Seanad debates

Thursday, 26 March 2009

Forthcoming Budget: Statements

 

3:00 pm

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)

I thank the Senators for their contributions to a very good debate. Deputy Michael D. Higgins and I, in the course of a debate in the Dáil last night on reform, the number of Ministers of State and so forth, took the opportunity to strongly vindicate the value of the Seanad and that value has certainly been shown today. I apologise for being absent for some of the debate but the French budget Minister was visiting and I was asked to go to meet him. However, I have notes of what was said by the contributors.

I stress that the pace and scale of the current global economic deterioration is without precedent for over a half century and advanced economies such as ours are expected to be the among the worst affected. The Irish economy is going through a very sharp downturn. Today's data from the CSO show that GDP declined at an annual rate of 7.5% in the final quarter of last year. The equivalent figure for GNP was a decline of 6.7%. These are obviously very poor figures. The Government is determined to take timely and appropriate action to stabilise our economy and to re-position it to be able to achieve sustainable, export-led growth when the global economic climate improves.

Notwithstanding current difficulties, Ireland retains the ability to recover and benefit from the global upturn when it emerges. Our medium term prospects remain positive and our economy has the capacity to grow at a relatively healthy pace once the current difficulties are overcome. However, the achievement of that potential is contingent upon implementing the right decisions now. Senator Twomey and I, in my opening contribution, referred to the previous example 20 or 30 years ago when Ireland was slow in benefiting from recovery because it did not succeed in getting its act in order.

On 7 April, the Minister for Finance will present a supplementary budget which will set out a comprehensive strategy to place the public finances on a sustainable footing and to prepare the economy for renewal and revitalisation when international conditions improve. I accept that "supplementary budget" is a manner of speaking; the so-called supplementary budget will probably be more important than most of the annual budgets in recent years. It will build on a deliberate series of measures that have been introduced to respond proactively to the difficulties in the public finances. The domestic and global recession have put enormous pressure on the public finances of this State. Added to this is the loss of confidence caused by the actions of some in the Irish banking sector, which has tarnished the reputation of the nation's financial services industry. However, this challenge presents the Government with the opportunity to renew our economy, revitalise the public finances and reform our banking system.

There is much evidence from various sectors of the economy that people are beginning to see opportunities again. Income levels in many cases have already dropped substantially, rents have dropped and other costs have been reducing, although they have not reduced everywhere. There are plenty of pockets where costs should be dropping and so far have not. In one or two cases, they are still increasing. That does make enterprise and investment viable again when it was not viable in the past year or two because we had simply got out of kilter.

Since the announcement of the Government's intention to bring forward a supplementary budget, the Minister for Finance has facilitated the Opposition by giving them unprecedented access to information and briefing outside of an election period. At the start of the month, his officials briefed Opposition spokespersons on the broad budgetary framework and made the Department available to the Opposition for confidential costings of any budgetary proposals they may have. While the Opposition has sought information on the numbers on which the supplementary budget will be based, the Cabinet is deliberating upon those numbers and will make its judgment, based on advice about their economic impact in the coming days. It is for Government to come to an informed decision on these matters.

Perhaps I am a bit of a traditionalist in this sphere. I have worked for many years in Opposition as well as in Government, albeit as an adviser. Opposition and Government have distinct roles, both honourable, and I do not think they should be unduly fudged. We need a critical Opposition. The problem with a so-called national government is that in those circumstances one has no Opposition at all and I am not sure the suspension of critical faculties is what we need in this situation. I do not know how many people agree with me but that is my view.

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