Michael Finucane (Fine Gael)

It is worth bearing in mind what the Minister has inherited. We all know what happened to the economy in 2001. We all know the person who was hailed as the all-conquering hero. If the situation was analysed and we reflected over his seven years in office, we could seriously question his achievements. When it comes to the budget, the projections are carried out by the Department as well as the type of evaluation and proper planning on spending. The projections this year are that the Minister will have a €2 billion surplus, which was not anticipated when the budget was moved last year.

There is a buoyancy in the economy, with a massive increase in tax take as well as a buoyancy in the construction industry where 80,000 units will be built this year, fuelling a big increase in revenue through stamp duty and other taxes. However, it is worth bearing in mind the prediction of the Construction Industry Federation for the next two years, which states that housing output will decrease to 53,000 units each year. That same revenue base will not be there for successive years. It goes back to how the budget is subsequently planned. I wonder whether the Department of Finance is planning budgets and projecting for the year ahead as it always deliberately underestimates the situation. In that case, when the subsequent figures emerge for income tax take, VAT take and the take on other charges, it can be perceived as if the Department has earned credibility as it achieved much more than it projected. That is a deliberate mechanism for the budget, as it always makes the situation look better afterwards. Despite a budgetary policy over many years, we do not seem to have achieved the proper planning and evaluation of spending.

When we reflect on the budget of 2001, we have to remember that there was an election in 2002. Much of the spending was earmarked in that direction. From 2002 until the departure of the former Minister of Finance to Brussels, the Government adopted the mantle of Ray MacSharry, and the former Minister could have been christened "Mac the Knife". The Government rowed back with harsh cuts, which was probably reflected in the recent local and European elections, where the Government parties got a hammering. That resulted from the austere changes introduced by the former Minister for Finance. He claimed it was to stabilise the situation, but it was an economic situation which he himself helped to create in the first place.

In the run-up to the budget, the current Minister is probably faced with people pulling in every direction who are trying to get hold of the surplus. With such competing demands, the Minister has to evaluate where the funding goes. Many people refer to the time when Fine Gael and the Labour Party were in office from 1995 to 1997, yet that Government left the economy running at a rate 10% higher than when it came into office. The economy was in good hands at that time. From a political point of view, if the then Government had spent more in the run-up to the 1997 election, things might have worked out differently.

They took it on a responsible basis and we have to accept that they handed over the economy in good condition. The Celtic tiger purred over the following years as we benefited from international trends. The Government may have shown some prudence in its initial years, but that went out the door subsequently.

The public believed the former Minister, Deputy McCreevy, when he said before the last general election that no cuts were planned, secretly or otherwise, but we know what happened thereafter. I do not want to speak about what happened in the past two years as if I were giving a history lesson, because the Minister has inherited new circumstances and has to work from there. The taxpayers who fuelled this country's bonanza anticipated the indexation of tax bands, but that did not happen during the first two years of this Administration, despite a commitment that it would. There is a feeling that an increase has been given in an environment in which people find it difficult to meet escalating employment costs. Many of those who sought an increase are paying much more tax as they move into the 42% tax category. It is anticipated that the Government will do something for such taxpayers and I hope it will.

The Government took a retrograde step in last year's budget when it cut the budgets of job creation agencies, including Enterprise Ireland, IDA Ireland, Shannon Development and the county enterprise boards. The organisations' budgets are sufficiently restricted and I hope they will not be confronted with similar decreases this year.

It is interesting that this debate is following the debate earlier today on competitiveness. Although I did not participate in the debate, I followed it on the monitor and found it interesting. I will not cite many figures or give classic examples. The Minister for Arts, Sport and Tourism, Deputy O'Donoghue, said at a tourism conference in recent days that the use of emotive phrases like "rip-off Ireland" is projecting the wrong image of this country. Industry players at a big tourism exhibition in London have said they feel that Ireland is becoming more expensive to visit. We all know this country has become far more expensive and that people are encountering difficulties as a result. One might not like that message, which was followed up by the Minister, Deputy Martin, last night. He said that the use of phrases like "rip-off" and "high-cost" gives the wrong image of Ireland.

We cannot ignore what is happening in the marketplace. The increase in costs is fuelling the expectations of those whom the Minister will have to placate when he announces the budget shortly. It behoves everyone, including members of Opposition parties, to remind themselves of the problems about which Senator Leyden spoke on the Order of Business this morning. During the debate on competitiveness, he seemed to blame Fine Gael for saying that consumer costs are increasing. He was critical of increased costs some time ago, however, when he advocated the establishment of a "name and shame" inventory. I do not know what happened to that idea. Senator Leyden has acknowledged in the past that we have a problem in this regard, but he seems to have changed his mind because an Opposition party, Fine Gael, has highlighted price increases as wrong, unpopular and something that should not happen.

I wish the Minister for Finance well. It is not easy to allocate resources among the organisations which are competing for funding. The motion moved by Senator Mansergh is an exercise in back-slapping. It is selective in the points it raises, although I appreciate that the same could be said of the Fine Gael amendment. I would not like the Minister to pursue the policies advocated by his predecessor, Deputy McCreevy, as he meets his responsibilities. The decisions the former Minister took over the past two years contradicted what he did for the two years preceding the election. I am sure the Minister, Deputy Cowen, will take a responsible approach to his new position and I ask him to ensure that his decisions facilitate economic stability. I wish him well in what he is about to do. I support the Fine Gael amendment.