Marc MacSharry (Fianna Fail)

We need to react and also pro-act, which is what has been happening in recent times. All Western democracies are experiencing the same level of difficulties, fiscally and economically, in terms of the banking system and levels of imports and exports. All over the world every economy is in the same boat. As I said last night, the IMF has stated that the advanced economies will experience lower levels of economic activity than have been experienced in the post-war era.

These are challenges that have happened internationally. The banking crisis is unprecedented internationally. We are effectively in a great depression. The World Bank projects that global export volumes will decrease for the first time since 1982. These are facts. Ireland, accounting for 1.8% of the euro zone output, is particularly exposed to these international forces. Exports of goods and services amount to four fifths of our national output, which is more than double the EU average and means that our nation's economic health is inextricably linked with that of the global economy and, in particular, UK and EU markets.

As we know, the economy contracted by 2% in 2008 and as the Taoiseach said in the other House earlier today, it is expected to contract by up to 10% between now and 2011. There have been a number of factors involved. We have had the building boom and bust. We have had the global financial and banking crisis, the sharp appreciation in the euro and, in particular, the exchange rate with sterling. There has been a decline in demand for our exports based on the international downturn. As has been outlined by other speakers and again by the Taoiseach in the other House, there will potentially be a 12% deficit up to 2013, which is absolutely unsustainable. The Government has outlined a number of actions in response to that situation.

It is easy to call for quick action and a quick response. We need to be measured and ensure we take the right decisions that are most appropriate to position us properly to benefit from the upturn when it comes and above all get the public finances into a position where they are sustainable. As we know that will require a saving of €2 billion almost immediately. I welcome that we seem to have agreement with the social partners on the basis on which we can design that process. The framework outlines the challenge facing the country and the rationale for urgent and radical action. It takes in the potential contribution of a shared approach to partnership in the need to stabilise the public finances over five years through an appropriate combination of tax and expenditure measures resulting in an adjustment in the order of €2 billion.

Areas that require short-term stabilisation measures include maximising economic activity and employment, stabilising the financial and banking sector while maximising employment and helping those who lose their jobs. These are the bases under which the social partners have proceeded in their discussions with Government. I wish them well. As we said in this House last night and the Taoiseach alluded to it in the Dáil today, if we can conclude with the social partners how best to save this €2 billion, it will send an extremely powerful message internationally as to the competence and determination with which the country is implementing a correction in our public finances and making the necessary adjustments based on the difficulties with the slowdown in the building sector, the international crisis and obviously the decline in demand for our exports, the exchange rate with sterling, etc.

There are a number of issues we can address, such as the following, which we addressed briefly last night. There has always been a focus on marketing Ireland in respect of foreign direct investment and the importation of intellectual property. While it is important to maintain a level of that, there should be a greater focus on breeding our own intellectual property and on the level of entrepreneurial flair exists among our young people. We should come up with measures for appropriate lessons on the primary school syllabus to nurture and extract the entrepreneurial flair that exists. There is a famous quote that says they are not just empty vessels but great engines of creativity to be ignited.

These are difficult times but we must face them with confidence and determination. The world has not ended and it is not going to end. If we work together in a coherent and determined fashion, we can come out the other end. I attended a function of the Sligo Chamber of Commerce where the president referred to the local outlook in his concluding remarks. It is true nationally and internationally. He told the anecdote of the American company that sent two sales representatives to the Australian outback many years ago to try to drum up some business. A couple of weeks later, telegrams from the two sales representatives arrived. One said that the sales representative had very bad news, that the locals did not wear shoes. The second sales representative said he had fantastic news and that there were great opportunities because the locals did not wear shoes. We must focus on the attitude of the second sales representative in that analogy. We must look forward with confidence and maintain a level of agility to meet the ever-changing challenges of these times. I am confident the Government can and will do so in partnership with the social partners. I hope the talks under way will be fruitful over the coming days.