Martin Mansergh (Fianna Fail)

Unlike the last speaker, in my encounters with the people I have found they recognise that fantastic progress has been made and that the country was never better. Equally, a number of unsatisfactory problems require a lot of further attention.

I welcome the Minister of State and his officials. He highlighted in his speech some of the benefits of increased expenditure in, for example, social welfare payments; in health where there has been a considerable increase in life expectancy over the past ten years; in the tackling of educational disadvantage; and in agricultural spending, most of which now comes from the Exchequer rather than from Europe. I wish to highlight the national Exchequer commitment which was not possible in the past. Taking the example of infrastructure, I know of nobody who does not appreciate the Luas enormously and the new trains and new bypasses. I am looking forward to travelling on the Ennis bypass this weekend. I acknowledge there have been some overruns and some trial and error but all the evidence is that the Government is getting this right and that we have learned lessons.

I wish to highlight a few points in the very interesting Central Bank report published in the last week. Growth is very healthy as are the public finances. However, the bank makes the point that continued surpluses — €2.3 billion in 2006 — will be needed, given significant external and internal risks. The Minister for Finance in his budget allowed for surpluses in 2008 and 2009. From the various policy announcements from parties opposite it seems clear to me that if they were in power the cushion of a surplus would very rapidly disappear. Senator Terry has stated that the Government is very good at spending but the budgeted expenditure was at €830 million under budget last year. The conventional wisdom is that one should spend all the money one has got but I do not think one should do that if it will involve waste. The doubling of employment in 20 years is the outstanding achievement of successive Fianna Fáil-led Governments. I will allow that the rainbow coalition, which was in power for two and a half years in the middle of the 20-year period, is entitled to a small share of the credit.

The Central Bank report refers to a pick-up in full-time employment and notes that women's participation in the workforce is climbing above the European average. This is a significant development. Traditional industry, which had been fairly flat in recent years, recorded a growth rate of 3% last year, its best year since 2000. Contrary to the impression that employment in industry is falling, it increased by 8,400 in the first three quarters of 2006.

The Central Bank forecasts that the general government deficit will fall to 22% in 2009. Assuming current Government policies continue, all the evidence suggests that Government finances will be considerably healthier that the bank's projection. The Central Bank report also points to various dangers and risks. For example, it states that the rate of Government spending — under the present Government rather than any alternative — in relation to gross national product is set to rise and that the volume of Government consumption increased by 5% last year.

Members have expressed concern about costs. The Central Bank report gives some interesting examples in this regard. For instance, between 2000 and 2004 the price of alcohol increased by an average of 5.7% per annum. In 2005 and 2006, the rate of increase declined to 2% and 2.5%, respectively. One wonders whether some of the difficulties experienced by parts of the pub trade in recent years were due to well above average price increases over a five-year period rather than the introduction of the smoking ban and random breath testing.

The cost of energy is also a matter of concern. The Central Bank report notes that the average price of electricity for industry is 33% above the European average, while the price of gas is 56% higher than the European average. The American Chamber of Commerce and other industry bodies have warned about these costs. I believe the regulator was too willing to award large increases in gas and electricity prices last year.

The Central Bank report includes an interesting statistic about the cost of building a house. In Dublin, where it costs €195,000 to build a house, the price of a house is €400,000. In Cork, the price of the average house is €300,000 and it costs €146,000 to build a house. If we decide to alter or adjust stamp duty or other incentives, we need to be careful that we do not increase the large profits being made in construction.

The report provides the astonishing statistic that the value of assets, in terms of residential housing, increased from €39 billion in 1981 to €553 billion in 2006. On my reckoning, this amounts to an increase in asset values of approximately 1,400%. It also includes the sobering statistic that Ireland's labour costs per hour in manufacturing, at €18.30, are almost four times higher than those of the Czech Republic which stand at €4.91 per hour.

Public sector pay increased by 7% last year. We also have a number of industrial disputes. In this respect, one does not always compare like with like. I value highly the work done by nurses and teachers; it may well be more valuable than some other activities. We need to watch disparities in this area.

As elections approach, the question of value for money goes out of the window. I wonder how many of the proposals with which we have been bombarded in recent days, mainly by the Labour Party, have been assessed for value for money. Did the Fine Gael Party assess their value for money before eagerly climbing on board and cheering "hurrah"? While the proposals may be worthwhile when viewed in isolation, will the general tendency be to increase Government expenditure above and beyond the rate of growth?

A question never asked in election campaigns is what one will stop doing if one decides to do X, Y and Z. I am certain a rainbow government, if elected, would shove aside several programmes. The Dublin-based spokespersons on finance for the Fine Gael and Labour parties clearly have decentralisation in their sights.

As I stated on the Order of Business, I welcome in principle the Labour Party's conversion to the broad analysis and tax policies of recent years, against which it has fought a less and less convincing rearguard action. I look forward to listening to the contribution to Senator Ryan who has repeatedly stated that tax reductions were not responsible for the Celtic tiger. It now appears tax reductions are the centrepiece of Labour Party strategy.

The Taoiseach is right to warn that ambitious tax cuts should not constrain vital increases in social services. As I stressed on the Order of Business, while I do not object to the Labour Party changing its policy, I object to its utter caricature of the Government's tax policies, which have been geared to taking the maximum number of people out of the tax net. The 38% of taxpayers who were removed from the tax net will not benefit from the standard rate being 20%, 18%, 16% or any other figure unless they are brought into the net again.

As I indicated on the Order of Business, the European Commission has praised the Government for having the friendliest tax regime for low income earners of all European Union member states. This is the main accent and emphasis of Government taxation policy. The reason Fianna Fáil secures around 40% of the vote is that it delivers. There is no truth in the absurd caricature that budgetary policy is for the benefit of a couple of dozen very rich people. Many of those on the higher tax rate earn only slightly more than the threshold.

As far as the wealthy are concerned, the reduction in the top rate to 41%, which was, in a sense, a hangover from the period between 1997 to 2002, when the then Government was supposed to reduce the rate if conditions allowed, does not compensate for the curtailment of tax breaks, on which the Minister for Finance, Deputy Cowen, has taken action across the board in recent years. I will challenge the Labour Party every time I hear it utter the drivel that Government tax policy is for the benefit of the veryrich.