Billy Kelleher (Cork North Central, Fianna Fail)

I welcome the contributions of Senators. I have only a short time to sum up on the discussion. The gross national product is estimated to contract by approximately 1% next year, unemployment is expected to average approximately 7.3% and inflation is expected to ease to 2.5%. I say this in the context of what we face next year and to explain why the budget was brought forward this year. It was to address these concerns and to get our fiscal policies in place to ensure we did not let the situation spiral out of control. Were we to have allowed the situation to have continued, we would have had an enormous hole in the national budget, the deficit would have been extraordinary and we would have been playing catch-up for longer.

We began to take prudent decisions in this regard some time ago. As early as last July when I came to this House, I spoke about the measures necessary in the context of paring back more than €400 million in this year's budget and of making savings next year of approximately €1 billion. We have now brought forward the budget, which is financially responsible and outlines a clear pattern for what we are trying to achieve. Let us be under no illusion that what we face in coming years in global economic terms with the downturn in the world economy, potential global recession, credit difficulties and lack of finance availability for companies means we are in a very difficult situation.

I wish to refer to some of the points made. A simplistic assertion and criticism is often made of the construction industry. The perception is that everyone in the construction industry is coining it. In excess of 14% of the labour force was actively employed in the construction industry in recent years, it was a vibrant part of our overall economy and provided long-term sustainable employment for many people, especially those in the crafts and labouring sectors. It is, therefore, facile to make the flippant, throwaway remark that the construction industry was a burden on society and the economy. It cheapens the debate we want to have.

There is no doubt we were overly reliant on the sector. It was estimated we would need approximately 55,000 housing units year on year. In 2007, the number of units built crept up to almost 90,000 units. We were, therefore, over-supplying the market. That said, the cheap credit available through the European Central Bank and the euro was also a major factor in escalating house prices. Affordability existed because people were earning good salaries and cheap credit was available. This was coupled with extraordinary prices paid for land in some cases. The lack of zoned land in critical areas was another factor.

These issues were outlined as far back as when I was a Member of this House from 1992 to 1997. The Bacon report and others pointed out the concerns at the time regarding increasing densities, availability of housing land, investment in infrastructure, etc. The difficulty was at the early stages then, but it increased rapidly owing to cheap credit following our involvement in the euro. This is something we never acknowledge, but it was a critical factor in escalating house prices. We are now in a situation where demand has dropped off, but this also has a global context.

The Government has made a decision and will bring forward legislation tomorrow with regard to the guarantee for the banks. It is important we send out a clear message to the banks. I will watch all banks to ensure they do not send out credit hounds to collect from small businesses struggling with overdrafts, etc. and that they look at the most productive sides of the economy and ensure credit is available to them. I will hound the banks until I know they are looking at the positive aspects of the economy where there are employment opportunities and to which they would make credit available, such as small businesses that may be suffering because of the credit squeeze, rather than looking at the balance sheets and bad debts in the context of inflated property prices and drawing on the current accounts of small businesses to ensure the books look good for the Financial Regulator.

I urge Senators to be conscious and sensitive to that and wherever they see the opportunity, to encourage the banks to listen. The situation has changed and there is a new relationship between the Oireachtas, the Government, the people and the banks. In my experience and judging from what has happened in previous global downturns and credit squeezes in other countries, the banks send out their credit hounds to small companies, pull the current account overdraft facilities and the companies fold. This happens because the banks want to get money in to ensure their books look good in the context of deflating property prices. I urge Senators to be aware of this whenever they have the opportunity to speak to banking people and during debates in the House.

I would like to go through each point made by Senators, but do not have time to deal with all the valuable contributions made. I agree with Senator Regan and others with regard to research and development, our competitiveness and attracting foreign direct investment. Every Government since the 1950s has acknowledged that corporation tax is a fundamental plank to attracting foreign direct investment into the country. For that reason, we have been very successful in that regard. Our low corporation tax, coupled with investment in education, access to third level, high quality graduates and recent infrastructural investment have brought foreign direct investment into the country. Senators should be under no illusion, however, that if we are not competitive in the context of our cost base, we will lose the foreign investors. I am concerned too much emphasis may be placed on the research and development side and we will lose sight of the fact that manufacturing is a fundamental plank to ensuring we have strong employment growth.

Over the next few years we should try to link the two factors. Not only should we send out positive messages internationally about us being available for research and development, having high end third and fourth level graduates and high quality engineers in the life sciences and other areas, we should also send out the message that we have a highly motivated skilled workforce. We must send out not only the message that we can do the research and development, but also the message that we are able to compete on the manufacturing side. We will never be able to sustain the growth and employment we need for our current demographics if we do not have a manufacturing base. We should not lose sight of this nor dismiss manufacturing as something that is no longer possible in this country. Manufacturing is a fundamental plank. One can have five or six high-end engineers designing a product, but one needs approximately 1,000 to manufacture the product for market. We should try to gel the two areas together and I am confident this can be done.

The issue of work-life balance was raised. It is important to have flexibility in the workplace, not just from the point of view of employers and large companies that may have peaks and troughs in production and demand, but also to ensure there is flexibility for employees so they are content in the workplace and they have the flexibility to deal with their families. Each year we have a work-life balance day, generally in February. We have also set up a panel of experts to advise companies on how to bring forward policies and procedures in the workplace that are family friendly. This is something that has benefited companies and on which there is greater emphasis. Issues such as pressure of travel at peak traffic times, child care costs etc. come into play as well. There are many reasons, therefore, work-life balance should be considered positively by companies and actively embraced. I urge them to take up that offer in the context of the availability of the expert panel, and to bring forward ideas and policies for improving work-life balance.

Community employment schemes are an important part of society. We must make sure we have a commitment that people in long-term unemployment do not descend into a black hole and become removed from society. They must be part of the community and a productive part of society. There are 2,500 places available on community employment schemes and they are fundamental in ensuring that people can remain in the labour market and can progress. They are an active labour market progression mechanism. We also must be conscious of the fact that some people who are currently in employment schemes may not progress to the active labour market and seek employment. We must have this debate. Are community employment schemes just active labour market mechanisms or are they also social employment schemes? We need to sit down and have that debate because these are fundamentally different concepts. Some people will continue to the full-time labour market while others never will.

We will listen intently to the views of Senators in the context of the budget. The debate on this is currently ongoing in the other House, and I know there also will be a debate in the Seanad. These are challenging times. We must ensure that tight budgetary policies are pursued and that we obtain value for money. In this way we as a Government and as a people — but as an Oireachtas as well — can ensure that Ireland remains a competitive nation. Senator Regan may be right in stating that from time to time we fluctuate, but we are still at the top end of the global competitiveness scale. We should not lose sight of that.

The social partners came together recently to discuss a national pay deal, which is being voted upon by the various stakeholders in partnership. Industrial harmony and peace is another important selling point that we have. We do not lose a large number of days or weeks to industrial disputes, as is happening in other countries. We should be conscious of that when we speak out nationally and internationally. As the Minister said yesterday, it is time to be patriotic. It is time to put the flag around ourselves and put our best foot forward in ensuring that Ireland goes through this turbulent time with everybody's assistance.