John Gerard Hanafin (Fianna Fail)

We have often quoted Dickens in this House and it is worth remembering Mr. Micawber when he said:

Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

We are in a slightly different situation today in so far as the annual income is €34 billion and the annual income expenditure is €52 billion. It is interesting to hear commentators from the Opposition speak well about different aspects of the economy. They do not, however, deal specifically with the substantial problem of how to raise that type of income and what the Government was obliged to do. The reality is that the Government was obliged to introduce a supplementary budget and that it took hours, days and weeks of planning on the part of Cabinet to ensure it was fair. In as much as it could, the budget established a balance in a progressive tax system to ensure equity and fair play for all. There is no easy way of giving bad news. It is a hallmark of a political party that will put the country first regardless of the political consequences.

Often, when one knocks on a door one is asked what happened to the money in the good times, as if it had fallen into a well somewhere. The reality is that many excellent projects were undertaken with the money available in the good times. We were well positioned for a global downturn in that Ireland had the lowest tax wedge in the OECD; the National Treasury Management Agency was in place and we had full employment. Funds were made available for many necessary works, including infrastructure. Our economy is well placed for the upturn which appears in the marketplace at the moment, although it would be foolhardy to suggest we have turned a corner. There are positive indicators in the international marketplace notwithstanding the fact that 3.3 million people in the US lost their jobs, the German economy will contract by 5%, the Japanese economy will contract by 6% and the French and Italian economies will contract by 3% and 5% respectively.

While there has been a global downturn, we were fortunate it happened when it did given our banking system was in near crisis. The Government upheld the structures and security of the State. It is interesting to note that the Opposition parties did not support the introduction of the bank guarantee scheme or nationalisation of Anglo Irish Bank, undertakings that were absolutely necessary. The finance spokesperson, when repeatedly asked by Vincent Browne what his or her party would do, could not come up with an answer. The Government spent many hours, weeks and days ensuring equity and fair play in the supplementary budget that was necessary. There are aspects of the supplementary budget that are worth examination, including mortgage interest relief. There is no doubt it was a positive sign for our economy that we were able to allow large levels of mortgage interest relief. I hope that when the economy picks up, this issue will be revisited to ensure the necessary construction industry can get back on the road.

Another aspect is the 2% increase in deposit interest retention tax, which will bring in €70 million in a full year. That indicates there is €100 billion on deposit in this country. I would like if we could consider giving incentives to people to spend some of that income thus ensuring less need for increased taxation. Other positive aspects include allowances for development in intellectual software. This is thinking for the future in the midst of difficult times.

While it was necessary to raise capital acquisition taxes because of the need to raise income, valuations have fallen substantially in the interim. The capital allowances were welcome. Excise duty is an area which I hope we can re-examine. We should seek to ensure ministerial orders in the North dovetail with the Republic to ensure the price of alcohol and fuel is maintained at the same level. This would prevent much of the illegal activity across the Border. I am particularly cognisant of the fact that many of the people who engage in these illegal activities use a cover of disparate republican view to justify them. In other words, it is a double edge sword. If we could introduce a minimum pricing order on excise duty on mineral oils and alcohol, similar to the one in place in Scotland, this would assist us in our endeavours to ensure criminality is removed from the system.

I am cognisant also of matters relating to social welfare. It does no harm to remind ourselves that we have one of the best social welfare systems in Europe. Despite world difficulties and the downturn, the Government has continued to care for the less well-off to the best of its ability. On allowances, social welfare recipients here are often paid two or three times the amount paid to recipients in the North, thus leading to a temptation for people to defraud the Irish State, a matter which is currently being dealt with by Government.

There is a commitment in Government, in light of the inability to pay the Christmas bonus, to examine what savings can be made not alone in the Department of Social and Family Affairs but across all Departments to ensure the payment is reintroduced, even at a reduced rate, which is welcome.