Marc MacSharry (Fianna Fail)

I welcome the Minister to the House. This is the first opportunity I have had to wish him well in the new Administration, as Minister for Finance.

At the outset I want to pay tribute to the management of our finances in recent years. It is almost inconceivable, when one considers where we have come from in the last 20 years, what has been achieved in that period and the level of prosperity being enjoyed throughout almost the whole of society. We owe a debt of gratitude to the many Administrations who managed over that 20-year period. It was predominantly Fianna Fáil in Government, although Opposition parties were also in Government for a period. We can look back with great pride concerning what has been achieved.

I am confused somewhat as regards what Senator Twomey had to say about the pessimism and the outlook. He should not confuse prudence with pessimism. The Fianna Fáil-led Administration looks forward with great confidence to what can be achieved in the 20 years ahead, including in this period in Government, based on good prudent fiscal management and the implementation of policies consistent with those that have been carried out in the past which were the foundation of our present prosperity.

The pre-budget outlook sets out the revised economic and budgetary forecast covering the period 2007-10. The publication represents another major step in the Government's ongoing budget reform process. As well as setting out the economic forecasts, it also indicates in detail the cost of keeping the existing level of public services in place for the next year. The initiative makes it clear to the Oireachtas and the public what is the pre-budget position. It helps the Oireachtas to focus more clearly on the existing overall level of spending and what we are getting for it.

I thank the Minister for giving Members of the Seanad the opportunity to feed into the process in advance of the budget and not just to react afterwards, particularly since this House does not have a formal role in its preparation. It is to be welcomed that this is the first time we can feed in to the preparation of the budget at an early stage. The pre-budget Estimates apply pay and non-pay inflators as appropriate to the cost of services currently in place. They provide for increases caused by the known demographic demands, such as provision for the extra teachers and students we know will be in primary schools next year. The figures reflect, as far as possible, next year's cost of providing the actual level of service on the ground this year.

By co-ordinating all of our decisions and resource allocations alongside the tax take on budget day, the Government will be better placed to roll out our ambitious programme of national development and improved public services within a planned, progressive and sustainable framework. This ultimately is the approach that will deliver better policy outcomes and better value for money for the public whom we serve. The next step in the budgetary reform process is for the Minister for Finance to meet with his Cabinet colleagues and prepare to discuss the priorities for the budget and all the spending and taxation decisions that will be announced on budget day. I am sure he will take into account the many points made today by Senators of all parties and none.

The economic forecast for Ireland seems to be overly pessimistic in tone. It is fair to say the short-term prospects are for lower, but perhaps more sustainable, growth rates than those to which we have become accustomed. There are risks and we must not lose sight of our strong fundamentals. The economic headwind resulting from lower residential output raises a number of important policy issues. On overall fiscal policy, more modest economic growth will result in a normalisation of the growth of resources available to the Government. It is essential that expectations regarding expenditure be adapted accordingly. Let us have a policy debate on these issues but let it be based on a realistic and balanced assessment of both the strengths and weakness of the Irish economy rather than on scare-mongering or blind, ill-informed criticism.

The Government will continue to prioritise spending on those areas crucial to the future development of the economy and especially spending under the national development plan. It will spend over 5% of GNP annually over the period of the plan to upgrade our public capital stock. All along, the Government's view has been that we would achieve considerable value for money from infrastructural spending and we are now seeing the benefits of the roll-out of the plan. The Minister for Finance mentioned the robust framework for value for money that is in place.

The prospect of a more modest evolution of domestic demand highlights the need to find alternative sources of growth to drive the economy forward. I commend the Minister on his prudence regarding the budget of last year and ask that the same policy be pursued in the preparation of this year's budget. I ask the Minister to be cognisant of a number of issues, one of which concerns local government funding. We have high levels of development contributions to such funding and these account for approximately 14% or 15% of the total. There will be a reduction in this funding and perhaps the Minister will consider an increase.

While I appreciate that the Minister has been reluctant to adjust the stamp duty threshold, I believe it may be of benefit to extend it from €127,000 to €250,000. I must declare an interest in that I am involved in the auctioneering industry.

I appeal to the Minister to focus heavily on the disadvantaged when preparing the budget. In spite of the great prosperity we have enjoyed over recent years, many challenges lie ahead and we all strive for the eradication of poverty. I ask that this be accorded priority.

Being from the north west, I have always focused on balanced regional development.