Phil Prendergast (Labour)

I welcome the Minister of State, Deputy Mansergh, to the Chamber. It is nice to have someone from home here.

I use this opportunity to comment on the economic situation in which we find ourselves. I do not want to be accused of talking down the economy. There is an almost subliminally pervasive air of negativity towards people who wish to deal with the reality of this economic situation but, such is life.

A fact we must deal with is that the housing market is dead and no longer the economic driver it was. Many of us feel the fall in the housing market has lead to a downward economic spiral and has infected many other sectors of the economy. There must be analysis of how this was allowed to happen. Growth levels in the domestic housing market over the past eight to ten years caused us to have a very positive outlook but many of the elements they fostered are now having a long-term negative impact on the economy they were supposed to advance. While the housing market boomed we did not contribute to exports and it was all quite internal. We did not feel we had to compete with international competition in many sectors as migration to the construction industry and the consequent production of housing estates created a protective cocoon of sorts. We are now out of the cocoon and are struggling to stand on our feet.

There was great dependence on construction and it is synonymous with the boom times. It is said that for every 10,000 houses that will not be built we are knocking 1% off our growth rate and it is estimated that approximately 35,000 houses will be built this year. This is putting thousands of people out of work, which is a serious down side to all of this. I feel sorry for those who have lost jobs or who hold their breath in dread of an increase in interest rates. This is impacting on people's approach to what they must cut back on. I am not talking about relatively well-off people who may be forced not to send a child to summer camp or not to take a second holiday. I am talking about people struggling with basics, including children's school books, uniforms for fast-growing children and so on.

Thousands of tradesmen are unemployed and we need reskilling programmes to bring them back into the workforce. There must be a proactive approach to this as these people should not suffer due to the mismanagement of the housing sector. Construction workers, through their wages, should not struggle either as sales wane. I spoke earlier of young people with 100% mortgages and 105% mortgages who are now experiencing negative equity but it is people who made tens of millions of euro who should suffer. It should not be necessary to make this point. It is unfortunate how things have gone.

The Government has lowered the expected growth rate of the economy to 0.5%. It began the year at 3% but it fell to 2.3%, then 1.5% and now it is 0.5%. There is no real clarity on what is going on in this regard. Revenue from tax receipts is falling and the worrying fact is that more than a drop in stamp duty receipts is contributing to this — corporation tax, capital gains tax and VAT are all down. Consumer confidence is very low and we have the highest monthly increases in the live register on record. Some 54,000 people lost their jobs last year and this trend continues — every day we hear of people losing jobs. This can occur through a dribble of 30 people here and 30 people there but it affects 30 families and will have a wider effect on a community, especially small, rural communities. Investors in pensions have made significant losses on the Irish stock market. Between 1995 and 2000 export volumes grew by 20% but this figure is now around 5% and we have slipped 17 places on the competitiveness indicator in the past five or six years. The strength of the euro compared to other currencies is having a dramatic impact on companies' export capabilities and house repossessions are up 350%. These are not great statistics and I feel very sorry for the people feeling the effects of them.

This nation has one of the highest levels of personal debt in Europe and external factors, outside our control, like the oil crisis and the weak US economy have had a huge impact in contributing to the bad news. Add this to the news about the weather today and the picture is not good. We have seen probably the worst ever deterioration in Irish public finances and if the Government needs to save €500 million this year I do not think yesterday's proposals will help in a meaningful way. Nothing in yesterday's announcement will create jobs. The Government should not be thanked for abolishing certain quangos because they were created by the Government in the first place and taxpayers' money was wasted in many cases. I do not agree with cutting aid to poor people in the Third World because much positive work was done with that money. It is small change for Ireland but for people in the Third World it is hugely significant.

Nothing that has been proposed will allow for an increase in training for those seeking to reskill or get back to work. The difficulties facing the HSE alone deserve almost a full day of debate. There are many levels of bureaucracy in that organisation and many strands that operate under its umbrella. Every time a very genuine person comes before us regarding services that are or are not provided by the HSE or pointing out shortfalls in the system I wish for a magic wand. However, sometimes a magic wand is not needed and a person need only make a decision. Not giving Ministers the proposed pay rise was the least the Government could do.

We must be innovative to turn this economy around and I ask that the Minister and the Taoiseach use their abilities to do something positive. I await the outcome of this process with interest.