John Gerard Hanafin (Fianna Fail)

In supporting the Finance Bill, I am conscious that this was probably the most difficult climate, in terms of instability, a Minister for Finance has found himself in when framing a budget since the foundation of the State. Certainly the 1930s were more difficult but the uncertainty of the current situation is totally outside our country's control.

The price of property in Ireland was too high, but prior to recent external events there is no doubt the property market was heading for a soft landing. With the economy powering along as it was, against all the odds, we would have got through the slump quite rapidly. However, the failure internationally in national regulation of the banks and what were eventually found to be illegal practices, which nearly brought down the financial system, created a thunderstorm in the financial world. A total of $1 trillion in sub-prime loans were created in America, repackaged and re-sold. The finance from the repackaged and re-sold mortgages was used to sell more sub-prime mortgages. The name "sub-prime mortgages" is a misnomer as they were not prudent lending. In fact, what happened will probably go down in history as one of the great scandals, like the South Sea Bubble or the tulip crisis in the 1600s in Amsterdam.

There is no doubt we are now faced with one of the biggest bubbles in financial history. The financial mis-selling brought down banks and almost brought down governments. The Minister found himself in the most extraordinary circumstances. Yet he balanced the budget in many difficult ways. He ensured there was sufficient funding in the economy so the construction industry could continue. Money is being spent to assist our competitiveness, whether that is in roads, railways or other infrastructure. Most importantly, the Minister looked after the less well off. I commend him on that.

He also examined the opportunities for the future and provided incentives for business. He got rid of some of the abuses in the system, such as where exceptionally wealthy people acted in their own and not the national interest by staying abroad so they would not have to pay tax on vast amounts of money earned in this country. The Minister closed that loophole. It was fortunate when the financial tsunami struck that this country had low taxation, a reserve fund and the lowest debt of any major economy in western Europe. In other words, despite what has been said, the economy was exceptionally well managed. We are in a good position to deal with the crisis as it unfolds.

In the future it might be necessary to consider pay freezes rather than pay increases. A group I wish to particularly commend this morning is the group of workers in Dublin Airport, and Jack O'Connor and SIPTU, who are well known for protecting the rights of the worker. They accepted, on behalf of the workers, a pay cut of 10% to preserve their jobs. That is a practical move in the current climate. It does not mean the unions are rowing back or retrenching in the advance in workers' rights and terms and conditions of employment, but that there is a practical application whereby it is better to have a job with 10% less pay than no job at all in the current climate. This is an issue we should examine.

I urge the Minister to give serious consideration to workers' co-operatives. If a business is pulling out of Ireland because it can secure a lower cost base in Morocco, why not establish a workers' co-operative in that business? Let us face facts. This State was founded by men who had no experience of running a state. Did the Cosgrave and de Valera Administrations not do a fine job? We have made much progress since the 1920s. If any group has proven there is no merit in the concept that only certain people are capable of managing, it is Lehman Brothers and their belief that they were masters of the universe. They nearly destroyed the financial universe.

There is hope for the future. There are low oil prices — a barrel of oil was $36 this morning — and low interest rates. In fact, interest rates are almost nil. We also have low inflation. Best of all, we have low expectations, which means we can get on with starting to rebuild. The Government started that in Dublin Castle yesterday in announcing the incentives for research and development and investing again in the future of Ireland. There are wonderful opportunities at present in nanotechnology and biotechnology. In the depths of the depression in the 1930s, certain businesses powered ahead, such as the automotive and electronics industries. They were the new industries at the time. The new industries today will derive from adult stem cells. The debate on that issue has been well won because everybody knows that in 30 years there has not been one clinical application of embryonic stem cells. The application simply does not work. However, there are currently 70 to 80 applications for adult stem cells. We have an opportunity to make this country an ethical centre for development in the world. I hope we grasp that opportunity.

The challenges faced in the budget were well met. It is unfortunate that our colleagues in the North do not have the opportunity to merge the tax rates. At present people are streaming into the North to buy goods and services. It is difficult for people to seek an increase in public services if they are spending their money where the VAT and other revenue go to a different jurisdiction. This is an ideal opportunity to examine harmonising VAT rates and excise duties with the North. As an island nation it is difficult for somebody to bring petrol in from Scotland or the UK without being noticed but it is easy to move it across the Border. The abuse must be tackled. There are good reasons for examining harmonising the tax rates.

The economic situation is fluid. We will experience more shocks that are not of our making. In fairness, however, no bank in this country has been lost. Consider the situation in America where AIG, Freddie Mac, Fannie Mae, Lehman Brothers, Bear Sterns and so forth are gone. Northern Rock, Alliance and Leicester, HBOS, Lloyds and other banks in the UK have had to change their ways of operating. The Minister, by taking strong and immediate action, ensured that our economy was seen as solid and stable. It will be ready for the upturn.

I commend the Minister on the quick management of the pork crisis, which was vital for this important industry. If we sell computers worth €1 billion, only €400 million or €500 million stays in the country whereas the full value of €1 billion worth of meat products sold stays in the country, thus creating more jobs. In addition, software, research and development and royalties do not flow abroad. The handling of the crisis ensured Ireland will again be regarded as a guarantor of good quality, clean and green foodstuffs. This is essential for the economy.

I am conscious of the difficulties caused by the current value of sterling. We have, in our Central Bank, the means of ensuring that the board of the European Central Bank, at its meetings in Frankfurt, learns of the difficulties facing Ireland arising from our strong trading relationship with the United Kingdom and United States. I am certain the Minister will ensure our voice is heard when the ECB board next meets and the ECB rate will decrease further. In light of the stimulus packages announced in Europe, the United States and the Far East, and the low rates of inflation and interest, is it not reasonable to believe that we will come through the current crisis?

The Fianna Fáil Party has been served well by one of its key priorities. The depression caused by the Wall Street crash did not reach Europe until 1932, the same year as the party formed a Government. It remained in government for 16 years, which included the height of the depression, because it looked after everybody. In this crisis, I commend the Minister on ensuring the less well-off are looked after and ask him to continue with the traditional Fianna Fáil policy of looking after the less well-off, irrespective of what price, whether pay freezes, pay cuts or higher taxes, the rest of us have to pay in the future. As he correctly noted, however, removing a large amount of money from the economy creates further difficulty. I ask the Minister to continue his current approach of looking after the less well-off so that we emerge from this crisis stronger than ever and come through the gates like a lion.