John Paul Phelan (Fine Gael)

I second the motion and welcome my old sparring partner, the Minister of State, Deputy Mansergh, back to the House. We spent four years debating financial and economic issues prior to the last general election. I am glad to see that he has been elevated to his new position. As Senator Twomey pointed out, the Minister of State and his senior colleague, the Minister for Finance, Deputy Brian Lenihan, will have a serious job on their hands over the next few years or for however long they remain in those positions. Nonetheless, it is nice to see one of our own returning to the House as a Minister of State.

The Government amendment to the Opposition motion responds in the usual back-slapping manner. It is clear, however, that the economic outlook for the country has changed since Deputy Mansergh left this Chamber for the other House. Economic forecasts by various agencies all point to significantly reduced economic growth figures compared to recent years. The ESRI forecast is somewhere under 2% for this year and many economists would say that we will be lucky to have economic growth of 1% or 1.5%. That is a significant downturn from where we were during the past eight to ten years. As a result of that situation, difficult decisions will have to be made by the Government. I remain to be convinced, however, that those decisions will be made.

We are facing into what will possibly be the weakest economic performance by the country since 1986. We often hear references by Government Senators to the 1980s, but I never thought we would be returning to those kinds of figures in 2008. There is no satisfactory explanation from the Government as to why we are now at this juncture. Nonetheless, we are being offered the usual token excuses about factors outside this country, including the global economy.

The recently appointed Taoiseach has been, at a time when he was Minister for Finance, the key to our economic downturn in recent years. He has overseen a large part of that recent downturn. We have seen significant disimprovements in most economic indicators, particularly in the last six to 12 months, including unemployment and inflation. We have had a number of debates on the latter subjects during my time in the House. Those and other indicators across the economy all point in a very poor direction.

On television yesterday, the Minister of State and another newly appointed Minister of State referred to the ESRI's mid-term review which pointed to the fact that a recovery may be just around the corner. The review did state that, furthermore, it was not mentioned that the Government would have to take a particular course of action. However, I have seen no indication that the Government is prepared to do so. We must see a reduction, in real terms, in the number of vanity projects that have been promoted by various Ministers in recent years. The Government must make a concerted effort to keep its costs down while delivering key infrastructural projects. Senator Twomey mentioned a number of them. The biggest scandal in my time in the House has been the appalling broadband infrastructure across the country. It is vitally important for the economy to have next-generation broadband but large tracts of the country do not even have first-generation broadband. If the new Minister of State, Deputy Mansergh, can do something to rectify that situation he will have done a good day's work.

There has been a significant deterioration in our overall competitiveness and in the balance of payments. Over the past year, the live register figures have risen by over 41,000. Some 1,500 people have been joining the dole queues every week since the beginning of this year, which is a big turnaround from where we were. The biggest increase was in the Taoiseach's home town of Tullamore where more than twice as many men are currently on the dole than at the time of the last general election. I hope that brings the message home to him in a stark manner.

The housing market has been mentioned and it played a crucial role in the development of the economy. Numerous Opposition spokespersons, economists and other commentators have said the Government is placing too much emphasis on moneys derived from an artificially inflated housing market. We had continuous rows in this Chamber about stamp duty reform and the Government did its famous U-turn in the run-up to the last general election. If action had been taken sooner and more heed had been paid to advance warnings, we might not have seen the significant downturn which is currently under way in that sector.

This year, it is expected that housing units will be down by 50,000 from over 90,000 a couple of years ago. Many people, including myself, would say that over 90,000 units was an artificially high figure at the time. However, the Government did nothing to try to ease the blow that such a significant reduction will have for people employed in the construction sector and, more crucially, for the revenues from construction upon which we are so dependent to keep our public services afloat. Revenue from housing output in 2006 was €23 billion. That figure will fall to €18 billion by this year, a 22% decrease, which significantly affects tax revenue. As Senator Liam Twomey pointed out, there has been a significant reduction in all Exchequer revenue in the first quarter of this year, not just in VAT and indirect taxation but in income tax too. This will have obvious detrimental effects if it is allowed to continue and something significant will have to be done. Senator Liam Twomey referred to the public finances and the shortfall in tax receipts. We have seen a reduction in tax receipts of 5.9% in April.

I have not yet mentioned the issues regarding the cost of living and inflation. There has been a small reduction in inflation this month and the annual rate is now 4.3%. However, so many of the services that the Government is responsible for providing are those that most influence the inflation rate. The factors influencing inflation for which the Government is not responsible are often those driving inflation down.

The average European figure for health inflation is just more than 20%; in Ireland it is 60% at present which represents a difference of 40% between our rate and the rest of the European Union. There are similar figures for housing, water, energy and education. These are all sectors for which the Government has direct responsibility. I urge the new Minister of State, Deputy Martin Mansergh, to ensure the Government does something to address this. It is easy for the Government to blame economic factors which are outside its control, but there are measures the Government can take which it has not heretofore. There has not been a need for these measures heretofore because there has been sufficient money. That abundance will not continue in the coming years and this is a time for a renewed stringency in economic policy.