Liam Fitzgerald (Fianna Fail)

The Government had the money to splurge had it chosen to do so. It did not. To have embarked on a spending splurge would have been irresponsible, highly inflationary and anathema to the Government's philosophy. A very short-sighted boom would have undermined our competitiveness and been followed by a bust. The Government has chosen not to adopt that approach to spending.

We have spoken about taxation policy as the generator of the income Government spends on services. While the House had an excellent debate on taxation before Christmas, it is a very relevant factor in spending. The Government's approach to taxation has been prudent, wise and far-seeing. The level at which corporation tax is set has been identified as one of the key contributors to our economic success, despite the contrary advice of critics and ideologues. I do not necessarily refer to Fine Gael in that context. According to some, to reduce corporation tax was to let fat cats off the hook and ensure the State would have far less income to spend on the poor. The opposite has been true. It took courage for the Government to stick to its guns and maintain a low rate of corporation tax.

I remember past budgets formulated in the context of economic downturns which screwed the corporate sector in the first instance and, having done so, proceeded to screw PAYE taxpayers. Strangely, this Government did not take that course. It did not set out to screw the corporate sector or the PAYE worker. I am open to contradiction in suggesting the current rate of income taxation is the lowest in the history of the State. While it may be that a lower rate obtained in the dim and distant past, the current rates have provided significant incentives to PAYE workers. It is a mark of the sound judgment of the Government that despite a dip in the international economy which impacted on Ireland and required belt-tightening, there was no frantic, reckless and irresponsible short-term dash to penalise any sector. The Government kept its cool. A reduction in the rate of increase in the level of provision to services across the board was characterised in loud terms as "cutbacks" but it was of short-term duration and constituted a prudent, necessary policy which has paid dividends. It was a clearly thought-out mechanism to manage transition responsibly and it has succeeded.

To be fair to Senator McDowell, he acknowledged that although there have been problems, which he articulated very well, Government activity has resulted in successes in many areas. There has been useful, prudent and effective management of the improvement of services. The results are evident. Senator McDowell cited education provision as a specific success. I draw to the attention of Members three independent organisations, one of which is home-based, which reflected on the Irish economy over the past few years in various reviews produced before Christmas.

The ESRI reports are a useful guide to Government spending and how the economy is performing. The organisation published an overview of the economy prior to Christmas, in which it confirmed that Ireland is one of the fastest growing economies in the developed world. The overview does not reflect an economy in which there is massive and reckless mismanagement of spending. The ESRI further stated that, over the past decade, which includes the period the rainbow coalition was in office, "unprecedented economic growth has seen the level of real Irish GDP almost double in size".

The ESRI advanced a number of reasons for Ireland's success, including its membership of the EU and the Single Market, its low corporation tax regime and a significant multinational presence. If we have such a presence, money must have been spent reasonably wisely to attract companies. If they are deemed to be playing such a major role in Ireland's success, something must be right. The ESRI also identified sustained investment in education and training and the significant role it has played, co-ordinated social partnership agreements and stable public finances. These hardly support criticism of the Government for engaging in reckless public spending.

The OECD also carried out a study on the economy, in which it stated domestic living standards had increased significantly over the past decade. Ireland is fourth in the league of developed countries in GDP per capita. However, the GDP measurement is faulty and can hide various deficiencies and weaknesses. If a GNP ratio is used instead of GDP, there will be a less favourable result. The repatriation of funds by multinationals makes up the difference. Nevertheless it is better to be fourth than lower in the league table.

I accept that, although major advances have been made in public services, a number of areas have been neglected. While living standards have improved significantly throughout the State, some people have not been lifted by the rising tide. Seán Lemass used to say a rising tide lifts all boats. He was universally acknowledged as a visionary but perhaps that is not as true today as it was in his time, notwithstanding the success that has been achieved.

The IMF commended the continued impressive performance of Ireland's economy, "which is based on sound economic policies providing useful lessons for other countries". I am sure we did not get at the IMF and that it made an independent, objective assessment. The views of the organisations I have mentioned are interesting and challenging for those whose stance is that the Government is spending recklessly and not managing spending well. I invite them to challenge the views of these independent organisations when they comment on the quality of Government spending over the past number of years.

Spending has been maintained within the guidelines set in Sustaining Progress and the social partners concur in this regard. However, I reject the attitude of the elite in the health service. It smacks of an arrogance with which I cannot go along. The Sustaining Progress agreement is in place and the Tánaiste and Minister for Health and Children has played her part since taking up the portfolio to ensure it continues. The highly-paid elite in the health service has significant power but it has launched a pre-emptive strike. These professionals pose no threat to the Minister who is more than capable of taking them on and I wish her well in doing so, but I resent the threat they pose to sick people. It is unnecessary and unwarranted. They should sit around the table in a responsible manner in the spirit of Sustaining Progress and its predecessors, which have underpinned the success of the economy since 1987. I call on them not to strike.

Social inclusion has been targeted in the past few years with substantial increases in excess of the average spend across Departments. There is much comment on questionable decisions regarding investment in capital projects but the way in which a Government targets spending towards social inclusion and reaching out speaks volumes about its performance. The pattern of increases in Government spending has been biased towards social inclusion measures in the areas of health, education and social welfare while this year people with disabilities and those living in disadvantaged areas have been targeted. There has been a significant bias towards social inclusion measures.

Health spending has increased by 9%. The allocation of 200,000 doctor-only medical cards has been heavily criticised but I could not disagree more. Every Minister is constrained by his or her allocation, even if it has been increased by 100% from one year to next, because each Department has many priorities. A programme that sets out to reach the greatest number of people must be commended and supported. I support the decision of the Tánaiste and Minister for Health and Children in this regard.