John Minihan (Progressive Democrats)

I welcome the Minister of State, Deputy de Valera, to the House and thank her for her attendance. We have faced a challenging set of economic circumstances since the 2002 general election. I am delighted that it has been predicted that economic growth will be approximately 5% in 2004. We are experiencing an economic upturn at present, but it would be unwise to think we will return in the short term to the high growth rates we enjoyed before 2001. The Government should be congratulated on steering the country through the downturn of recent years in a prudent and pragmatic manner.

Many major international considerations have a direct effect on our economy. The American boom has slowed markedly, the German economy, which is the largest in the euro zone, is almost stagnant and there is hesitancy in international markets. The climate of uncertainty has been exacerbated by the conflict in Iraq. When one considers the increase in oil prices, the fall in the dollar and the uncertainty in the US economy, it is possible that there could be a slowdown in 2005. The impact of recent events on Ireland is clear — the pace of economic growth has moderated. In that context, the figures announced in the Estimates are welcome.

The Government's prudent management of the public finances has ensured that the economy has continued to support economic growth, promote employment and generate the necessary tax revenues for key social and economic public services. The Progressive Democrats Party has played a key role in the formulation of economic policy since it returned to Government in 1997. I do not think anybody denies that its policies have worked. The policies have brought the country from mass unemployment to full employment, virtually eliminated long-term unemployment and ended the curse of emigration, which was a blight on this country for many years.

I would like to reiterate what Ireland's economic priorities should be in the next four years. The first requirement — to secure and preserve prosperity — has been achieved. It took us a long time to get the monkey of unemployment off our backs and it would be a tragedy if we allowed it to return. It took a great deal of effort to put in place this country's pro-employment tax system. Our key objective must be to retain that system, in the face of the temptation to raise personal taxes. I welcome the Minister's declaration that a key part of the Government's successful management of the public finances and the economy has been to avoid large-scale borrowing and increases in taxes.

I agree with the Minister that excessive public spending could add to the inflationary pressures on our buoyant economy. It could place upward pressure on wage demands and erode Ireland's competitiveness in global markets. The Minister is right to suggest that growth in public spending should be correlated with revenue growth if it is to remain at a sustainable level in the medium term and that any temptation to do otherwise must be resisted. Full employment was a prize worth fighting for and is a prize worth defending, but if we want to defend it we will have to keep taxes down. We know that the low-tax formula works so we should retain it.

It is imperative that the Government should invest in the economy. For example, it needs to invest in key infrastructural projects which are essential if we want to keep the country moving and ensure that it stays competitive internationally. We have set about correcting our infrastructural deficit. Eight decades after independence, there is no proper road running between Dublin and Cork, our two major cities and economic centres. Our transport infrastructure is literally kilometres behind the rest of the European Union. We are making progress, however; record sums of money are being invested in the National Roads Authority, which is responding to the challenge.

There will be a transformation of the national roads system over the next three years. The motorway link between Dublin and Dundalk has been completed and the motorway project between Kilcock and Kinnegad, which is a vital part of the link between Dublin and Galway, will be open in two years. There is a continuous stretch of motorway and dual carriageway between Dublin and Portlaoise, following the completion of the Kildare and Monasterevin bypasses. The Cashel bypass has been finished. Such impressive achievements will bring badly needed relief to road users throughout the country and improve significantly the quality of life of those living in the towns which are being bypassed. We need to maintain the pace of investment, for example by continuing to invest in the national roads programme, if we are to provide the kind of transport system this country needs.

Public investment is also needed in other areas, such as hospitals, schools and railways. Investment costs money, which has to be prioritised, but long-term investment should not fall foul of short-term pressures. The Progressive Democrats Party has always favoured prudent borrowing to fund capital spending. It would be foolish to reduce investment now, only to find when economic buoyancy returns that our congestion and public facilities are even worse than before. Prudent borrowing for public investment makes eminent sense. It is what the Irish economy requires now because it smoothes the economic cycle and helps to avoid boom-bust economics.

I welcome the publication of the Book of Estimates, which provides for public spending next year of over €43.5 billion, money that has resulted from the hard work of the Irish people. The Government's first job is to manage and invest public money wisely on behalf of all citizens, which involves delivering the public services they expect. It means getting value for public money and spending it within a sustainable social and economic strategy. With these Estimates, the Government has set priorities with limited and precious public resources. Public spending is being increased at a moderate rate that will not put a strain on jobs or the economy. Steady progress is being maintained within the limits for our economy. There is no exaggerated spending and no exaggerated curtailment in spending.

To grow public spending in line with our economic ability to pay puts the focus on the policies to achieve our economic potential. The Government has shown in recent years that economic performance is the engine of social justice, public resources and sustainable public services. The Government will continue to give priority to policies and actions that maximise our economic growth potential, including investment, competition and low taxes.

I note in the Estimates that the Government has prioritised investment in our social and economic future in the areas of health, education, persons with disability and infrastructure. I welcome the increase of €530 million, or 8%, in education, bringing total spending to €7.1 billion. When one looks at gross expenditure on education from 1997 to 2005, one sees an increase of €3.9 billion, or 218%, over the period. I also welcome the fact that the Government has ensured that the programme for research and technology in third level institutions, or PRTLI, has been funded. That investment is key to our future development as a knowledge-based economy by providing the necessary graduates and postgraduates to complement the many initiatives and programmes delivered by Science Foundation Ireland. That will deliver long-term rewards for the people of this country.

Health spending will increase by €915 million, or 9%, to just under €11 billion. The cumulative increase in gross expenditure on health from 1997 to 2005 will amount to 205%, representing an extra €7.4 billion. No other European country has increased health spending at that rate. In France, for example, the Government stated that there were "particularly steep increases" in health spending in 2002 and 2003 of 4% at constant prices.

The Government is making the investment. It has brought forward the reform package, and now is the time for action and results. I am confident the Government is absolutely determined to implement the health reforms that put patients first. It will be a step-by-step approach, beginning now and continuing over the coming years, backed by sustained political will. I welcome the Tánaiste's announcements in that regard, in which she has clearly set out a targeted and focused programme that will be the start of delivering these reforms.

Those who express opposition to the proposals based on their own vested interest and short-term gain do not have the long-term interests of the people of this country at heart. Credible opposition to this point of view should be expressed with credible alternatives; to date I have seen none. I congratulate the Minister for Finance, Deputy Cowen, on the Book of Estimates and congratulate his predecessor on his management of the Irish economy over the past few years. I am confident that in these Estimates the Minister has shown his commitment to ensuring that the decisions now being made are in the overall interest of the Irish people in the short, medium and long term and must be viewed as such.