Martin Mansergh (Fianna Fail)

On the other hand, we have the new Labour Party line which is that there is a €5.2 billion surplus. My old friend and colleague, Fergus Finlay, laid out the argument in full and I have noticed many Labour Party spokespersons repeat this line. The clear implication is that there is a lot of money in the Exchequer, so why is the Government not spending more of it? If capital spending is €3.75 billion, according to the implicit argument there is at least another €1.5 billion or so which should be spent. With terms such as "broke", "profligacy" and "the Government is not spending nearly enough" being used, it will be interesting to see how a coherent alternative will be arrived at.

I recall when Governments struggled through the first six or seven years of the 1980s with Exchequer borrowing requirements at 12% to 16% of GNP. Some of that borrowing was necessary, but there was little benefit from that sort of policy. There is a lingering belief – and not only among the current leadership of the Labour Party – that there is a great deal of virtue in the economic policies of the 1970s, in borrowing deficits and so on. I am not convinced of this, although I accept the argument that between the 1920s and 1950s we were too conservative and we should have borrowed for capital purposes. However, we went off the rails under the national coalition and under Fianna Fáil. For ten years after EU membership, we thought all our problems had been solved.

Another small country like ours which has by far the highest standard of living in the European Union is Luxembourg. It is no accident that it has the lowest borrowing level.