Jim Walsh (Fianna Fail)

Ba mhaith liom fáilte a chur roimh an Aire Stáit go dtí an Teach inniu chun an ábhar tábhachtach seo a phlé. I welcome the Minister of State, Deputy Mansergh, to whose comments I listened with interest. From listening to the Minister for Finance and the Taoiseach, I can tell they have a fairly firm grasp of the extent of the challenges and problems we are facing, as well as a plan to deal with them. I hope this debate contributes towards the decisions that are made.

I felt, listening to the debate, that it was in the main balanced and measured on all sides of the House. I welcome this. I and others have been asking for a long time that this be above politics. The current economic situation is a real challenge to the State and we are there to play our part, as far as we can, in ensuring the Government's policies protect the citizens of this country so we can come through the severe economic downturn in a way that gives us a platform for growth in the future.

Reference was made by one Senator to the fact that during the good times the money was unwisely spent. No matter what organisation one is talking about, one can home in on certain expenditure that is not the wisest or most prudent. The Minister of State mentioned this week's article in The Economist, which recognises that Ireland has come a long way and has gained much in the past ten years of which we can be proud. Much of this will stand us in good stead in trying to rebuild the economy and regain the growth rates we had previously. If we travel to any part of the country we will see the motorways in which we have invested. It is not just for our convenience; it is to add to the competitiveness of industry, particularly the commercial transport sector, for which motorways are the arteries of economic well-being. We have also seen a significant increase in the number of teachers — there are more than 60,000 at the moment — doctors and gardaí. The number of gardaí has increased by more than 3,000 since I have been in the Seanad, which is a decade. All these developments are positive. The education budget has been increased over this period by a factor of three and health expenditure has increased fourfold. In addition, €20 billion was put into the National Pensions Reserve Fund. This was a significant and courageous political move because often politicians like to spend money on projects whose benefits are immediate so they will get the credit when election time comes around. That money was taken from the surpluses we generated, which displayed an element of prudence.

If we are asking the other side to be fair and balanced, we should also be fair and balanced on this side. We do not have to agree with everything the Government does. One of my criticisms was a weak managerial approach to cost control. It happened in the private sector, but it certainly happened in the public sector. We have seen significant wage inflation to a level that is now unsustainable. That is a major aspect of the current challenge.

This downturn is global, but unfortunately our national broadcaster has been deficient in showing people what is happening in other jurisdictions. The reason I say that is not to excuse the difficulties we are having here, but to highlight the global context in which they are occurring. I have watched, particularly on the BBC, some excellent programmes which have focused on the banking sector, the property bubbles in other countries, including Eastern Europe and the USA — and the measures being taken to deal with the economic difficulties. These programmes are not expensive to produce and I do not understand why RTE is not doing that. It would provide the information necessary to underpin sensible, measured and progressive debate on how we deal with the crisis, and it would also put it into context, which is very important.

Our fiscal difficulties are the major topic of this pre-budget debate. The Minister implied, and I concur, that we are probably looking at a budget the like of which we have not seen in our lifetime. The extent of the deficit is such that it cannot be other than very harsh. Unpalatable decisions will have to be taken and faced up to. Every taxpayer, and probably every person in the State, will feel the impact on his or her standard of living. Unfortunately, there is no escaping the reality. After receipts are subtracted, we have a current expenditure of approximately €56 billion. Various figures have been put forward for revenue, but it has certainly changed from the figure of €37 billion at the last budget. It will be between €30 billion and €34 billion and will, unfortunately, get worse as the year progresses.

There has been discussion among economists about identifying the difference between cyclical and structural deficits. The latter must be addressed because that money will not be replaced in the future, whereas the cyclical deficit will improve as the global economy takes a turn upwards — whenever that will be — and revenues rise. Of the €56 billion in expenditure, €20 billion is for pay and pensions. I am amazed at the reaction to the pension levy of intelligent, well educated people with very good jobs. I said at the time that if we escaped with only that, it would be miraculous. I have for some time been advocating a correction in wage levels across the public sector, as is happening in the private sector. Wage levels in this country are about one third higher than those of our competitors, and this must be corrected to bring us into line. It is a significant reduction. I mentioned in the House previously a survey carried out last year and published by the University of Glasgow which showed that the average income in urban areas in Ireland was €44,300, while that in Britain was €29,700. In other words, our average income is 50% greater than that in Britain. That shows the level of correction that may be required.

Social welfare payments total €21 billion. We need to ensure that budget cuts in social welfare are targeted to spare people who are vulnerable and do not have other incomes, but we also need to ensure we remove the anomalies whereby some families are in receipt of two or a larger number of social welfare payments. In addition, there are certain abuses within the system that need to be investigated and correction must take place. These changes will be unpopular and sectional interests will be strongly critical of the moves, but social welfare is a complex area and any changes that are made need to be measured and tested to ensure we do not make things worse for people who are in real hardship. We cannot, however, allow waste in any system. The balance of the €15 billion is made up of the service we provide to the public.

There is a need for a campaign across the public service. I said that seven years ago but nothing has happened in the interim. There must be a war on waste where we change the culture where people see expenditure as being no one's money so it does not need to be managed with the same degree of care as we would use to manage our own finances. It happens in all large organisations, where money can easily be wasted, but checks and balances are built into the private sector that do not exist in the public sector. There is an example of this at the front gate of Leinster House and someone recently told me that a local authority is paying €250,000 a year in mobile telephone bills. We must focus on money that could be saved because it adds nothing to the services we are delivering and does not take from the benefits citizens should enjoy.

There should be a focus on job creation and retention, both of which are difficult at present. Senator O'Toole mentioned energy and communications infrastructure. The communications regulator responded yesterday to the news we pay three times as much for land lines than in Finland by saying we are a rural country. That demonstrates an out of touch attitude and irresponsibility as a regulator. I hope the committee will take that up because it displayed in many ways what is wrong in many of our regulatory authorities, including the Financial Regulator, which contributed to this in some way. We would have an economic crisis, however, regardless of that and the other issues pertaining to the banking sector that have been so widely publicised.

There is a need to ensure that anything that is done is fair. Senator O'Toole mentioned GPs who charge €95 a visit, which was also mentioned by Senator Butler this morning. We are going to pay our consultants €250,000 per year, 50% more than they would get in Britain. There is no justification for that at all, just because they had held us to a contract that was unworkable and defied the best intentions of the Minister and any Government to have a health service we could be proud of. We cannot allow people to hold the State hostage and that is what has happened.

The same goes for barristers' fees. In the last correction, there was an 8% deduction as a levy on fees. An irresponsible article in the Irish Independent lauded the fact that fees would be reduced from €2,500 to €2,300. Those fees should not be more than €969 per day. Why do I say that? Because that is the decision the Government made in September 2004. Unless we are prepared to show we are equitable in the manner in which we impose the necessary pain to improve our economy, it will be difficult to get all those who need to subscribe to that cause unless we are scrupulously fair. I will support any measures that will correct the inequity in our system.