Martin Mansergh (Fianna Fail)

I came in here this morning on the DART at 8.40 a.m. It was an extended train and I had a seat and was able to read the newspaper.

I welcome the Minister and his officials, many of whom I have had pleasure in working with in the past. I thank the Minister for his comprehensive exposition of the situation including the issue relating to health spending. As regards capital spending, I am very glad that the Cashel-Clonmel hospital reorganisation project is going ahead this year. As regards the previous speaker's comments, one cannot possibly talk about the taxpayer being overcharged when there is a Government deficit and a public debt.

I want to compliment the Minister on his management of the economy over the past 16 or 17 months. We are virtually in a unique situation, when the Government has not had to increase taxes in two budgets in a row. I do not know whether there is any precedent for this. Expenditure is set to rise. The Minister's speech said it was up 9% last year. I believe the outturn will be about 11%, although the post-budget Revised Estimates will give us a final figure for the moment. In any event, expenditure is rising by about 11% and we are also able to reduce the debt to GDP ratio somewhat further. It is currently 28%. I well recall, as I am sure the Minister does, that in 1987 the debt to GDP ratio was 127%, as it was then measured. I am not at all unhappy at the steady downward pressure on that which gives us more financial freedom and is greatly envied by most countries in Europe.

When one visits other countries one finds finance Ministers arguing that it is impossible to keep down taxes, increase expenditure and control deficits. The fact is we are doing that at the moment. The Minister's predecessors, in the 1980s, thought this was quite impossible to do as well, so we are in an extremely fortunate situation.

I was in Austria over the new year where they were complaining about record unemployment for 50 years. It is now 7.5% there and I accept that by previous Irish and general European standards that is not particularly high. The Portuguese economy has stalled. They put all their cohesion funding into roads, motorways and so on, while neglecting education. They compare themselves to Ireland where a good deal more money was invested in education. Mr. Gordon Brown, the British Chancellor of the Exchequer, was mentioned a few moments ago. In Britain the economy is bumping up against the 3% EU ceiling and he is facing some difficulties as a result.

Spending here is very definitely under control. As we know, the Minister is as likely to be criticised for underspending as he is for overspending. As he has pointed out, systems have been put in place to discourage sub-optimal end of year spending. I welcome the announcement that he will be coming to the Joint Committee on Finance and the Public Service to set out the parameters for the period ahead. I am, however, somewhat disappointed that the Labour Party has declined his invitation for a briefing. It shows a certain lack of self-confidence in one's position when one appears to be afraid of the facts and the parameters.

The new year has been accompanied by a wealth of positive economic indicators. An 89,000 increase in employment is totally unprecedented. For the first time in three or four years, there has been a rise, again, in net industrial jobs. This casts doubt on those commentators who suggest that we are simply moving over to a service economy and all our industry will go to places far afield. I believe this is extremely simplistic and that the wealth creation of the industrial sector is very important. Once again, there has been a very low level of industrial disputes and days lost. It has been one of the lowest years for redundancies in recent times. Lower income workers get the best deal in this country compared to any other in Europe, as the European Commission, which is responsible for the comparative data, keeps telling us. Real earnings are rising by roughly twice the level of inflation. What is definitely unusual, and perhaps the Minister should prize this fact, is that surveys show small firms are upbeat on job creation. It is not often that representative organisations such as small firms' bodies are optimistic about the economy. The debate about whether Ireland is closer to Boston than to Berlin is an artificial one. In the past the capital of Germany was Bonn. I refer to a quotation from Ludwig Erhardt, the architect of the German economic miracle. He said the freer an economy, the more social it is. There is a great deal of truth in that statement. I acknowledge there is a place for government intervention and nobody will dispute that. I note that the Heritage Foundation which is regarded by some as a very right-wing, economic think-tank, rated Ireland as the third freest economy. Despite the source of this observation, I would take it as a compliment rather than something we should be deeply worried about.

Against that background I was saddened by the introduction of the topic of reintroducing, as we are allowed to do, work permits for immigrants from central and eastern Europe. If we were in a situation of plunging employment and growth declining down to zero, I accept this matter would be a legitimate subject for discussion and it is so provided for in the European regulations. However, I do not believe there is any objective justification for raising this topic in current conditions, where we have the lowest unemployment in Europe and where wages and earnings are still clearly rising by considerably more than the rate of inflation. If people thought we were seriously thinking of doing so it would send a devastating signal and would show a loss of nerve and mean that we would renege on commitments for which we were praised.

There is substantial evidence to show that immigration is underpinning the current dynamic growth of our economy. This is not just true of the situation in the Dublin area. The haulage industry and much of the horticultural industry depend on immigrant workers. The living standards of everyone in the country are linked to the current work permit system. A corporation tax rate of 12% — which we introduced — which is used for conducting every type of business, has made this country one of the most attractive countries in which to do business.