Paschal Donohoe (Fine Gael)

I second the motion and I thank Senator Phelan for tabling it. I welcome the Minister of State to the House.

I take this opportunity to highlight not what Fine Gael says about the state of the economy, but what the National Competitiveness Council says about the state of the economy and the conclusions drawn by the Government in a publication it submitted to Brussels at the beginning of January. The National Competitiveness Council says about our economy and job creation prospects that between January 2000 and December 2008, Ireland has experienced a 32% loss in international price competitiveness. With regard to education, the council states that, "Despite progress, older cohorts of Ireland's labour force remain less qualified than the OECD average and a relatively large share of the working age population has no more than lower secondary education."

It refers to productivity which is vital to our competitiveness and employment creation prospects. The NCC states, "Productivity levels in GNP terms are below the OECD average" and it referred to the factors influencing that, including pricing. The report said, "In terms of general consumer price levels, Ireland is amongst the most expensive locations benchmarked and has experienced inflation rates that are amongst the highest in the EU-15 countries". The report looks at the factors that influence our infrastructure which is vital if the country is to get out of difficulty. The council comments that, "Despite tangible improvements in Ireland's infrastructure, key bottlenecks remain and quality rankings are relatively poor across a number of infrastructure types". On transport, the council say that Ireland's road networks rank poorly internationally, with peak speeds in Dublin well below most other countries surveyed. On information and communications technology infrastructure it says "Ireland's investment in both information and communications technologies is below the EU average and lags leading countries by some distance."

One of the many merits of Senator Phelan's motion is that he takes the trouble to acknowledge that there are factors that are beyond the control of this country but asks the Government to take responsibility for the factors within its control. A body created by the Government to provide an overview of progress and of where we stand competitively has provided nothing more than a damning indictment of where our country stands.

The second document to which I refer is the Government's publication at the start of January, which was forwarded to Brussels to provide confidence to European bureaucrats regarding its ability to get our finances under control. It was entitled An Addendum to the Government's Stability Programme. The document should have been circulated to every Oireachtas Member but it was difficult for any Member to get his or her hands on it. The document draws two conclusions. The first is that if we do nothing, our debt as a percentage of national income will be a minimum of more than 10% annually for the next five years and the second is that the Government needs to find €20 billion in spending cuts or tax increases in each of those years. These are based on two assumptions, which are that the economy will return to growth in two years and there will be no increases in social spending.

When we discussed the budget in December, I offered a challenge to the Minister, which I reiterate. Can he find an economist who will come into the House and say he confidently expects the economy to return to growth in 18 to 24 months' time and that it would be feasible for the Government not to increase spending on social welfare and social services, which are vital during a downturn? If so, I will be stunned. None the less, these are the assumptions on which our fiscal recovery plan has been predicated. These are matters directly under Government control and within Government competence. They are not attributable to the economic circumstances in which the world finds itself. Our motion specifies what Fine Gael wants to do differently. The thrust of our policy approach is that we believe that wage moderation is preferable to cutting jobs or services. If we pare jobs and services ruthlessly as is happening at the moment, it will be very difficult to get them back. We would much prefer to moderate or in many cases reduce wage levels to allow us to hang on to what we have at the moment and to enjoy more of it in the future.

The Government amendment goes to the core of the difficulty we face. It points out what needs to be done to get the national finances under control and the contribution it must make in tackling the situation in which we find ourselves. We need to pause and think about it for a moment. It is not the state of the national finances that is causing the employment difficulties and horrible challenges we face in the economy at the moment, and which could cause major social difficulty in the future. Employment is not falling because we have major budget deficits on the vista. It is the other way around. We are facing such challenges in our national finances because our competitiveness has declined. Many of the things we can influence, including our infrastructure and education, have not been in the right place to generate the employment and growth necessary to get our finances under control.

Our motion proposes what we believe should be done differently. It acknowledges the difficulties that are under the control of the Government. It appropriately castigates the Government for its horrific failures on infrastructure, education and keeping our tax and spending at appropriate levels to ensure prosperity for the years to come.