Marc MacSharry (Fianna Fail)

I welcome the Minister of State. I also welcome the opportunity to discuss the economy. I further welcome the frequency with which we are engaging in debates of this nature. We are seeking the knowledge and experience of eminent and qualified individuals such as Senator Ross who is an economist of some renown and a journalist and someone who has had a long career in business. It is important that we obtain a diverse range of opinions on this matter. Innovation and differences of opinion will be required if we are to discover optimum solutions to the challenges we face. It is vital that there be differences of opinion because otherwise we will merely engage in an exercise of public administration, of which there has been far too much. Innovation is what will be required as we face into the challenges that lie ahead.

The Government operates in real time and does not have the benefit of hindsight. No administration has ever enjoyed or ever will enjoy the latter. Senator Twomey referred to Frank McDonald's book. All I can say in reply is that if the points to which the Senator refers are contained in that book, they must be true. However, I am not sure that this offers much, either in the context of the debate or solving the problems we face. In recent months the Senator has been all too quick to carry out his post-match analysis of the past and how certain problems arose. He has done precious little in the context of indicating what might now be done.

I wish to analyse some of the suggestions made in recent times in order that people might know that Fine Gael does not have the benefit of 20-20 vision either. In its most recent election manifesto, it predicted that there would be a growth rate of 4% and, like everyone else, on that basis proposed expenditure in a wide variety of areas. Since the election, circumstances have changed and the Government has changed its mind. Fine Gael has also changed its mind. In fairness, Deputy Bruton has been reasonably consistent in seeking pay cuts. However, the leader of Fine Gael recently indicated that he was seeking a pay freeze. Last night Deputy Shatter appeared on television and informed us that in the past government had involved nothing other than failed predictions. Fine Gael claims to have a monopoly of predicting everything accurately but that is not, in fact, the case. Deputy Shatter is also seeking a pay freeze. Fine Gael is indicating that there should be no decreases in pay and that all the problems should be solved. However, it has not suggested any method, other than an increase in taxation, we might use to bring in the money required to allow us to solve our problems.

Senator Twomey also referred to the property market and, again, displayed 20-20 vision. I accept that certain individuals indicated that the property market was overcooked. The Minister of State and I concur on the contention that a stopped clock is right twice a day. There were those who said the market was being overcooked and that we should perhaps row back on urban and rural renewal schemes at a particular time. However, we did not have, for example, absolute control of our monitoring policy in respect of interest rates. During the period to which I refer interest rates in the eurozone were unprecedentedly low. Those rates focus on inflation, not the Irish economy. It is not, despite what Senator Twomey suggested, our responsibility to devalue the euro but that of the European Central Bank, ECB, of which the Central Bank and Financial Services Authority of Ireland, CBFSAI, is a small but intricate part. If the Governor of the CBFSAI, Mr. John Hurley, were to telephone Mr. Jean-Claude Trichet at the ECB to ask him to devalue the euro, I do not know if he would be as cognisant of this if we had absolute control. We do not have such control, particularly since this country is a member of the eurozone.

In addition to the low interest rates to which I refer, there were unprecedented high levels of growth. Everyone in the country, including Members of both Houses of the Oireachtas — some of whom may own second, third or fourth properties, have various investments in equities, commodities, etc. — got on the gravy train and stated it was time to invest and create a little additional wealth for themselves because money was cheap. One of the welcome developments as a result of the current doom and gloom is the realisation that cultural change is required. It must be acknowledged that individuals in every walk of life were involved in overcooking the economy in the areas of property, equities and commodities. However, it is ridiculous in the extreme and completely uninformed to suggest this was happening only in Ireland and nowhere else.

I do not have a background or possess a qualification in economics. However, I would like to believe I possess a modicum of common sense. In that context, it is fair to acknowledge that there have been property booms-busts in Spain and, to a lesser extent, the United Kingdom and the United States in recent years. Recently, the asset values of property, equities and commodities across the globe have been inflated. During the past 12 months they have decreased significantly. However, this phenomenon is not unique to Ireland; it is global in nature. No one knew this would happen. I accept, however, that certain individuals, based on particular criteria, predicted aspects of what came to pass. That is fine and they can claim credit for being correct on some of the issues some of the time. However, it is ridiculous to suggest someone was entirely correct in predicting what happened.

As the Minister of State correctly stated, our situation has changed to a substantial degree. There is a great deal less coming in than we had planned to invest. It is simple mathematics: if one has only three bananas, one cannot give one each to four people. If one has €40 coming in and outgoings of €54, one must make adjustments. The Government will make such adjustments.

I do not agree with Fine Gael's accusation that the Government is dithering in this matter. The social partnership process is envied by many countries which do not possess such a model. It was one of the largest contributory factors to the stability and relative success enjoyed in the late 1980s and early 1990s and the growth experienced in more recent times. It is the platform that will — in conjunction with the policies over which we have control such as those relating to the public finances, pay, pensions, public service numbers, etc. — allow us to extricate ourselves from the difficulties we face.

I wish the Government and the social partners well in their important work. If ever there was a time for Ireland to make a statement on its international standing and credibility, it is now. It is important that we make a statement of confidence and indicate that we are in control of our destiny to the greatest extent possible. There could be no more powerful message than the social partners and the Government emerging either from Government Buildings or Dublin Castle and stating a deal has been reached and indicating how the required €2 billion will be saved. I do not want to prejudice the outcome of the ongoing negotiations, nor do I wish to suggest or demand any particular outcome. However, success in those negotiations will send the strongest and best possible message that the country is in control of its own destiny, that it acknowledges the problems it faces and that it is prepared to take the appropriate actions. I wish the social partners and the Government well and I am extremely hopeful with regard to the outcome of the talks. It was stated last week that there would be posturing on the part of the various parties — the employers, on the one hand, and the trade unions, on the other — in respect of pay, etc. I hope, however, that there were no absolute prerequisites once the negotiations began. Whether it is innovations in respect of pay or adjustments to pension arrangements, I will welcome whatever deal is forthcoming. I am glad the parties involved are prepared to negotiate. I must pay tribute to the suggestions made by the trade unions. The concept of a pensions levy is a good one and has merit. In addition, the suggestion with regard to a recovery bond is innovative. Such a bond could work and I hope the Government will give it consideration.

In these more difficult times one of the greatest challenges we face is retaining as many in employment as possible. In that context, I would prefer to ensure I had a job — be it for three days each week, if it were not possible to have it for five. I ask those with an interest in this area to recognise that placing people on a three-day or two-day week is much better than making them redundant. Last week I spoke to some involved in a manufacturing business in County Meath who had retained their entire staff on a week on-week off basis. This solution is innovative, shows the commitment of the company to the staff involved and acknowledges the difficult times in which we now live.

With regard to other actions the Government might take — not least in the context of the public finances — the State's bills should be paid. Arms of the State and State agencies are the slowest payers of bills in business at present. It is completely unacceptable. The State does not live up to the standards that legislation effectively dictates. One example of that is tax rebates. Many small businesses and individuals are waiting for tax rebates. While they may have been due as far back as November in some cases, Revenue has told them it might get around to them in March. A €5,000 rebate to a business at present is worth €100,000 in terms of what it could do. I ask the Minister of State to look at that issue.

Senator Twomey mentioned borrowing and what the State may need to borrow in future years. It is worth noting that in 1985, debt service accounted for 35.2% while this year, the share of tax revenue taken up by Government debt service will be between 12% and 15% rising to 17% to 20% between now and, say, 2011. We are in a completely different situation and we are facing into it from a position of relative strength compared with many years ago.

It is also worth noting the International Monetary Fund is forecasting that 2009 will be the first year of negative growth in advanced economies in the post-war era. To suggest what this country is experiencing, whether in terms of the banking crisis, the property situation or the other difficulties, is unique to Ireland or as a result of specific actions by governments in this country alone is ridiculous in the extreme.

Deputy Enda Kenny, leader of Fine Gael, said 20% of the problem in Ireland is as a result of international factors and 80% is as a result of our own actions. I completely disagree with that, although we might have placed ourselves a little better if we had had the benefit of hindsight and of adjusting interest rates at a particular time to cool the property market. What could we have done? Could we have put stamp duty up to 50% or 100%? If we had done so, there would have been a revolution in the country. Some 80% of this problem is international while 20% is national.

As we look to the future, key elements of the Government's plan include the stabilisation of public finances, improving competitiveness, which can be done potentially through pay, supporting those who become unemployed and supporting Irish business and multinational companies. We must invest heavily in research and development and in incentivising multinational companies to locate more research and development aspects of their businesses in Ireland.

As we plan for the future, I would like to see us introduce an aspect to the primary school syllabus which can help to extract and nurture the natural entrepreneurial flair among young people, and I will bring proposals to the Minister in this regard. Today a lobby came to Leinster House seeking the vote for people of 16 years. While that is a debate for another day, it is welcome and it shows the level of maturity among our young people. We need to tap into that a bit more.

Implementing a new green deal and moving us away from fossil fuel-based energy production through investment in renewables is an area we need to grow. Some 10,000 people are employed in this area in Denmark, which is a good example. It is part of the programme of the new US President, Barack Obama, as he sets out to deal with the crisis in the United States. As he said, the world is facing an unprecedented economic crisis.

We can control an aspect of our own destiny through the management of public finances. This needs to be done quickly and it important to send a message nationally to our people and internationally to our contemporaries that it is done best through partnership. It is important we maintain our capital budget to the greatest extent possible. I am glad more than €8.4 billion is scheduled to be spent in the year ahead. I ask that this be kept under review and that we continually prioritise those capital projects which will best assist us in improving our competitiveness in the years ahead. I look forward to future debates on this issue.