Charlie McCreevy (Kildare North, Fianna Fail)

I thank Senator Norris. I appreciate it greatly.

We need to keep the sound position and good shape of the public finances if we wish to provide properly for the next generation. The achievements of this Government in successfully managing the public finances are evident. We have the second lowest debt level in the euro area, at under 33%. We have a sound budgetary position with a general Government deficit target this year of 1.1% of GDP. Many of our EU partners find that they have to make painful budgetary changes to ensure they respect the Stability and Growth Pact. Through prudent budgetary planning we have ensured that our position is consistent with the Stability and Growth Pact and we have avoided that difficult experience.

It is to be expected that the ordinary knockabout of politics always focuses on the near term. However, the Government must be more forward looking. This is less about vote winning than spending our largesse now as some would have us do. The Celtic tiger has left us with a lasting legacy which we are determined not to squander. The Government has taken decisions that will ensure the legacy of the Celtic tiger will still be with us in a generation. Part of that forward-looking policy has been maintaining a high level of capital spending, which is twice the EU average in terms of GNP, in providing for substantial capital envelopes amounting to nearly €34 billion for the next five years and in reforming the tendering and purchasing rules for capital spending to ensure better value for money.

The Government has also begun to tackle the pensions issue both by saving at Government level through the National Pensions Reserve Fund and at individual level through SSIAs, giving savers better control over their pension nest egg and the institution of PRSAs. A recent pensions seminar put the potential pensions savings gap at €6 billion per annum. This is consistent with what I have said on previous occasions, namely, that the annual contribution of €1 billion per annum to the National Pensions Reserve Fund will meet only one third of future pension costs of the public service.

Against this background, maintaining a balance in the public finances is a basic requirement to provide us with the means to cope with the future costs of health and pensions for a rapidly ageing population. I intend to continue to follow this course and to use such windfall gains as may arise to add to our pension nest egg.

The Government has continued to accord priority to investment in the key areas of social and economic development. In particular, it has accorded top priority to the areas of social welfare, health and education. Since 1997, health expenditure has increased from €3.6 billion to €10 billion; education has increased from €3.2 billion to €6.6 billion; and social welfare spending has increased from €5.7 billion to €11.3 billion. Overall, spending on health, education and social welfare has increased from €12.5 billion to nearly €28 billion, an extraordinary increase in resources. Health, education and social welfare spending will account for 68% of total voted spending this year.

The exceptional economic growth in the years from 1997 to 2000 enabled annual gross spending to be increased very substantially to a high point of 21% in 2001. As economic growth has moderated, the Government has, in the interests of prudent management, followed a course of bringing spending increases more into line with increases in revenue. This has seen annual increases moderating from around 21% in 2001 to an estimated 7% this year, which is still a substantial rate of increase by any standard.

This Government's record on its management of the economy is one of substantial achievement. The motion before the House accurately summarises that record. Since 1997, the Government has consolidated the capacity of our economy to grow and create jobs; cut taxes on labour and on the lower paid; brought inflation under control to secure our competitiveness; managed our public finance soundly; and kept its eye on the future through spending on capital and prudent pension provision. Such policies will yield rewards both in the short and the longer term and will show the wisdom of a prudent approach to the public finances.

I commend the Government motion to the House.