Seanad debates

Tuesday, 27 January 2009

Economic Situation: Statements

 

6:00 pm

Photo of Larry ButlerLarry Butler (Fianna Fail)

Senator Coghlan has set the tone for me regarding people with second houses. The construction sector has gone extremely flat and the Senator is right in pointing to the surplus of houses. One in two is owned by someone who bought it towards a pension or for the use of his or her children going to college in Dublin, Limerick or Galway. Such persons now find themselves in a position of negative equity. We do not need to put pressure on them.

Economic forecasting has been near impossible in recent months. The International Monetary Fund has looked at every economy and revised its projections of economic growth on a number of occasions. Even though it is one of the better bodies at forecasting, it has not got it right. The Government has taken action as difficulties have emerged. The Taoiseach has made it very clear that there is an immediate and intensive round of discussions with the social partners, with which it is very important to consult. As the social partners have been extremely good in ensuring we have had a stable economy for the past 12 or 13 years, why would we not hold discussions with them when we find ourselves in some difficulty, as is the case now? It will not be a problem if it takes an extra few days to get agreement on savings of €15 billion in the next five years. People have not listened carefully to what the Taoiseach has said. There is a plan. We need to ensure we meet the target of €15 billion in the next five years.

The spreads on borrowing have widened in virtually every country. It is more difficult to raise money on world markets because of a major extension of borrowing, not just in Ireland but across the globe. Decisions in countries such the United Kingdom which I would regard as knee-jerk reactions have not ensured their banking sectors are any safer than ours. Our approach to dealing with the sector has been responsible. We have not cost the taxpayer one penny. We bought Anglo Irish Bank at a very modest price — if we need to pay anything for it. The people would expect us to take a cautious approach to the banking crisis. We must investigate the disgraceful behaviour of former directors of Anglo Irish Bank. I agree with Senator Boyle on the need for a proper inquiry into what happened at that bank.

We are going to have a difficult time in the next five years. We need to support the Government in its efforts to bring spending under control. If we do not do so, it will cost us dearly. It is important not to be doom and gloom merchants. We can exaggerate our difficulties. Mortgage and bank interest rates have reduced considerably in recent months, which is very good news. Petrol and diesel prices have reduced. Houses are becoming more affordable for young people. There is a competitive market for clothing and footwear. We will benefit from this readjustment in the economy. A competitive market for consumer products is improving. There is no point in increasing wage rates when inflation rates have stabilised. Even if we stand still for the next year we will be in good stead because prices have stabilised.

I have made a proposal to the Fianna Fáil parliamentary party in respect of a €9 billion retrofit of housing which could create up to 25,000 new jobs — three times the number of jobs associated with Dell. Inspections with regard to the new building energy rating, introduced on 1 January, will result in the creation of at least 1,300 jobs. The Government will put substantial money behind that job creation project in the budget. There are more than 1 million houses which need to have their insulation upgraded. Through attic insulation, cavity wall filling and air tightness, for approximately €15,000 to €20,000 the energy rating of a house could be raised to a "B" standard. This, in turn, would result in a payback to the householder who would benefit by a 50% reduction in energy consumption. We would also meet our EU commitments in CO2 reductions. Such a job creation project would do more than taking 100,000 cars off the road. We must reduce our dependency on fossil fuels through the provision of grants or tax incentives. The use of solar energy and wood pellet burning would benefit the economy greatly and help to ensure we meet our EU commitments in CO2 reductions.

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