John Gerard Hanafin (Fianna Fail)

Social partnership has proved to be hugely beneficial and, if we need to make adjustments, it is incumbent on us to ensure that when this passes over us we remember those who made the cuts, the savings and the sacrifices. Some 120,000 people marched and they genuinely felt that something needed to be done. We must take action, it is very easy to make a decision when one has no choice.

This Government has started on a programme of economic recovery. It reduced Government expenditure in July 2008 because it saw tax revenue falling sharply. The budget brought forward measures to stabilise the public finances. The Government introduced a system whereby bank deposits were guaranteed. We published a plan for a medium-term recovery, Building Ireland's Smart Economy. It was the right thing to do to invest at a time when it is more difficult but necessary. We did this in the 1960s when we invested in education and it paid off to a great extent. We nationalised Anglo Irish Bank because it was systemic to the Irish economy and not, as was stated by the Labour spokesperson on finance, because the bank was a friend of Fianna Fáil. Words take flight and they have meaning. With the international markets as nervous as they are now, it did this country no service to suggest the Government would nationalise the bank because its friends were involved. This put us at some point lower than a banana republic. We continue to engage with the social partners and I hope that process re-opens.

The measures taken now and those that will be taken will be seen as the steps that took us closer to recovery. The current Swedish Prime Minister, who was finance minister in the 1990s when Sweden had a banking crisis, told the country that it needed to cut pay by 4% and increase taxation by 4%. Within three years Sweden had started on the road to recovery. In good times people forget the bad and in bad times people forget the good. We are less than one year into this recession and it feels like ten years already.

We are starting from a base from which we can work well. One part of this is our tax base, which is solid but, over time, we will need to spread the tax base. Some 38% of workers are entirely exempt from income tax. The top 20% pay 77% of all income tax. It is not iniquitous to have a progressive tax system, it is just. Some 2.5% of the top income payers pay one third of all income tax. The top 6.5% pay half of all income tax and the top 12.5% pay two thirds. This proves that we are committed to fairness and equity. We have also made suggestions on reductions of 8% in fees. This is only right when the economy is slowing down and I am sure it will be taken on board. There is a ready acceptance that something needs to be done and we are doing it. There is also a reduction of €100 on the €1,100 social welfare payment to parents of children up to the age of six years. This is correct and when there is deflation in the economy social welfare payments have had a significant increase this year, beyond the 3% increase and including the extra 2% of deflation.

The actions we are taking are the first steps on the road to recovery and I call on the Opposition to play its part in supporting them. It is ironic when we think back to the 1980s. Despite the fact that a Government fell in 1981 on taxing children's shoes, when Fine Gael went back into government in 1982 there was public acceptance of the need for fiscal prudence. It was one of Fine Gael's best results. I accept that people find it hard to accept the initial pain. In the full and certain knowledge that this Government is totally committed to fairness and equity and to the idea that all should share the burden equally, an idea to which the Taoiseach is committed, we will benefit and the Opposition would benefit if it took on board the reality that the public is sensible enough to know, namely that we are doing our best for the economy. The Opposition should come on board and support the Government in what is a national emergency to ensure we put our finances on a sound footing. We are losing 1,000 jobs per day and we must get back. If the President of the ECB said we were on the right path, who am I to say we are not? I am certain that we are.