered, including any ways of doing business that are out of step with the needs of a modern, responsive public service. The group is also examining and will make recommendations for further rationalisation of State agencies beyond the measures announced in budget 2009. I expect to receive the report in the next few weeks. Clearly, this will give the Government options and enable a public debate on the choices that we face. How much time have I used?

Charlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

The Minister has five whole minutes remaining if he cares to take advantage of them.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

While the new economic reality has meant that significant expenditure adjustments are required, the Government remains committed to the continued upgrading of Ireland's infrastructure. To this end, the Exchequer capital allocation in 2009 published in the Revised Estimates for public services 2009 is for more than €7.3 billion. This is a substantial outlay, given the dramatic drop in Exchequer revenues and the increase in Government borrowing. The allocation amounts to 5% of gross national product, which is among the highest in the former EU 15 member states.

It is our intention to ensure that this expenditure is targeted to achieve the maximum economic return while presenting the best value for money to the Exchequer. Within this context, we are targeting investment that will support sustainable employment, have the optimal impact on employment and help Ireland to take advantage of an eventual upswing in the economy. Indeed, with this prioritisation of investment in mind, the Government has already redirected €150 million in February within the 2009 allocation to areas that are both labour intensive and of high economic value. Some €75 million of this money went to sustainable energy schemes, including €50 million for the home energy saving scheme, and €75 million went to the school building programme.

Within the 2009 capital allocation, continuing national development plan, NDP, investment can be seen across all sectors. Obviously, this will not completely arrest the contraction being experienced by the construction sector, but the investment in our capital programme will provide a certain level of ongoing activity in this sector while providing us with the infrastructure to enhance our return when the upswing comes. The Government is examining the potential for unlocking investment by pension funds and other institutional investors in the public infrastructure market. The contraction in the construction sector reflects the substantial collapse in private sector investment in construction. The challenge for the Government is to restore confidence in the public finances and thereby restore confidence in the economy. This will encourage the resumption of investment by the private sector in construction.

As a Government, we have needed to introduce a series of measures over the past year to tackle the unprecedented deterioration in the public finances. All of the measures announced since July last year, both expenditure-reducing and revenue-raising, have cumulatively delivered adjustments of approximately 5% of GDP for 2009. We did not flinch in making these difficult choices. To meet the general government deficit target of 3% by 2013, further decisions will be required in all areas of policy. In this context, the Commission on Taxation and the SGPSNEP will have a significant role to play. Their two reports will set the context for a real political debate on policy options. It will not be a comfortable debate, but it will be an inevitable one that will force every Deputy, including those in Opposition parties, to address the real world in which we must all now live. There are no soft options or safe hiding places. The time has now come to tell the people what they would do were they on this side of the House.

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

I propose to share my time 50:50 with Deputy O'Donnell. Will the Acting Chairman tell me when I have one minute left?

Charlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

I will work that out.

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

Excellent. I welcome the debate because it provides an opportunity before the House recesses to review what impact the recent budget has had. Sadly, the economic details published since the budget suggest that it is not even achieving the objectives set in its own narrow terms. The ESRI and, today, the OECD indicate that the Government will not meet its budgetary targets. More worrying is what they claim will occur to the real economy. According to the ESRI, 300,000 jobs will be lost between 2009 and 2010. The impact on families will be immeasurable. The OECD's report, published today, suggests that the decline in GDP will be 20% worse than forecasted by the ESRI. If true, 20% can be added to the predicted job losses, if not more. Another 60,000 or 80,000 jobs being wiped out on top of the ESRI's forecast is frightening.

My continuing concern with the budget is its narrow focus. It has taken the easy route of raising tax and cutting capital spending. The Minister rightly stated that the core action for policy was to deal with value for money within public spending. However, he put this off and asked others, the McCarthy Group, to investigate the issue. The determination and decision to put things off, to refuse to face consequences and to aim for the tax-raising option instead, are not affordable. In our heart of hearts, we know that the way out of this recession will not be found by loading taxes onto families and businesses that are already under severe pressure.

The success of the banking policy, which the Government believes is the pillar of its strategy, is yet to be seen in practical terms, given the fact that businesses cannot get credit. The Minister will tell the House that the anecdotal evidence given to us by people around the country is not supported by hard evidence. Where is the Minister's review of credit? In March, we were to have detailed reports on declined credit, that is, where companies had been turned down, and on how credit was flowing to small businesses. The Minister did not deliver. Although we committed money to guaranteeing the banks, their commitment to showing whether they were meeting the needs of small businesses has not been honoured, not even to the extent of providing to the Minister the statistics promised to the Dáil.

We are in a serious dilemma. Like our predecessors, including the former Minister for Finance, Seán Lemass, who later became Taoiseach, we must recognise-----

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

He was never a Minister for Finance.

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

I beg to differ. He was the Minister for Finance according to John Horgan. Perhaps I am wrong and I will bow to the Minister's greater knowledge in these matters. However, the truth of the matter is that Seán Lemass recognised the need to abandon failed policies and to confront issues instead of getting stuck in a narrow orthodoxy on fiscal retrenchment. He saw that people must have confidence in the State and its ability to create opportunities. Fine Gael has backed this thinking. Our new era document calls for investment in key infrastructure funded not by the Exchequer, but by using pension reserve funds and private investment capital. This opportunity is not being grasped.

Charlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

The Deputy has one minute remaining.

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

This morning, we learned that the Government is considering a fund of €1 billion for job protection. This would be welcome in so far as it would show that, at last, employment is on the radar. However, I would ask hard questions about it. If we are to have a selective scheme that focuses on just 10% of the manufacturing sector, which constitutes approximately 15% of employment, what will it do? Will companies spend all of their time trying to find out whether they can get past some bureaucrat to avail of the aid, will it postpone the necessary adjustment or will it reduce sustainable costs for everyone, namely, the cost of doing business, thereby giving every business a chance to survive in this difficult time? I wonder about the direction of that intervention. I see the need for a much more broad-based strategy to bring down costs generated in the Government sector, and to drive them down in the way Lemass confronted the challenges in the 1950s. I am disheartened by the shape of the strategy being pursued by Government. We need to have a fresh debate. I look forward to a debate, not just about the public finances where difficult decisions must be made, but on the broader strategy of how we protect, create and sustain employment.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

I wish to make a few observations. We are talking about the Estimates. The key issue is that we consider them long after the budgetary process-----

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

The baby crying in the Gallery is the future.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

Anger is coming even from the very young, from infancy up.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

That is the generation I am looking after.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

I hope our soothing tones will help the baby in some way. I thought I had left the sound of a baby crying long behind me.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

We know what WC Fields said, that one should never work with animals or children.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

We must take care of the future of that baby in the Gallery.

Competitiveness is the main issue I wish to discuss. The OECD report refers to the fact that exports will fall. We are a small open economy and we must get exports to grow. Dr. Ken Whittaker was associated with Seán Lemass. To some extent they are synonymous. He stated categorically that our biggest problem was our lack of competitiveness. The Minister is probably aware that our exports fell for the first time in 2003. We became extremely uncompetitive and the economy began to depend on the construction sector. The key issue is to restore competitiveness, get back to being a small open economy and return to being export driven.

Deputy Bruton referred to the jobs initiative. At least something is on the table but I question its narrow focus. We have a large services sector in this country. People are losing their jobs and we need to consider how a rising tide can lift all boats. It appears the baby is in agreement with Fine Gael policy.

Charlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

Deputy O'Donnell seems to be soothing the baby.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Deputy is taking his chance.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

We must foster an entrepreneurial culture. When the Irish went abroad we were adaptable. We must focus on that area.

The most recent stability report from the European Council states that it is wary of the Minister's growth assumptions for 2011 to 2013. It is my understanding that the IMF will refer to the same. On average, the Minister is projecting a GNP growth rate of 2.9%. That is extremely optimistic. In the report for 10 March on the Irish stability programme, the European Council concluded that the budgetary targets are subject to downside risks throughout the programme period due to a lack of information on the envisaged measures to support the planned consolidation and the growth assumptions that underline the macroeconomic scenarios.

I raised the next matter in committee but I will raise it again. The Council established a deadline of 24 October for the Government to take effective action on measures to achieve the 2009 deficit target and the specification of the necessary measures to progress towards the correction of the excessive deficit. The ball is back in the Minister's court.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

It has been dealt with.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

It has not.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Deputy should go to Brussels and inform himself.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

Why does the most recent report from the European Council state that it has not been addressed? I would like the Minister to deal with that question.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

What is the date of the report?

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

The report is dated 10 March. This is the most recent report the Minister presented to us.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I thank the Deputy.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

I would like the Minister to deal with that point because major reservations have been expressed in terms of the Minister's projections in the recent Supplementary Budget. We must deal with the issue on the basis of realistic targets. The Minister must broaden the focus on job creation and job protection to the wider economy, not just specifically internationally traded services and manufacturing. Those areas are vital but we must deal with all jobs. We must get the banking sector lending again. The Minister must address concerns about NAMA and assure us that it will provide a flow of funds. That point has not been addressed.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

The Minister for Finance is given to having soaring rhetoric at the end of his speeches. One recalls his standing ovation following last October's budget. He said at the end of today's speech, "There are no soft options or safe hiding places. The time has now come..." In terms of the Budget Statement, there were soft options and hiding places. The Minister was the person who took them, to the considerable discredit of politics and public service in this country.

I refer specifically to the keynote part of the Minister's speech, which addressed the issue of reform on areas such as serving Deputies who are former Ministers and are in receipt of ministerial pensions. The Minister laid out as a critical part of his budget architecture that if sacrifices and contributions were required from all sectors, they would be led by people at the top of the public service and office holders structure. One of the difficulties with this country is that the Minister failed abjectly to deliver on that.

When the debate took place on salaries for members of the Judiciary the Minister might recall that I suggested to him he should include in the legislation a scheme that would be available to the Judiciary. I recall asking the Minister who in the Judiciary would take such a scheme to court. If that were to happen, a previous Supreme Court ruling should have given the Minister fair wind. What concerns me is that the Minister talked the talk but he did not deliver. That has been his continuous theme as an officeholder.

In the brief time available to me, I wish to mention the banking crisis because, again, in his speech the Minister referred to us being subject to international factors. It is long past the time that Fianna Fáil in particular recognised that so much of the Irish banking crisis was completely home-grown. It was stimulated by the party's policies and inflated by the policies of the Government and the Minister's predecessors. That is at the core of the damage our economy has suffered. Part of that damage is reputational damage. The Minister has done relatively little other than talking a lot of rhetoric about how he will solve the problem. He has done little to address the problems in a serious way that players, whether they be in the United States or the city of London, would say the problem in Ireland has been addressed.

The core of the problem with the banking crisis is that there is a general belief that the golden circle of the politically connected, the bankers and the developers still influence every step of the resolution of our banking crisis. Perhaps only when there is a change of Government and that pervasive influence is no longer there, will our reputation be fully restored. One can ask why that is important. This is important because the banking crisis and overall financial position are at the core of our unemployment crisis. All the commentators are talking freely about unemployment rising to 16% by this time next year. The Minister and his colleagues in Government have not put sufficient thought into what a rate of 16% would entail. I was a Minister of State at the Department of Social Welfare when Deputy Michael Woods was Minister, at which time the unemployment rate was 18%. One really needs to think outside the box to get the unemployed back into the workforce, education and training.

The Minister, Deputy Brian Lenihan, is offering what is essentially a hopeless alternative. He knows from our shared constituency that it takes two or three months before those who become unemployed, particularly those who were self-employed, can register with the different agencies. Consequently, what otherwise might be a short-term gap in employment becomes much longer, particularly where those affected are young, male and not particularly well educated. The biggest threat we face is that unemployment will become the norm such that the unemployed will get used to not having a reason to get up in the morning. The Government does not appreciate the extent of the crisis that is engulfing families right across the country.

The Minister made reference to the stimulus programme, which he has included as part of the capital programme in spite of savaging the latter, and referred to the investment in schools. The investments in stimuli came only after a long campaign by the Labour Party to insist that some employment be retained in the construction industry. What about the other areas? In the budget last year, the Minister made a fatal decision to raise the rate of VAT by half a percentage point. The amount of revenue involved in this increase was neither here nor there in terms of income flow but the increase served as a tipping point based on policy that was basically designed to bolster tax collection and preserve revenue. However, the policy failed abjectly to account for the likely economic consequences and for how people would behave when the very small 0.5% increase was imposed on them. They went in droves to the North.

What is happening now is like a slow playing out of the rest of the crisis. At present, there is a price war involving three or four dominant supermarket traders whose gross profit margins are way in excess of those in other EU countries. In spite of this, the supermarket operators are squeezing the lifeblood out of various sectors, particularly the farming sector and the middle-level retail sector. The supermarkets are seeking to squeeze the margins of producers in Ireland, be they producers at primary level, such as agricultural producers, or assemblers or packagers, to the point that they cannot continue to operate. Perhaps the stabilisation package announced today will help some of those operators in addition to those trading abroad. However, there is no doubt that what the Minister set in motion when he sent people to the North to shop has caused a series of structural faults in various sectors of the Irish economy, with the effect that we are bleeding jobs. This means the Minister, for the period during which he remains in office, must come up with fresh ideas. If this means he must accept those of the Labour Party, we will welcome it. At least he will be taking some action.

Let us consider the referendum on the Lisbon treaty. For the next couple of months, I would prefer if some of the Ministers refrained from public debate. In the United States, people take a holiday at times from the high summer season up to Labour Day at the beginning of September. Ultimately, when the people vote on the treaty, the key question they will have in mind will be whether it will help them and their families to keep their jobs. They will ask whether it will help them to be part of a bigger European economy and sustain them.

Some of the issues that dominated the debate before the last referendum on the treaty will be replaced by very simple bread-and-butter questions. If the Government wants the involvement of Ireland in the European Union to continue to the fullest extent possible, it must give a message of hope. In part, this would involve acknowledging the mistakes and disasters the Government itself has caused for the economy and employment.

Arthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

I welcome the opportunity to contribute to this debate on the Estimates. It is a mere formality because we did not really have an opportunity to tease out the detail of all the departmental programmes. Even if we had, it would probably have been rather pointless because the Government, as usual, would not have listened to us in any event. However, the debate does confirm for us the Government's continuing two-pronged approach to the economic crisis we are facing. On the one hand, it involves, as a top priority, bailing out the banks regardless of the cost, be it to the tune of €440 billion or whatever it takes. On the other hand, it involves cutbacks for those who can least afford them. The latter include pensioners and others who have had their Christmas bonuses cut. Key public services for such people have been cut right across the board and some of these are the subject of debate before the House at present. This is the Government's strategy to date and it needs to change.

Many economists have cautioned against this approach. The Minister has obviously been reading their remarks.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

They have not.

Arthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

Yes, they have. They have told the Minister on many occasions that what he needs to do is introduce a stimulus package to retain and create jobs and get people back to work. However, the Minister is ignoring them and listening to his friends, the fat cats and developers, which is the wrong approach.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Please, Deputy.

Arthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

I believed there was a new development when I heard the announcement yesterday evening that the Minister is putting what sounds like a €250 million fund in place for job retention. If so, I welcome it warmly. I have not heard any details about it but I hope it is modelled on a proposal such as the one my party made to the Minister in March before the April budget. We advocate that a fund of €300 million, to be administered by Enterprise Ireland, be made available over a six-month period with a view to retaining jobs. We propose that the subsidy that would apply to each job in viable businesses requiring assistance would amount to a maximum of €200 or 20% of an employee's salary.

I hope this is being proposed by the Minister. However, there are a couple of difficulties, one of which is that we do not have any detail. For how long will the €250 million fund be made available? Will it be for six or 12 months? We advocate a six-month pilot project to allow us to see what is happening. This would save in the order of 90,000 jobs. This would be good for the economy, keep the bicycle upright, serve as a stimulus and encourage people to make investments. However, we have heard no details of the Minister's scheme.

We now hear about a package worth €1 billion. I am concerned that this may partly be to keep the social partnership talks ticking over. Why would the Minister mention a fund worth €1 billion and not give us any details thereon? Can he understand why I am suspicious? We heard announcements of funds from the Government before but in many cases they were re-announcements. It is not unusual to hear this Government re-announce something three or four times, without giving detail. It is really bluff and bluster. That causes us major concern. Is this a genuine announcement? Will the Minister tell us when he will give us details of the scheme? The one feature missing from Government policy is job retention and creation. We have not had a stimulus package to get the economy going. The Government has been silent on this. Will the Minister please give us any details he can of this scheme? I welcome what I have heard. I want to be positive about it. I hope the Minister has taken account of all the details of my proposal but I do not care whose proposal it is. It is more important than that.

The Minister has shown no interest whatsoever in protecting jobs. He has had several opportunities, from October last year to April of this year and many announcements between. All of this has been going on while 200,000 people have lost their jobs in the past 12 months. I hope that when the Minister responds in a few moments he will shed some light on this and give us something we can all support.

The big project for Government policy has been for the bankers and bailing out the speculators. That is what the National Asset Management Agency will do. I look forward to the debate on that in September. Unfortunately, it will probably trundle through the House with the support of the voting fodder on the backbenches.

The Minister has told us over the past few days that he is acting in the public interest and that we have to make tough decisions. The Government is not acting in the public interest but in the interest of a small group of people. It has not taken tough decisions but soft, easy decisions that do not deal with the real crisis. It has been making the wrong decisions. That is what has got us where we are. We know all about that. It has nationalised Anglo Irish Bank and issued a blanket guarantee to the other banks. This is aimed at a very narrow sector. It is not fair to use taxpayers' hard-earned money to bail out that category of people.

In his April budget the Minister announced 400 extra community employment places. Those places could be taken up between two towns. Kildare and Navan, or Dundalk and Drogheda, or any couple of towns would easily have taken up 200 places each. Some towns would probably take up all 400. It is a ridiculous number to offer across the State. He also announced a ten-week training scheme. Many of us see that as bluff and bluster. It is squashing down courses that are already there, doing paperwork to put more people through to make it look as if the Government is doing something.

I would encourage the Minister if he wants to do something constructive, to use some funds from the National Pensions Reserve Fund, for example, in an enthusiastic roll-out of a school building project. That would help the construction sector, particularly if the Minister changes the rules to allow contracts to be segmented so that smaller developers could get some of that action and employ people from towns to get them back to work and get the economy moving again. I do not see that happening.

In his speech day today the Minister said: "These Estimates reflect the necessary albeit difficult expenditure measures taken by the Government over the last year while protecting as much as possible vital front line services." Would the Minister forgive me for thinking that he is not protecting vital front line services? The motion for Private Member's business last night and this evening put down by Fine Gael outlines that failure in the closure of wards and a theatre in a children's hospital. There is no efficiency there. These children must be dealt with in any event. An accountant would tell the Minister that it will cost more to deal with them in the long run. It would be more efficient to deal with the injuries and other medical difficulties these children have now rather than doing five or six procedures or major surgery later. It makes no sense whatsoever. The Government is pointing in the wrong direction. I wish the Minister would sometimes listen to the Opposition parties and some economists and evaluate what they are saying and stop listening to the fat cats and the corrupt bankers because they are leading the Government and the State in the wrong direction. It needs to change and be turned around. I hope it can be turned around soon.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I thank the Deputies for contributing to the debate and facilitating the approval of the Revised Estimates for the public services. It is important to note that the output statements are a major step forward. The OECD recognised that last year in its report on the Irish public service which commended the output statements as the right way forward for performance-based budgeting in Ireland. The OECD noted in particular that Ireland was on a sound trajectory of modernisation in that regard. I am glad to see that endorsement but I am open to suggestions from the Opposition parties about how we can improve the exercise of deliberative choice in the whole area of expenditure. As the reports of the Commission on Taxation and the special group on public expenditure numbers become available I will examine the working papers of these reports to establish whether they can be made available so that we can have as informed a debate as possible about how to tackle the crisis we face.

In my official script this evening the line is inserted - "I think we all agree about the magnitude of the task facing us in rebalancing the public finances." After listening to this debate I am not sure that we do all agree about the magnitude of that task. Not a single speaker opposite mentioned it, although I accept that they have mentioned it on occasion. In this debate on the Revised Estimates, however, I do not think we agree about the magnitude of the task facing us in rebalancing the public finances. Deputy Morgan, and occasionally Deputy Burton, consistently confuse the banking crisis with the public finance crisis.

Arthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

That is not true.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

We have two distinct problems here. The Deputy alleges that I was in league with fat cats and bankers and I am at least entitled to reply to his suggestion.

Arthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

The Minister's Government was.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I have not met any of these gentlemen.

Kieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

Deputy Morgan is being nice to the Minister.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Let us assume that we have no banking crisis. We must and constantly do discuss that in this House. I am not taking away from that fact. Even without the banking crisis we would still have a substantial public finance crisis because the volume of our expenditure is at unsustainable levels. Our taxation receipts fell to unsustainable levels. That problem exists independent of any banking crisis. It is a problem which any Government will have to address.

Telling the citizens that they must pay a pension levy to fund the banks or the mistakes made by bankers is simply incorrect. It is wrong. That is not why the pension levy was introduced. It was introduced to rebalance the public finances. Until we recognise that, that our day-to-day expenditure is being funded by borrowing and that on the current account of the State expenditure we must fund it through borrowing, our discussions in this House will make no progress because that means that we must adjust our expectations and expenditure accordingly. I look forward to the publication of the reports of the Commission on Taxation and the McCarthy group which will inform expenditure and taxation decisions.

I said in my budget speech, and most Members will agree, that in considering expenditure and taxation figures in the next few months we must view the targeted figures for taxation in the next budget as the maximum and the figures for expenditure as a minimum. Deputy Bruton alleged that I took the soft option in the supplementary budget in April. I did not take the soft option but I brought income tax to the highest level possible consistent with the security of the economy. That had to be done because our income tax receipts fell to unacceptable levels. We had to plug that hole in our revenue base and we did so. However, there are definite restrictions on how much more of this we can do and it is clear that if we are to make further adjustments they will have to be on the expenditure side. That is the entire position of our expenditure and taxation.

We have fundamental decisions to make this year to maintain the country on a sustainable basis. We must ensure the passage of the Lisbon treaty, which was discussed in the House earlier today, and I welcome the constructive approach taken by the Opposition parties in that regard. We must examine the NAMA legislation and I will be most anxious that in advance of any parliamentary debate on this matter it will be debated fully at a meeting of the Oireachtas Committee on Finance and the Public Service. We will also have to formulate a budget that complies with our obligations under the Stability and Growth Pact. All of that lies ahead of us during the next seven months. These are important decisions for the country. The Opposition must hold us to account but it must also face up to the reality of the position in which this country finds itself.

We can argue about whether the causes are domestic or international but it is clear that a huge international component is involved when one is dealing with a small globalised economy such as Ireland. That has been recognised by all of the commentators who have examined the position in Ireland and the decisions the Government has had to take and who, by and large, have supported the approach taken by the Government.

A fiscal contraction of 5% of GDP is not an easy route and when Deputy Bruton speaks about value for money does he refer to all public expenditure or to a few select items of public expenditure to which he consistently refers in public discourse? If one seeks value for money on the totality of public expenditure then one cannot exempt any head or subhead of expenditure from one's consideration. I understand the position of the Opposition parties but that is what the Government will have to do during the coming months.

Deputy Burton referred to the crucial issue of changes to the remuneration of Deputies and Senators. There will be a 10% reduction in all expenses and I am preparing the relevant statutory instrument. A 25% reduction has taken place in mileage rates. Deputies will no longer receive long service payments or increments. They will be abolished from the next election and an immediate 25% reduction has been made on the advice of the Attorney General and it is not open to the Government to vary or depart from the advice of an Attorney General. The ministerial pension arrangements will be discontinued from the next election with an immediate 25% reduction. The question of teachers' pay is being addressed, the allowances are being halved, the payments to Whips and committee Vice Chairmen are to be abolished and the various proposals of the Oireachtas commission on expenses are under consideration and will be implemented over the summer.

All of those measures will be implemented and, more fundamentally, the review body on higher remuneration in the public sector is undertaking a fresh review of top-level pay rates. That will be crucial, along with the other two reports, in informing the thinking of the budget this year.

John O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

Question put, "That the Revised Estimates for public services, Votes 1 to 41, inclusive, for the year ending 31 December 2009 be agreed to."