John Paul Phelan (Fine Gael)

I welcome the Minister of State, Deputy Mansergh. I also welcome the opportunity to contribute to the debate on the economy.

I wish to make a number of points in respect of this debate. I did not hear the start of the debate but heard a number of the contributions. It is interesting that so few from the Government side contributed to this debate and to yesterday's debate on housing. That tells a tale in itself about the Government's thinking on this issue or the realisation that it has handled matters badly in recent years.

Everybody on this side of the House will admit that there are external forces at play in the economy. It is an small open economy which is very vulnerable to what goes on in other parts of the world. However, the Government can no longer deny that it has played a significant part in creating this situation.

I agree with the sentiments expressed by Senator Mary White. She has been a defender of small businesses when we have had debates on financial issues. As Senator Alex White pointed out, she saw there was over-dependency on the housing market and on construction in general. Why did the Taoiseach, who was the Minister for Finance for several years, and other Ministers fail to recognise that over-dependency and not to try to address it before it was too late? Very little was done.

Senator Mary White mentioned development charges and their negative impact on small businesses. That tax was introduced by Fianna Fáil and the Progressive Democrats in government. Development contributions existed up to several years ago but they were only a small amount. However, because of the continuous under funding of local government, they have become a very large and significant cost on small businesses and on anyone who wishes to undertake any development. It is ironic being lectured by the Government side on that point.

During my four years as finance spokesperson in this House I have continuously pointed out our reckless dependence on construction but I was virtually laughed out of the Chamber each time by the Taoiseach, when he was Minister for Finance, and by Tom Parlon, who was a Minister of State in the Department of Finance. They are both in very different positions now.

It is also clear that in recent years, the Taoiseach, in his role as Minister for Finance, embarked on a series of reckless inflationary budgets. All eyes were on the political cycle rather than on the economic one and the chickens are coming home to roost. We have seen huge increases in current expenditure based on tax revenue from construction, which could not continue. There was no plan B or realisation that the day might come when we would not build 90,000 units per year. We all knew it was unsustainable into the future but there was no realisation on the part of Government that when construction went down, money would have to be found elsewhere.

Yesterday's launch was a joke. The Minister for Finance and the Taoiseach outlined €440 million in cuts but they gave no details on where those cuts would be made. Even the figures they gave in respect of a 3% reduction in payroll costs in all Departments except the Departments of Education and Science and Health and Children do not make sense. The sums do not add up. We need clear indications from the Minister for Finance rather than hand-wringing and him saying "Poor me. I am the Minister for Finance when the country faces recession". He needs to face up to his responsibilities.

As Senator Mary White said, we are an exporting nation. In recent years we have seen a huge deterioration in our balance of payments and in our competitiveness. We were competitive for many years when the economy was growing. The Taoiseach and the Minister for Finance should insist on a vigorous programme of public sector reform and of improving our competitiveness into the future. That is the key to the development of the economy. It is not the Opposition talking down the economic situation.

We must be realistic and put forward real proposals. That is why I am delighted Deputy Richard Bruton has outlined detailed proposals in the finance area. I hope the Government takes up some of the good ideas he has suggested.