Marc MacSharry (Fianna Fail)

I join other Senators in welcoming the Minister and I am delighted to have an opportunity to speak on the important issue of our changed economic circumstances. Senator Twomey will appreciate that, as is customary, I have to rebut his arguments. It is a shame that he did not start with tangible suggestions but he always seems to run out of time before completing his moaning. He suggested that our current woes are entirely the Government's fault.

There is no question that the nation has benefited tremendously over the past decade from high growth rates. All sections of society have realised a level of prosperity as a result of the implementation of appropriate policies by consecutive Administrations over many years. I give credit to the Opposition in that Alan Dukes agreed to the Tallaght strategy once he realised that the then Fianna Fáil Government's policies were correct. We all know what Fine Gael did to him for pursuing that strategy, however.

Mortgage lending has fallen to its lowest level since data began to be collected and is 70% below the peak recorded in November 2006. That is in the United Kingdom. Approximately 42,000 mortgages have been approved, which is 27% less on the month and 60% on the year. UBS confirmed last week that it faced further heavy write-downs on exposure to troubled US credits meaning earnings for the second quarter would be "at or slightly below break-even". It is a remarkable achievement in government for Fianna Fáil that the policies it implemented in recent years have had such an effect on the United States and the United Kingdom.

In terms of the changed economic situation, I am sure Senator Twomey is well aware that Fine Gael did not predict that this would happen. The Fine Gael manifesto of last June indicated a 4.5% growth in the year ahead. As we all know, that did not materialise. I do not blame Fine Gael for not knowing this because nobody knew circumstances would change so much throughout that period. Since then oil and food prices have risen exponentially leading to high inflation and, in turn, to high interest rates. The credit crunch was unprecedented and we are in uncertain times in terms of the international banking sector. To complete the perfect storm conditions, exchange rate difficulties, in terms of the strength of the euro against sterling and the US dollar, have resulted in Irish and eurozone exports being less competitive than those around the world. None of this, any independent or objective commentator will admit, has anything to do with the policies that can be pursued by this Government.

In the main Ireland has benefited from its involvement in the eurozone and single currency. However, it is arguable that our signing up to a single currency at a time of unprecedented economic growth — on average 5% per year — while interest rates in the eurozone stood at 2%, may have led to a frenzy or increased activity on the part of developers or people yearning to capitalise on Ireland's new found prosperity. Money was cheap and growth was high and this arguably contributed to the growth of what some choose to call "frenzied property speculation".

The reality is that Ireland constitutes less than 1% of the eurozone economy and as such what is good for Europe is not necessarily at all times good for us. Had we been responsible for setting our own interest rates, we might have set them a little higher. The reality is, in terms of oil, food, the credit crunch and exchange rates, that nobody in the world perceived the development of the current situation. Fine Gael, which predicted a 4.5% growth, did not foresee it.

A famous person once said that when circumstances change we change our minds. That is precisely what we have done. I would like now to comment on the Government's announcement yesterday of sensible proposals, incorporating a few different measures, to address the situation. The deferral of ministerial pay rises is a prudent move, one we all support. There is no indication this issue will ever arise again. We are told only that the matter will be reviewed in 2010. The reduction in the payroll bill of 3% across the board is an admirable proposal. However, I suggest that the Minister, as far as is practicable, should be directly involved in this to ensure that front line services are maintained. It is timely that advertising and consultancy services are reviewed to increase efficiencies. There is no question but that there exists an over-reliance on the advice of consultants when much of that expertise is available in-house. There are savings to be made in this area.

The re-organisation of the various agencies or quangos, as some people prefer to call them, is also an admirable proposal. The Minister indicated reviews are taking place and that he will not at this time name the agencies involved. However, an announcement will be made in due course. The decentralisation programme has paused but has not been cancelled. Decentralisation has been successful in Sligo with some 900 people currently working and living in the area. I have no doubt Government will return to this programme when it is prudent to do so.