John Paul Phelan (Fine Gael)

I support the comments of my colleagues, Senators Browne and Higgins. I was taken aback by Government Senators backslapping the Minister for Finance for his new found devotion to fiscal rectitude. Irish growth rates of over 3% are the envy of Europe. How is it that a country expanding at that rate, with an economy that is still growing, can find itself in this position? Senator Higgins spelt out the answer. The finances of this country have been completely mismanaged over the past three or four years and the chickens have come home to roost today.

I was amused to hear Government Senators say that there had been no increases in tax. Perhaps they did not hear the Minister, but VAT was always a tax as far as I knew. The 1% increase in VAT will have a serious impact on many aspects of the economy. The Government has failed to face up to the problem of inflation. This increase will have a serious knock-on effect in many sectors of the economy and will fuel inflation further.

Soft targets have been hit again. Those buying their first house were hit with the abolition of the first-time buyer's grant and today's paltry €300 a year goes nowhere towards redressing the balance.

Another soft target was the motorist. It is almost a crime to own a car now. Thankfully I own a petrol car.