Paschal Donohoe (Fine Gael)

My colleagues have commented well and forcefully on the impressions that will be created by this budget. Two points are most apparent and most upsetting to the families and those who will be paying these new taxes and dealing with the new economic reality we all face. The first is the imposition of an income levy that does not discriminate or differentiate between someone earning €20,000 or €30,000 a year and someone earning €95,000 a year. The second is the withdrawal of medical cards for those over 70 years of age. The granting of those cards was a clear symbol of the existence of universal benefits in the country. Our movement away from it, regardless of the economic circumstances we are facing, will cause great worry and upset for many families.

However, I wish to discuss the Government's objective, which it has stated many times, to bring order to the public finances. I wish to examine how it claims it will do that. Even a cursory examination of the assumptions the Government has outlined regarding how the budget will perform shows it is culpable of the most profound economic negligence that puts everything it has done up to this point into the shade. When this House debated the budget, we said that the assumptions on which it was based were flawed. We talked about the number of house builds on which last year's budget was predicated and we pointed out that no economist or anybody with a real understanding of how the economy is performing expected those houses to be built, which is what happened. That budget was built upon flawed assumptions that nobody believed would happen. Even if we had not encountered what are, I accept, exceptional global circumstances the mere development of the kind of economy we were witnessing last year would have meant that the budgetary assumptions of last year would never happen.

We can see exactly the same thing happening now. Government Members talk about social solidarity and the need for everybody to make sacrifices. They claim to have a plan and if it is to work they need everybody to undergo hardship and make sacrifices now. However, there are two assumptions in all this that are very likely to undercut everything they talk about. The first assumption the Government made is that the recession will end in 2009. It believes that unemployment will peak next year at approximately 7% to 8%. It then believes that from 2010 to 2011 the average rate of national income growth will be between 3% and 3.5%. I challenge the Government to produce a group or even a single credible economist who will make that forecast and believe it will happen. The truth is that any organisation or single economist trying to predict the future can only envisage an uncertain global economy and can only expect that the national income of countries like ours will be squeezed.

I am at a loss to understand why the Government believes that our national income will rebound from where it is now to growing next year and by 3% for the subsequent years. This is storing up even greater difficulties in the years ahead. The Government is hoping that the current global economic circumstances will rebound and that rebounding will save it hard choices. That was the assumption it made last year and it has not happened. In the plan to restore so-called order to the public finances it claims this will happen by 2011. By 2011 on its own figures there will be a €3 billion gap between where it expects the deficit to be and the deficit required to be delivered under Stability and Growth Pact. Some €3 billion needs to be raised through either raising taxes or cutting services, for which we have no plan.

My other colleagues have made very forceful points about the impact the budget will have on families here and now. They are pressing problems and already coming home to roost. The entire budget relies on a set of economic circumstances that are so optimistic that even if the economy gets back to normal growth next year, which is unfortunately unlikely, those assumptions will not be met. It means that even the kinds of sacrifices, solidarity and suffering the Minister of State suggests people need to show now in order to enjoy a return to a good economy at some point in the future will not make that happen. Given the Government's track record of making rosy economic assumptions, those assumptions not being met and it blaming somebody else for their failure to be met, I fear we will see the same happen again in the future. We are witnessing the same kinds of rosy assumptions being made on the economy.

The Government must take responsibility for how the economy has been managed in the past ten years. The standard way to manage an economy that is going very well is not to allow it to overheat and to save money for a rainy day, provide tax cuts when needed and lower interest rates when needed. The big question the Government must answer alongside many others is why, given that we have reached the rainy day, is the war chest empty? After enjoying rates of economic growth of 6%, 7% and 8% year on year, why is it that the moment people turn to the Government seeking help it can give no help? That question must be answered. As we work through the difficult times ahead we need to look to the past and ask what we can learn from the lessons of the past. All I can see in this budget is the mistakes of the past being made again, being compounded and made on a worse scale.

Senator O'Malley rightly pointed out that Fine Gael had not been in government recently. Perhaps if we get into government at some point in the future — I am certain we will — we would have had the opportunity to learn the experiences the Government parties have. I am envious of any politician in any party that has the term of Government that Senator O'Malley's party has had. The lessons we need to learn are minor by comparison with the lessons the Government needs to learn in looking to the future, making responsible and prudent decisions and then having the honesty to communicate that to the people. That has not happened here.