Liam Fitzgerald (Fianna Fail)

It is well to be up-front about it.

As Senator Mansergh stated, the Fianna Fáil Party supports the concept of a low-tax economy, not to reduce revenue, but because it is the right way to achieve better quality public services and social inclusion. The irrefutable evidence to support such an approach is set out in the motion. When discussing low taxation, we are discussing one element of economic management. Prudent increases in public spending is another, while social partnership acts as the cohesive force that helps the other elements to work together in harmony.

It is not just the merits of the approach that are important but its results. The primary objective is to bring about a radical improvement in quality of life for all sections of society and ensure their sustainability. The Government's approach has been based on a low-tax regime. Those who promote higher taxes to increase public spending might do well to reflect on the unenviable record of past Governments in that regard.

The evidence, nationally and internationally, of how people's welfare has improved over the past seven years is overwhelming. The recent ESRI overview of the economy confirmed this is one of the fastest growing economies in the developed world. A recent OECD study confirmed that Irish living standards have increased significantly over the past decade. In its recent annual review of the world's top 50 business nations, Forbes noted that, apart from Cyprus, Ireland has the lowest overall tax burden for business, consumers, employers and employees in the EU.

Happy that such a solid foundation has been built over the past seven years, we must now ensure its sustainability. The improvements have spanned every area of public services. I also welcome that every area has a detailed programme set out for the future. These programmes are a recognition by the Government of its long-term responsibilities to the people. It is building on the successful approach of the past seven years. The many initiatives that have already taken place will prove to be of great benefit to the next generation.

A decision to lower taxes has resulted in large increases in Government revenue. As pointed out by Senator Mansergh, it is not low tax for the sake of low revenue. The decision on low taxes has been beneficial in substantially increasing revenue generation. There has been a massive reduction of the national debt. Record amounts of investment have been made to address our infrastructure deficit. The national pensions reserve fund has been established. All these measures are aimed at the future and will significantly reduce the burden to be carried by the next generation of taxpayers. Commenting in its recent 2004 review of the economy, the International Monetary Fund considered Ireland well placed to deal with the impact of population ageing through its sound fiscal position and the high degree of pension funding. That is a very significant comment.

The fruits of prudent management of the economy and public finances are evident in the everyday lives of ordinary people. Since 1997, in excess of 300,000 new jobs have been created and unemployment has been reduced from over 10% to a historically low level of 4.4.%, one of the lowest levels in Europe. Long-term unemployment has been cut by 80%.

Economic growth has averaged nearly 10% per annum over that period. The rate will be approximately 5% in the near future but the average of 10% since 1997 is quite spectacular. Our public finances are acknowledged as among the strongest in Europe. Despite that we have lower tax rates, higher social welfare benefits and an expanded public service. Some would say we should not have that but we do. The Exchequer balance results show the Government is well on course and in surplus to meet its budgetary targets this year.

There are several hallmarks of the Government's successful management including a hands-off approach, for want of better words, and social partnership. They encapsulate much that has been done and is predicted to continue, and are responsible for our success. Local and international commentators acknowledge this fact. Needs are identified, stated and targeted. Significantly, the Government has consistently refused to take the easy but blinkered option to target the funding of these needs through uncontrolled borrowing. We have learned from our own past as well as that of other governments that this approach was a disaster and inevitably led to the boom and bust cycle. Uncontrolled spending almost without exception means more taxes, more borrowing, more dole queues and more hardship for ordinary people. It is a vicious, self-perpetuating circle.

One of the guiding principles underpinning the Government's approach to economic management has been that we must generate resources before we can spend them. That is a fundamental principle and has had extraordinarily beneficial effects because it has encouraged and generated prosperity in every sector of the economy. It has promoted investment and has created and sustained employment.

The social partnership model has harnessed the key human resources comprising workers, employers, the unemployed, farmers and Government to work together in harmony and for the common good. Although there are anomalies in the taxation system, the Minister's predecessor and the Government in the past seven years have made significant progress and introduced significant reforms. One of the independent conclusions of the Organisation for Economic Co-operation and Development is that Ireland has the lowest tax wedge in the European Union for the average single worker. Overall the record of significant achievement in that period speaks loudly for itself and provides a solid foundation for the future.