Martin Mansergh (Tipperary South, Fianna Fail)

I am glad to have this opportunity to speak in this debate in support of the Government's counter-motion on the management of the economy and the public finances in the current global crisis. Although we are dealing with a very difficult issue, Ireland, unlike in the past, is facing into the present serious economic challenges against a backdrop of strong sustained growth in recent years and relatively low levels of public debt. The policies now being pursued to restore sustainability and confidence in the public finances will help us take full advantage of global recovery when it emerges and bring growth back up to a sustainable level.

We discussed the banking sector yesterday, and all I would like to say today is we must not lose sight of the fact that a healthy and sustainable banking system is vital for all of us in society and a sine qua non of our recovery to sustainable future growth.

I would like to address some of the real and practical steps being adopted by the Government to achieve these objectives. Intensive dialogue is taking place with the social partners to establish an established framework which will enable us to tackle the issue with the maximum degree of social consensus.

In the 2009 budget the Minister, Deputy Brian Lenihan, emphasised the need to bring spending in line with resources while safeguarding key public services and protecting the vulnerable in our society. The Estimates allowed for a 3.6% rise in voted current expenditure this year, representing a large reduction from the 11% increase over last year. This was achieved while allowing for spending on social welfare to grow by 8.4% to €19.6 billion; education to increase by 2.7% to €8.7 billion; and health to increase by 2% to €15.8 billion.

To accommodate these increases which focus on maintaining services for the vulnerable in our society, spending in other areas had to be curtailed. As I stated yesterday, the Office of Public Works has, for example, reduced spending since the summer by 30% in real terms. In addition, the Government announced a major streamlining of State agencies with further rationalisation to come.

The Government will not allow our country revert to becoming dependent on large-scale, persistent borrowing to meet day-to-day spending. We owe that much to generations to come. Accordingly, the Government is undertaking stringent examination of public expenditure with a view to managing expenditure in 2009, taking into account the additional pressures and the further weakening of the tax base. As Senators will be aware, the recently published addendum to the Stability and Growth Pact sets out a framework for the restoration of sustainability in the Exchequer finances over the medium term, commencing with immediate action to secure a further downward shift in expenditure adjustment in the public finances of the order of €2 billion in 2009. We must ensure more than ever that the taxpayer obtains optimal value for money from all investment in capital projects and current day-to-day expenditure.

The Government has established a special group to conduct a focused review of public sector numbers in all branches of Government to identify where major savings can be made across the range of expenditure programmes. The group's work will help the Government in our task of putting the public finances back in order over the medium term. This special advisory group has now begun its work and is chaired by Mr. Colm McCarthy and assisted by a panel of advisers with experience from both the public and private sectors. The group will report regularly to the Minister for Finance and submit a final report to him by the end of June 2009.

An area for which I have been given special responsibility is the reform of public procurement. The Government is acutely conscious of the need to improve continually the various processes involved in State procurement. In recent years, a significant effort has gone into devising new forms of public works contracts with the objective of bringing a far greater degree of certainty to the costs of public works and eliminating very sizeable overruns which used to be endemic in the system.

The Government has turned its attention to the supply of goods and services. Last July, as part of its decisions on savings, it decided that a national operations unit for procurement should be established in the Office of Public Works. It directed that a joint Department of Finance and Office of Public Works implementation group, under my chairmanship, should progress the development of this unit. The group has completed its deliberations and has recommended that the duties of the national operations unit should include the organisation of the procurement of common goods and services across the public service, the provision of professional procurement advice to the public sector, the establishment of appropriate links with public procurement structures in Northern Ireland and the further development of the e-procurement systems already in place in the public service. The establishment of the unit is proceeding apace with the objective of commencing its operations by the middle of the current year.

Although some scaling back of capital investment is unavoidable in the current budgetary climate, the Government is determined that Ireland must continue to deliver the core productive economic infrastructure that will support our future economic development. It was with this imperative in mind that the budget provided for Exchequer capital investment in 2009 of some €8.2 billion. This amounts to more than 5% of estimated gross national product.

In times of scarcer resources, we must be very targeted in the way we invest taxpayers' money. We must concentrate on investment in core economic areas which increase Ireland's productive capacity, promote employment and position us to recover quickly from the current downturn. Today, the Minister for Transport announced a €1.4 billion allocation for the national roads programme, which shows the great progress being made. It also complements a great deal of public transport investment that is equally taking place. I am especially pleased that one of the serious bottlenecks, around Tipperary town, is being tackled with funding of €550,000 to complete planning on the bypass on the N24.