Jim Walsh (Fianna Fail)

I congratulate the Minister of State, Deputy Billy Kelleher, on his reappointment. I join with other Members who commended Deputy Mansergh, a former Member of this House, for his appointment as a Minister of State.

I support the amendment to the motion. The nature of the Fine Gael motion is negative and was moved in a negative tone. I accept that Senator Donohoe took a somewhat different approach. I always listen to his contributions because they are well thought out and well argued. I would even concur with some of the points he made. He pinpointed some issues which must be attended to.

By any standards, Ireland's recent economic progress has been phenomenal. It is no coincidence that China and many other countries in the former eastern bloc, have applied the same economic template which made Ireland so successful. As one who grew up in the bad old days in the 1950s and 1960s, I recall the only travelling Irish people did was to get the boat to England to get work. I was at the airport recently at 5.30 a.m. There were queues which would take an hour to clear at the check-in desks, which is a remarkable transformation and indicative of the progress we have made.

Some were inclined to dismiss international forces as irrelevant but they definitely play a part. We are probably more exposed to these forces than other EU economies. We have a very open economic template here, which has been to our betterment, but it means that the winds of change have an effect. One of those international influences, the sub-prime crisis in the United States, had nothing to do with us but has rippled throughout the global banking system and has led to a huge increase in the cost of funds. Worse still, it has led to a situation where the liquidity of banks and therefore the funding available for investors has been seriously affected. We cannot ignore this. It is extraordinary that interest rates have increased by quite a bit over the past 12 months whereas the ECB rate has been kept level at 4%. Banking is certainly an issue.

The currency position is another factor, in particular the strength of the euro vis-À-vis the dollar, and to some extent sterling, which has added to the challenges we face. At a meeting two or three years ago I remember raising a question with an economist from one of the banking institutions who was addressing us as to how we would cope if the cost of oil went to $100 a barrel. We were told he did not expect that to happen but that should it happen it would have many adverse economic effects. Many people more expert than I in that area are now saying we could be looking at $200 a barrel in a couple of years, which will certainly have an impact.

However, there are domestic matters which are under our control. The manner in which we accept the challenge in that regard will determine how we meet the projections and expectations as set out in the ESRI report and other reports. I would point to three issues. One is inflation, which has been raised by other speakers. Undoubtedly, we must do what we can to bring inflation back under control because it is at too high a level — we are double the EU rate, which is not sustainable. For the Administration, it is very important that all fiscal policies are feeding into controlling and reducing that threat to our level of competitiveness.

I listened with interest to what Senator Alan Kelly had to say and I concur fully with him. The price of food in many of our stores——