Paul Bradford (Fine Gael)

I welcome the opportunity to speak in this important debate even though it must be conceded that the developments in the past 24 hours have shifted the debate from a broader economic statement to a preview of the legislation the Government is due to bring forward in the next hour or two and the impact of that legislation. I presume we will have an opportunity in the coming hours to speak on that matter and, therefore, I will try to confine my remarks, within reason, to the economic debate. This is a debate we urgently need and it would have been helpful if we could have had it a number of weeks ago.

While I am pleased the Government decided to bring forward the budget by some weeks it may be just a political signal, although I hope it becomes a strong economic signal. We must concede that nobody should be surprised by the stark economic figures and facts that face us currently. It was flagged in advance by many commentators — some economic, some political — and notwithstanding what Government sources would now like to pretend, it is far removed from being an entirely international crisis.

It is approximately 18 months since we commenced in full the debate about the 2007 general election campaign. There was a mantra coming from Government sources, particularly Fianna Fáil sources, at that time that all economic wealth and job creation stemmed from Fianna Fáil, that it was not an international boom but a domestic one brought about, maintained and retained by the economic policies pursued by Fianna Fáil-led Governments for the past ten or 15 years. The idea was presented that the economy would not be in safe hands if the Opposition took hold of the chains of Government and that Fianna Fáil alone could somehow lead the country forward. Now, however, the economic indicators have changed dramatically and there has been a sharp increase in unemployment, with between 40,000 and 50,000 people losing their jobs during the past seven to eight months. We are now being informed that the origins of the current crisis are international and in no way domestic.

We must face facts and consider what we can do to reverse the trend and ensure a return to real growth. The end of the property boom was flagged in advance by many people. However, the Government chose to ignore the signals and the public — of which we are all members — took the soft option. From a political perspective, no one decided to cry wolf. As a result, we find ourselves in the current situation.

With regard to how we should move forward, competitiveness and the control of inflation must be placed at the top of the agenda and genuine public service reform — not the type of fire brigade action proposed by certain commentators — must be considered. Senator Mary White made a valid point in respect of wage restraint. No one favours such restraint. Members are public servants and, like everyone else, we want our salaries to increase. However, we must ask whether we can afford to pay such increases at present. If it is a case of job creation and employment retention versus wage increases, we must err very much on the side of wage restraint.

I appreciate that in moving forward with the social partnership process that has operated for the past 20 years, there was pressure on the Government and employers to strike a deal. I am concerned that some aspects of that deal may be unaffordable and that the so-called benefits relating to it might be offset by job losses. Retaining existing employment and creating new jobs must be placed at the top of the agenda. In the context of job creation, Ireland is obliged to compete in the wider international market. I refer here not only to our EU partners but also to the emerging countries of eastern Europe, nations in the Middle East and far eastern states such as China and India. We must maintain a competitive economy and ensure we tread very carefully regarding wage costs, charges, levies, etc. I am concerned that what passes for a partnership deal may not be in the best interests of the country at present.

Previous speakers referred to the end of the property boom. Senator Healy Eames made a valid point to the effect that introducing new measures to boost the housing market may result in a continuation of what happened for far too long, namely, house price increases. She also stated that perhaps the best thing we might do, especially in respect of those trying to get on to the property ladder, might be not to intervene further in the property market. Prices are dropping and people who took out mortgages between three to five years ago are concerned and disappointed. For new entrants trying to get on to the property ladder, however, the fall in house prices is a welcome development. We must be cautious with regard to intervention.

The Minister for Finance will deliver his Budget Statement in two weeks' time and I hope he will place competitiveness and the control of inflation at the top of the agenda. During the past two to three months, when it was finally recognised that the Government was facing serious economic difficulties and that major shortfalls were occurring, many of the Minister of State's colleagues indicated that savings would be made across Departments. I hope such savings can be made from an administrative perspective. If these savings can now be made so readily and easily, it is disappointing that no one considered making them one, two or three years ago. Everyone, particularly the Government, became carried away with the idea that the boom years would continue.

Spending across Departments increased dramatically in recent years. There is no doubt that the value of money which should have been achieved was not forthcoming. If the current downturn in the economy forces us to face reality, we may perhaps benefit from it in the long term. If it puts competitiveness and value for taxpayers' money at the top of the agenda, that would be a welcome development.

Notwithstanding the political rumours doing the rounds, I hope the Minister for Finance will not introduce taxation increases. Evidence from the 1970s and 1980s shows that such increases do not help to create jobs or produce a winning economic formula. Taxation levels must remain as they stand or, if possible, they should be reduced. We should also reduce levies and charges to make industry competitive and allow taxpayers to spend their money.

We will be rehearsing this debate in two weeks' time in the aftermath of the budget. I look forward to the debate that will take place later this evening, at which point we will gain a greater understanding of what the Government's proposals, announced early this morning, will mean for taxpayers and the financial institutions. During the past five or six years, particularly when one considers the amount of money available to it, the Government lost the plot in economic terms. We are now suffering the consequences of that.