Derek McDowell (Labour)

I trust the Minister of State treats his human constituents rather better than the fish elements of his constituency. As Senator Phelan said, it is not just a matter of piscatorial convenience.

Value for money is a serious issue and I was struck by the lengthy passage in the Minister of State's contribution on this point. Senator Phelan rightly quoted at length from the very worthy Fine Gael document on the issue, which sets out increases in expenditure in graphic detail and asks what we have got for it. It is always important to have a sense of balance and there are many good examples of where money has been well spent. The Minister of State outlined one of them in the course of his contribution when he referred to pupil-teacher ratios and specifically the additional provisions made for resource and special needs teachers and so on. It is important to say that money has been well spent in that regard.

Another area where it has also been well spent — I am struck by the commitment of the Minister for Finance, Deputy Cowen — is disability, where the approach is absolutely bang on. A serious assessment of need has been done over a period of years in conjunction with the interest groups that represent people with disabilities. We have a fairly good idea of what is represented in terms of respite, day-care, residential care places and so on. The Minister has made a multi-annual commitment to meet that need. This is in stark contrast to the way matters were dealt with frequently in the past. By and large, they are still dealt with in that way. We look at the figures on annual basis, find out what money is available and decide to spend it as quickly as possible. I very much favour the use of multi-annual envelopes.

The way we tried to do it in the 1990s simply did not work. Good progress has been made in terms of, for example, the roads budget, the proposals for disability and overseas development aid, although I do not agree with the actual numbers in this case. These are in stark contrast to the way we normally deal with matters which, frankly, is not efficient. An enormous amount still has to be done, however, in terms of assuring value for money. One great example over the years was the way in which we dealt with EU Structural Funds. As the Minister of State knows, a unit, either in his Department or loosely connected with it, was responsible, in conjunction with the Commission, for looking at the manner in which we spent such funds. It is accepted not just by us, but internationally, that it did a good job. I understand this unit is at risk of being broken up by virtue of one of the Minister's other pet projects, namely, decentralisation. I believe he wants to pocket it and bring it down to his constituency or somewhere close to it, which would be a great pity.

We need to build on that experience by introducing a unit which reviews all Departments, not just EU Structural Funds. It should look at all expenditure programmes and not just the ones that are funded by money from other than Irish taxpayers. It appears to me an uncontroversial proposal and one that has been kicking around for a long time. I would like progress made on it.

The truth is that we have not succeeded in planning expenditure when we had money. The experience of 2001-02 was disastrous. Most famously, we ended up building health facilities we could not use because we had not projected for the ongoing current cost of staffing them. I gather this has just about been rectified, but the problem is nonetheless stark.

When Departments are given money at short notice and do not have plans on how to use it, the best and wisest course is not followed. Regrettably, this has happened a good deal during the time when we have had resources beyond compare over the past five or six years. For that reason, if no other, many of the resources available were simply wasted or at least not used to the optimal degree.

Deputy Ruairí Quinn, when he was Minister for Finance, around 1996, introduced a series of expenditure reviews. They ran into the sand, to tell the truth. I read some of them and, by and large, they were turgid. Some of them were good while others were not so good. However, the programme was well-intentioned. I am not sure whether it has been wound up at this stage. If it has not, it has not gone very far. We need something with more teeth that is current and public, where we can engage with those who run programmes and assess publicly whether they meet the needs.

I was struck by the Minister of State's comments on the budgetary process. The budget is a charade. Virtually any of us who has been even tangentially involved in this process knows that is the case. It suits the aims of those within the Department who wish to keep everything under wraps for as long as possible and then announce matters in a declaratory fashion on budget day. By and large, however, it is a charade. We are spending a great amount of taxpayers' money. Announcements are made after decisions have already effectively been taken without giving committees of the Oireachtas, or outside bodies for that matter, a chance to look at whether the expenditure plans are good or match the aims, as stated.

We need a period of discussion, running from September or whenever the Dáil resumes in the autumn, for a period of two months. During that time expenditure proposals, Estimates for the following year and taxation plans should be on the table and discussed by all relevant committees so that we can tease out in public how taxpayers' money is being spent.

However, I welcome the commitment made by the Minister on budget day, which I believe he repeated in the Dáil last week, to change the budgetary format. I presume the Minister of State in his comments today meant it as a caveat when he said it had to be done in the context of the current budgetary timetable. I am not sure whether that is intended to restrict the nature of any reforms to be made because the major problem is the timetable. If that is the case, it would be very disappointing.

Senator Mansergh referred to the Central Bank report which makes for interesting reading. It projects, as the Minister of State knows, an approximate increase of 4.75% in GNP next year, in comparison to a likely outturn of 5% this year. It points to some potential problems, however, which perhaps we should highlight and ask the Minister of State to comment on. I was struck by the contribution the construction sector is now making to the economy. The figure of 220,000 employed in the sector is given in the report, which is equivalent to about one in eight workers employed in the economy as a whole. It might be argued that this is a measure of success rather than a potential problem. As long as employment can be sustained at that level, it is good and healthy because, by and large, the sector is indigenous and gives a good deal of employment. However, it is also a very cyclical sector. We are building almost twice as many houses as we were only a couple of years ago. Therefore, it is prone to reductions as well as increases in employment. We have to be a little wary of this aspect.

The bank also points to our increasing reliance on the competitive elements of our export-led economy, which are the foreign-owned sectors of the economy. In particular, it mentions chemical and pharmaceutical industries, as well as information and communications technology. This is a feature that has been intensified over the years.

It is also worrying as the flip side is that the indigenous sector is becoming less competitive. We have less of a comparative advantage when it comes to exporting goods that we manufacture here. That will cause us trouble in the future. I read the enterprise strategy report which was produced last year for the Department of Enterprise, Trade and Employment. In effect, it argues that we should accelerate that process. The areas of growth that it targets are increasingly likely to be foreign owned. We have to approach this in a fashion which ensures a reasonable prospect that foreign-owned companies stay here.

The emphasis in the report on research and development is very important. Even with the tax breaks that have been introduced in recent years, I am not sure we have done enough to encourage Irish-based multinationals to carry out research and development here, nor have we done enough to make it viable for third-level institutions to carry out research and development here. We have to do more to ensure that we continue to attract foreign direct investment and that we keep it. Our reliance on foreign-owned companies in the trading sector is increasing to worrying levels.

An interesting area of the bank's report was that which dealt with credit. While the bank makes the point that credit is now at a very high level, it also notes that the number of credit transactions last year was down and that consumer confidence is not as high as one might expect in an economy that is growing 5% year-on-year. The reason seems to be that domestic demand is still pretty low. To put it another way, the growth in the economy is not being driven by people in Ireland demanding more goods and services, but by exports. It is being driven by foreign-owned companies producing products in which we have a comparative advantage and exporting them. We are living comfortably, but nonetheless not too far from the edge of a cliff. We are very reliant on industry that we do not own and that is mainly producing goods for export. While it has been a fine foundation on which to base our boom for the past ten years, I am not sure we can afford to be as reliant on those sectors in the future.

What has happened to public private partnerships? There was a great fanfare about this a few years ago. I was one of those who expressed a certain cautious optimism that they could make a contribution. The Government made a capital resource allocation for PPP projects a couple of years ago, which has since been scaled back. The word on the ground is that the programme is running into the ground. It is not delivering anything remotely close to what we thought it would deliver. I do not know whether this is because the common form of contract to which the Department would like to work is not satisfactory to the financial institutions or to the private sector investors that it would like to bring in. It may be because we overestimated the attractiveness of the projects to the private sector in the first place. Many of those companies would not be Irish based in the first place. It may be that we have just got it wrong. We may have been over-enthusiastic about it and perhaps it is time to recognise that it is too expensive and that we should finance it directly from the State. I would be interested in hearing the Minister's reflections because the great white hope of four or five years ago is no longer what it was.

A few weeks ago, the CSO published a disturbing report on the levels of poverty in this country. We congratulate ourselves regularly about double digit growth, but we forget that there are still shameful levels of poverty in this country. These are levels of relative and consistent poverty. The CSO report points to a level of consistent poverty of almost 5%. While it is fair to say that that has reduced from the level of ten years ago, it nonetheless represents one in 20 people. These are households that cannot afford to buy a roast once a week, that cannot afford to buy new clothes, that have difficulty in repairing utensils and suffer arrears in rent and electricity. These are the very basics of everyday living, yet one in 20 people in this country cannot afford such basics. At a time when we have the levels of economic growth that we have, that is simply intolerable. There is no excuse for having any level of consistent poverty beyond 1.5%.

The reality is that we are no longer dealing with that issue. We are still a one-trick economy. The philosophy of the Minister of State's party and that of the Government as a whole is that the way out of poverty is through getting a job. For many people, that is the case. However, those who are now poor are only tangentially attached to the labour market. They are people who are disabled. They are lone parents. Some of them may not be able to work for whatever reason, some of them may not be able to find work. They are people with a drug addiction problem, or formerly with a drug addiction problem. Some of them are ex-offenders. They are people who have difficulties above and beyond the simple fact that they do not have the skills to go out and get a job. These people need to be directly targeted by interventions which are tailored for their needs. This is a classic case where rising tides will not raise all boats.

Without particular assistance or targeted measures, these people are very unlikely to have a job. In some cases they will never have a job. Some disabled people will never be able to work, or will only be able to work part time. For them, the State has to make particular provision. We ask people on invalidity benefit to live on less than €200 per week. To tell someone who is temporarily unemployed that he or she will have to live on €200 per week is all well and good. Saying it to someone who is disabled and who may very well never work again is quite a different proposition. Frankly, it is a proposition that beggars belief. The Government has done a reasonable job in dealing with the issue of unemployment. No one would begrudge it that; it has taken many people out of consistent poverty. The one in 20 that are still in such poverty require specific interventions. That issue must be addressed and it is not being addressed by current Government policy.

There are a number of myths about Irish economic policy. One which was mentioned by Senator Phelan was that the boom started in 1997. Any objective analysis would suggest that it started a good deal earlier.