John Gerard Hanafin (Fianna Fail)

Economists predicted many more recessions than have materialised. There were three recessions in the last decade. That period witnessed the crash following the tragedy of 11 September 2001, the bursting of the dot com bubble and the results from criminal misselling of mortgages, called sub-prime loans, in the amount of €1 trillion in the USA, which put the whole financial system in jeopardy and created a debt bubble the effects of which have reverberated throughout the world. We should measure how we are coping against how others are coping and consider how we positioned ourselves. We have saved €19 billion in national reserves. There is a very low tax base and national debt in Ireland. No one can say the Government did not act prudently during the good times. There is no doubt in the good times people forget the bad times and in the bad times people forget the good times. We are in a recession, but the question is how long will that recession last.

There is a housing decline in Ireland. Output is falling in manufacturing, unemployment is rising and the budget deficit is increasing. However, in the past 12 years, the Government has produced 11 budget surpluses. I have no difficulty taking a Keynesian, pragmatic or practical approach in dealing with the problems and doing what we must do. I do not care if this involves the application of "Reganomics" or Roosevelt new deal policies as long as it helps the economy.

We should consider the positive aspects. The price of oil fell to €42 per barrel today, but the effects are not immediately translated into the economy. It is only last month that the first decrease of 0.5% in interest rates worked its way through to the mortgage market. There was a second decrease and a third decrease of 0.75% yesterday. Inflation is low, which is a positive aspect, and people hold reasonable expectations. We have a good basis on which to start to rebuild, but we should do this with new criteria.

In the 1930s, the then president of the USA, Mr. Franklin D. Roosevelt, was correct to say that he would abandon the merchant banks if he could, but the memory of financial history is short. They created the debt bubble in 1929 and we are now dealing with the repercussions of a debt bubble. The financial services sector needs to be regulated. We have seen many examples of irresponsibility. Sub-prime lending is not the only instance; there were the cases involving Mr. John Rusnak, Mr. Nick Leeson and the case of Société Générale. Billions of euro belonging to the banks were lost. In the case of Société Générale, the amount was €55 billion, but no one there knew about it. The accounting procedure was such that the confirmation of the purchases was the responsibility of the purchaser. It was incredible that this was allowed to happen. People who were in debt and were unable to pay were offered more loans at a higher rate and were given as much as they wished for, with no income, no job and no assets. We are paying the price for that.

The biggest difficulty we face, looking to the future and the good times again, is fear. People are fearful because of what we hear, the uncertainty that exists and the reality of the shakiness of banks. The Government has performed extraordinarily well in providing security to the banks. The Bank of Ireland recently proceeded with a €2 billion bond issue, for which it received an AAA rating because of the Government guarantee, and it was considerably over-subscribed, . No Irish banks collapsed or were taken over. The Government has done a good job.

I accept the proposition that we must have an export-led recovery. This will be the source of the recovery. As the Irish economy is open, we are undoubtedly dependent on trading partners. However, when reducing oil prices and interest rates manifest themselves and people begin to see the end of the recession, there will be a turn-around. When that occurs we should place ourselves in a position to grow and to be flexible.

We should seriously consider introducing workers' co-operatives. The notion that only a few people have the capability to undertake certain tasks has been long dispelled. If a person is in a job, he or she is more than capable of doing it better than another person. Workers' co-operatives can make very good and positive contributions. For example, if a company moved to Morocco from its original location because of cheaper labour costs, I see no reason not to support a workers' co-operative in its place. While the company which moved will make mistakes related to initial production, the existing workers' co-operative could improve production techniques. Germany has long been a high wage economy, but it is constantly improving its techniques and the way it does business and its companies are becoming increasingly specialised.

Let us consider the foundation of the State. It was founded by young men with no experience of national government. The Cosgraves and even de Valera had no full experience of government, yet they brought this country an extraordinarily long way. I wish to get away from the notion of masters of the universe. We saw what the masters of the universe did in Lehman Brothers and we are all paying the price for it.

I see very positive possibilities with high-end manufacturing. There is a thesis that we are finished with manufacturing. We are no longer competitive at a certain level of manufacturing but we could specialise in high-end manufacturing. I strongly recommend to the Minister that we look to ethical developments. I am thinking of biotechnology, nanotechnology, the new, growth areas. In the 1930s electronics and automotive were major growth areas and there will be new growth areas if we can take the opportunity. The world economy will grow this year. When people can see that fear and uncertainty prevent them from making decisions they would normally take without undue worry, and when we see this will end and that the low oil price, inflation and interest rates will filter through, then this economy will again be in a proper position.

I urge the Minister to take on board very seriously the opportunity for worker co-operatives. It is an ideal opportunity as we lose jobs to Third World countries that can manufacture cheaper, to allow our people to take up the cudgel and manufacture for themselves in their own businesses. High-end manufacturing and ethical development are areas for the future. We came through three recessions in this decade alone. I hope this is a very short, two-year recession and that we can power ahead and come out of the gate like a lion when this recession ends.