Clare Daly (Dublin North, Socialist Party)
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To ask the Minister for Finance noting that NERI estimate that Budget 2013 will reduce GDP by 2.1% and cost between 25,000 and 35,000 jobs, the way austerity can lead to job creation. [3191/13]

Michael Noonan (Limerick City, Fine Gael)
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The economic policies of the Government are designed with the core objective of restoring balanced economic growth. This will, in turn, allow for the continued creation of jobs and for the improvement of living standards for the people of Ireland. The policies are paying dividends - yesterday's figures show that employment and unemployment are now moving in the right direction. An essential condition for the resumption of balanced economic growth is sustainable public finances. International research has shown that elevated levels of public debt are harmful for growth prospects and ultimately for employment. As such, the Government is committed to cutting the deficit, stabilising our debt level and putting it on a downward path. Considerable progress is being made in this regard.

I am conscious, however, that consolidation will have a short-term impact on the economy, although I do not accept that the impact is as large as some have suggested. Ireland is a small, open economy with imports accounting for over three quarters of GDP. As a result, a considerable amount of consolidation leaks out through a reduction in these imports. For this, and other reasons, the fiscal multiplier in Ireland tends to be somewhat lower than in many other European countries so economic and employment growth and fiscal consolidation are not mutually exclusive.

The Government has continually stressed that while further consolidation is imperative for this country's future, there is also a need to ensure that such measures seek to minimise the impact on the economy and the labour market. With this in mind, Budget 2013 - like its predecessor - was framed in such a way as to make it as jobs-friendly as possible and a number of measures were introduced to assist in this regard, including several initiatives designed to lend support to Ireland's job-rich SMEs.

It should also be noted that Ireland's commitment to carrying out the necessary structural reforms has had clearly visible confidence effects in the financial markets - as evident in the decrease in bond yields in recent months.

Mick Wallace (Wexford, Independent)
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The IMF has admitted at this stage that it seriously underestimated the effects of austerity, as did this Government. Surely there is a compelling case not only to accelerate investment in priority infrastructure but also to bring forward plans to reform banking and to establish a strategic investment bank, as promised in the programme for Government? Does the Government still plan on creating a strategic investment bank that it would control completely and which would be guaranteed to lend to small business? An analysis by the ESRI has shown that despite cuts and tax increases of €23 billion introduced by the Government, between 2009 and 2012, the deficit only narrowed by €8.8 billion, which is about one-third of the €23 billion. This shows that the Government's fiscal policy has been damaging not just in terms of jobs and growth but has not quite so efficient at narrowing the deficit. Does the Minister not think that an increase in public investment is likely to be more productive in the long term?

Michael Noonan (Limerick City, Fine Gael)
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I do not believe that because it was tried not only in Ireland but elsewhere.

A strategy of piling deficit on deficit and debt on debt was tried not only in Ireland but elsewhere and it was supposed to make everyone rich. That is the reason we crashed out. It reached the point where it was unsustainable and had to be paid for and we are still paying for it. That is not a solution. On the other hand, every economy needs some stimulatory demand-led projects. My colleague, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, is using European Investment Bank funds to fund bundles of schools in various parts of the country and release 19 community health centres some time in the summer. This is very important. Completing roads programmes is also important. However, we should never forget the supply side of the economy, a case we have been arguing for a long time. We have included supply measures in every Finance Bill. If demand increases, supply normally increases to fulfil demand, but if supply increases, it can create its own demand. For example, I have observed Members using iPads and iPhones. They were not driven by demand but by supply. Smart people invented them and put them on the market. The fact that they were available meant everybody wanted to have them. An economy with supply side difficulties such as we have encountered can work. We cut the VAT rate for the tourism industry from 13.5% to 9%. That is on the supply side and it worked. Because prices are more competitive more people will come. It is a case of working on the supply side instead of the demand side. However, both are needed to balance an economy, but we do not have the resources for this big new deal initiative which works best in an enclosed economy.

The IMF paper is very controversial and has been severely criticised by equally eminent economists around the world. Even if it works in a country such as the United States, it does not work in Ireland because the multiplier is probably less than one. If one spends money, it has a knock-on effect. However, we import so many goods that the money goes out fast. As savings are high in Ireland, it goes out fast. The return on big infrastructural developments in Ireland is no longer great. A balance on both sides is needed.

Mick Wallace (Wexford, Independent)
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I do not think sensible investment in sensible infrastructural projects was the cause of our problems. Good governance involves good investment which would be a creative initiative. The Minister knows that the domestic economy presents our biggest problem because it is struggling which impacts on people's lives. The lack of finance remains a serious problem. The Government promised a State strategic investment bank but two years have passed. Does it intend to establish it or is it dead in the water?

Pearse Doherty (Donegal South West, Sinn Fein)
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I welcome the Minister's reference to the iPhone. I presume this means he does not support his colleague's call for legislation to ban the full use of iPhones and iPads. Stimulus works, and so will austerity to get to a deficit reduction. There is no doubt about that. The big debate is which is the least painful and best path to choose. I have a very different view from that of the Government but mine is valid and is held and implemented by governments throughout the world. Stimulus does work. The Government has put all of its eggs in one basket. On average, 100 jobs were created every month last year. While any job created is to be welcomed because it presents an opportunity to remain in Ireland or move away from the deep depths of debt, the figure of 100 jobs every month means that it will take the Government 83 years to reach its target of 100,000 jobs, if things stay as they are. I hope nothing like that will ever happen, but we need a stimulus in the economy. There is no need to throw money at projects, as happened under the previous Government, but the National Pensions Reserve Fund has money that has to be mobilised to get people back to work and help to lift the level of economic activity in the State. I encourage the Minister to do this. However, many people have offered different opinions. I know that under the rules of politics, one's job is to ridicule or rubbish the proposals coming from the other side. However, political parties on this side of the House have offered genuine, serious proposals, as have people outside the House, which should be adapted to get the country moving again.

Michael Noonan (Limerick City, Fine Gael)
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We intend to legislate to establish a strategic investment fund. We hope to introduce the legislation before the summer recess. As the fund strengthens, it can be transmogrified into a strategic investment bank. That is the policy.