John Gerard Hanafin (Fianna Fail)

This Bill does exactly what it says on the tin. It is interesting to hear Opposition Members set out all the actions the Government must take to restore our economy, yet they will not support the effort which is clearly in this Bill to do exactly that. This is despite the inclusion in the Title of the Bill of the words "emergency" and "public interest", which is an accurate reflection of the nature and objectives of the legislation.

I begin by acknowledging the excellent work performed by the public service through the decades. Since the foundation of the State, it has been true to its founding principles. The State would not be in the position it is today were it not for the good work of the public service through the difficulties of the Depression years, the Emergency years and through the 1950s. It was Dr. Whitaker and Seán Lemass, working together, who started us on the road to economic recovery in the 1960s. In recognising the value of the public service, I merely offer what is due. Public service workers are a fine group and I am proud to be an elected member of that group. I strive always to do my best in that role, just as I see others in the public service performing their duties in a highly professional manner.

There has always been a benchmark between the public service and the wider economy. It was never intended that any member of the public service should be significantly better or worse off than a comparable employee in the private sector. The objective was always that there be equivalence. That equivalence must now be judged in the light of our current economic difficulties. None of us takes pleasure in these measures and we all wish we were in a different position. However, we are where we are. Current challenges arise not because of the actions of the Government but as a consequence of international events. It was clearly stated by the Government that a downturn in the construction industry was expected. This was factored into its considerations. There was talk for many months of a soft landing and how we should prepare for that. That soft landing would have happened had events not overtaken us. Developments in the international economy have put us in a position far worse than any of us could possibly have anticipated.

The Government is taking the measures outlined in this Bill in order to redress an immediate imbalance in the public finances. It is not possible for any state to borrow on a continuing basis as much as we will need to borrow on a day-to-day basis this year. Therefore, we have taken immediate action to ensure that, over time, we will once again be in a fiscally sound position. This legislation represents the beginning of that process. As such, I welcome its introduction. This Bill results from not a knee-jerk reaction but rather a proper assessment of the situation which involved, as much as possible, an effort to bring the social partners with us and to ensure all parties were on board.

The reality is that 1,000 jobs are being lost every day. We must match that reality with appropriate supportive actions. There can be no question of waiting until everything is perfect before we accept what must be done. There is little point in focusing exclusively on what has happened in the banking system. Nobody can deny that serious, probably criminal, abuses have taken place. However, that does not mean we can wait until the world is perfect before implementing measures that require to be implemented immediately. There is a tendency for people to say that while they accept there must be changes in taxation, reduced spending and increased levies, those changes must not affect them personally.

Unfortunately, we are not in a position to look at it that way. Everybody must share the pain but this is being done in a progressive way. A person on the average industrial wage pays very little income tax. While workers here are liable for no tax on the first €18,000 of their earnings, their counterparts in the United Kingdom pay tax on all income above €6,800. In the case of a worker on the average industrial wage, who will pay social insurance and some tax, the net tax wedge after the transfer of other funding from the State is a negative position. In other words, such a person, in either the public or private service, is receiving more money from the Exchequer through State supports than he or she must hand over in tax and social insurance.

Earlier today, the President of the European Central Bank, Mr. Jean-Claude Trichet, pronounced his belief that Ireland has the strength to ride out the economic downturn and that we are well placed to benefit from the eventual recovery in the global economy. Unfortunately, there has been much negative comment on our economy, particularly from commentators who look to the City of London as their model. It is surprising they should do so given that this is where we can find the people who are partially responsible for current difficulties. The pride of the Lehman Brothers, the call of the masters of the universe, have been shown to be false. These people thought they knew everything but their world has collapsed around them. That was inevitable. It is disingenuous for such people to talk down the Irish economy. They are utterly incorrect in their pronouncements.

In response to suggestions that Ireland may default on its debt, Mr. Trichet said he would "not comment on absurd assumptions". He asserted full confidence in the Government to make the appropriate policy choices to convince everyone that there will be "a sustainable handling of the fiscal policy". He went on to say he trusted the Government and the Minister for Finance to operate the appropriate fiscal policy to prove we are acting prudently. The President of the European Central Bank thinks we are on the correct path and we are. I hope we are not talking only about cuts because we are aware that we must re-engage with the social partners as soon as possible. Social partnership has been hugely beneficial in bringing Ireland to where it is and we will need social partnership again because we are certainly not getting support from the Opposition.