Eugene Regan (Fine Gael)

It has occurred under this regime. It was not the responsibility of the Minister, Deputy Lenihan, but of his predecessor, the current Taoiseach, Deputy Brian Cowen, who presided over the deterioration in the public finances despite the warnings on the unsustainable position of the public finances by the IMF, the OECD and the European Commission. All this advice went unheeded because there were general elections to be won at any price. We are paying the price for that now.

The Minister referred to the demonisation of the public service, which is a distraction from the key issue. People in the public service bring to the attention of the Opposition and other public representatives the waste that exists in different services. That is how the waste in FÁS came to light. It required constant probing from the Opposition and it is one example, of many, where the Minister for Finance and his predecessors in Government did not have their eyes on the ball and did not have control of public finances. What is pitiful is that much of this is due to waste, inefficiency and expenditure for which there was inadequate financial control. The Minister highlights that public pay accounts for €18 billion, 32%, of total current expenditure. It has risen by 39% from 2004. The Minister points out that, over that period, the number employed in the public service increased by 31,500 or 11%. Here is an admission by the Minister of the contribution by this Government to the problems we are in. Where is the justification in such an increase in numbers at a time when the Government was warned that it could not afford this type of increase in public expenditure?

In terms of a stimulus for the economy, Richard Bruton, the Fine Gael spokesperson on finance, proposed a 1% reduction in VAT, designed to stimulate and arrest the decline in consumer demand. That proposal was laughed out of court and it got critical reviews in the media, but the merit of that proposal is now being seen because, rather than reduce the VAT rate the Government increased it by 0.5%. We now see a gulf opening up between VAT rates in the United Kingdom and Northern Ireland following the decisions of the Chancellor of the Exchequer. The chickens have come home to roost. People are travelling to the North in droves to get value for money for their purchases, but they are being blamed for doing that and accused of being unpatriotic when the Government could have prevented it.

In opposition we tried to be as helpful as possible. Most of the proposals Deputy Richard Bruton came up with earlier this year were adopted by the Minister. The Minister is edging his way towards acceptance of most of the proposals made in the autumn, but the problem is that the Government has not presented a clear plan on how we will restore balance to the public finances, stimulate the economy and avoid a depression as distinct from the current deepening recession.

The cost of that inaction is that the level of borrowing that is now inevitable to cover the huge deficit that is arising is increasing due to the Government's inaction and it is persisting with a pay deal it has an inability to pay in circumstances where it is incapable of taking decisions that are seen by the international markets as holding out the potential for good management of this economy. Where that good management of the economy is not evident, international markets become very concerned. Leadership is absent and we will pay a price for it.