Liam Twomey (Fine Gael)

I welcome the Minister of State, Deputy Mansergh, back to the House. He is a frequent visitor. He has been coming here so often his attendance is almost as good as when he was a Senator.

In terms of the next budget, unfortunately for the Government it will be "damned if it does and damned if it doesn't". We cannot discuss the budget because we do not know the details of it and therefore much of the discussion is about the theories in terms of what will happen in two weeks' time. The Government must now make the difficult decisions to put the country first and history may judge it more fairly, but regardless of the decisions it makes in two weeks' time the people will judge it very harshly. It is damned either way.

The Minister of State has been around for a long time. He saw what happened in the 1970s when we tried to spend our way into utopia. It all went wrong and it took us a decade to get out. As the rest of the world was improving we were trying to jump on the same conveyor belt that was global economic growth at that time.

The Minister need not be deluded in terms of what Commissioner Almunia or the economists say. The problem is that the Government has destroyed the dreams of thousands of people with what has happened to our economy in the past two years. The perception given to the Irish people was that everything would be fine. Up to 12 months ago it was telling the people that there would be a soft landing in terms of the property bubble, that there was nothing to worry about and that we had an open economy which would help to get us out of all our difficulties, but the Government misled the people. There was no soft landing in terms of the property bubble and the loss of competitiveness in our open economy has put us in a precarious position globally.

In his contribution the Minister of State, Deputy Mansergh, said we must consider having lower incomes and lower costs. Perhaps the Minister of State, Deputy Noel Ahern, will expand on that when replying because there is no doubt that the issue of lower incomes being necessary to restore our competitiveness will create havoc in the discussions with the social partners. How will those lower incomes be introduced in the economy? Is he talking about the civil and public service, over which the Government has direct control, or the private sector which looks after itself?

Members of the Government spoke about this issue in the House. Senator Hanafin, who is present, is one of those who tried to make out that we should see our indebtedness as a type of buffer. It is a buffer, but it is a very small buffer and one that should not be wasted in the next year or two to get us out of the current financial crisis. The debt of the Irish people is the equivalent of our GNP, which is the one we should use. The debt of the State will be 50% of GNP by the end of this year but we are only at the beginning of sorting out the crisis in our economy. Another Senator, in trying to make this out as something that we should regard as positive, made comparisons with Italy. I hope the Government is not using the scenario in Italy as the baseline for our economy. We must get our public finances right.

Regarding how much the Government will allow to drift, so to speak, it appears now the figure of 9.5% was not an absolute but only an indication. The shadow Chancellor in the United Kingdom got into deep water by outlining the difference between an anticipation and a promise. We started here with a figure of 3%, but that went up to 6%, then to 9.5% and we are now saying that figure is only an approximation.

International investors are becoming concerned about the way we are dealing with our economy. The Minister of State came into the House and spoke as if everything was grand. He said the economists and the European Commission are speaking positively about Ireland but no one in this House is deluded to that extent. The economy is in dire straits and we must have that international confidence if we borrow the billions of euro we need in the course of the next three years.

In the seven years I have been a Member of the Oireachtas I have seen the biggest budget surpluses and I will now see the biggest budget deficits. That is the classic boom and bust economy which has got this country into an unholy mess and the uncontrollable Government spending and lack of tax revenue coming in makes the position much worse.

We are not being honest with the people about the seriousness of the position. The Minister of State, Deputy Mansergh, in all his visits here, with the Minister for Finance, was the first to speak about reducing incomes, lowering costs and introducing a draconian budget to bring some stability to our public finances. We need more of that from the Government. It must stop deluding us into thinking things are not really that bad. It is a case of "damned if you do and damned if you don't". No matter what happens, people will notice that in the services they receive, whether social welfare benefits, school places, road infrastructure, public transport or health care. Everybody knows we are heading back towards the 1980s in terms of those services.

The philosophy of the Progressive Democrats in recent years was one of privatisation. We have seen little major investment in the health service in terms of building up capacity to deal with our growing elderly population. When I was health spokesperson for Fine Gael in the last Dáil, the Minister, Deputy Harney, constantly talked about all the private hospitals that were to be built, how 70% of the population had private health insurance and we were moving towards a Boston model in which people would seek health care through the private sector, paying for it themselves with higher wages. Nothing could persuade her or her Fianna Fáil colleagues that this was not the right way forward for the people of Ireland. Now, 500,000 people are unemployed and many of these cannot afford private health insurance. The private hospitals promised by the Minister — she said they could be built faster than public hospitals — have not been built. At the same time, the health sector has been seriously run down and, if we are to believe the recent comments of Professor Drumm in the media, this will get worse in the next couple of years. We have created a social and economic disaster for ourselves because we had a boom-and-bust Government that did not pay attention to the most basic tenets of economics when it was running the country.

We have seen things happen which one could say are legally correct but are ethically and morally wrong. The behaviour of bankers and developers in the last couple of years has been wrong anyway. However, since the crisis struck and these individuals were bailed out by the taxpayer, their amoral behaviour has been sickening for the Irish people to watch. What has been more sickening, however, is the way in which the Government has responded. I do not know whether this was because its members are not capable intellectually of dealing with these individuals or because they themselves are morally compromised by the numerous scandals that have occurred. Some individuals are paying themselves bonuses, taking money and giving themselves loans, and the Ministers are whingeing and squealing that it is wrong, but they are doing nothing about it. It reminds me that the Governor of the Central Bank and the Financial Regulator squealed, below whispering level, about the crisis that was brewing in the economy, but it was completely ignored by Government. Some of the problem, although this has been denied repeatedly by Ministers, is that there has been too much complacency and cosiness between the individuals involved. They have all been there together for too long.

The Irish people have given Fianna Fáil power, with the assistance of a small political party, in the last six general elections. In some respects we are reaping what we sow in this regard. Going forward, which is another great term used by the Taoiseach, we need to see exactly what the Government is doing. Perhaps in two weeks' time it will for once put the national interest first. It should show us it can do that. The reversion to discussions with the social partners also needs to be more public. I do not know if the social partners can accept the reduction in wages that is required to reform the public service and Civil Service. We have been talking about reform of the health services in both Houses of the Oireachtas since the day the HSE was set up five years ago, yet we have not seen major change of the type that is required. We have seen an explosion in top management, but the Government has not done what it promised.

The Government must deal with a few important issues. What is its position on consultants' pay in the health service? Will it continue to pay them a quarter of a million euro a year and allow them to carry on their private practices, or has that come to a stop? That deal was made in the best of times. What reforms will the Government genuinely implement in the public service? I do not mean yapping about another commission or report. Since the day the Minister, Deputy Martin, went into the Department of Health and Children, every difficulty has been kicked to touch. What will the Government do to reform the Oireachtas? If, for example, five or six junior Ministers were removed from their positions at the next budget, that would not correct the public finances, but it would show moral authority in terms of what the public needs to do. To defend long-service increment payments, a matter which has cropped up recently, by saying that is the way it has always been is not acceptable. The Minister must show courage by not asking for voluntary cuts but making massive reductions in what we as public servants get paid. We need to do this to regain the confidence of the people.

Some people are losing their jobs and homes. They have lost their dreams and expectations from three or four years ago. In some respects they were fooled into having those dreams. They were told three years ago by the former Taoiseach, as the Minister of State is well aware, that the economy was in fine shape and everything was going great. There were more than enough warning signs then. The Government should have told the people the truth and should have done something about this crisis a long time ago rather than leaving it until 7 April 2009 to deal with it, by introducing an emergency budget that will be the harshest in our history.

The Government has not accepted that it did not deal with the crisis. Acceptance of the fact that things were not dealt with as they should have been is important. The first time the Minister talked about cutting public sector spending was when there was a projected reduction of €500 million in Government spending, which did not turn out to be the case. It was a drop in the ocean at the time. When the last budget — the early budget — was introduced, the Government said it would reduce public sector spending by €2 billion, but it turned out to be less than that. When it was taken into account that people could get tax rebates on their pension payments, it was less again. There has not yet been acceptance of the crisis by Government. Even though it is borrowing money to bail out the banks and shore up Government spending, it is still giving the impression this money will fall off trees if we need it.

As the Minister of State is well aware, UK bonds did not sell at auction yesterday. Our saving grace is that we are in the eurozone. I would not like to say where we would be if we were not part of the eurozone, but we would be in trouble. There is a need to get that message across. It comes from everyone, not just the Taoiseach and the Minister for Finance but from all sides of the House. Senators on the other side of the House need to wake up. They should stop saying there is no problem here and that our level of indebtedness is nothing more than a blip. It is not a blip, it is a serious issue and it will get worse.