Liam Twomey (Fine Gael)

With the permission of the House, I wish to share time with Senator Eugene Regan.

I do not know whether the Government has learned anything as regards what is actually happening in this crisis. There was an unbelievable episode around 15 months ago, in March 2008 I believe, where the Government announced it wanted to give itself pay increases of between 12% and 14%. At the time while it was not as clear as it is today that the economy was in trouble, it was obvious that there were problems coming down the track.

The then Taoiseach, Deputy Bertie Ahern, and the then Minister for Finance, Deputy Brian Cowen, were about to splurge out and give themselves another increase on the recommendation, they said, of the Civil Service pay review body. It was so outstandingly stupid that the only credit one could give Ministers at the time was the fact that they did not actually pay themselves the money, because it was just unreal. The Minister of State, in his speech is trying to make out that people are taking lines out of the IMF report to have a go at the Government. It must be remembered that before the IMF report was published it would have passed through a number of hands in Government Buildings to ensure it contained nothing glaring that would embarrass the Government. It quite clearly states that this place was run by a bunch of lunatics between 2002-07. Government policies have basically banjaxed this country and put us in a worse position. It is stated quite clearly throughout the report that the Government overheated the economy and that we are suffering one of the worst contractions in GNP by comparison with the rest of the world. This Administration has made a mess of it.

The fact the Minister of State can talk away, as if there were only minor problems to be dealt with, is misleading the people. They should know that this is serious. The financial sector is a serious worry, for example. If the IMF said the deficit was €35 billion and this was read by civil servants in Government Buildings who did not contradict the report, then it is a fair indication that this figure is being accepted by Government as a true estimate. The public finances remain a serious concern, and day to day spending in the public sector has increased this year, not contracted. The Government is still not prepared to publish the report of an bord snip nua, so that we may see what it is planning to do. There is a €20 billion deficit in our public finances.

I do not believe it is right that the Minister of State is attempting to palm us off with the assertion that the Government will be working over the summer. There is a serious need to inform the people as regards how bloody serious this problem is. They have lost confidence in the Government and understand the essence of this report to the effect that we have dismantled our economy. It was the Government of the day which did this. One remembers the former Taoiseach, Deputy Bertie Ahern, kept going on about the fact the economy was flying, because there was an election coming up in 2007. The executive summary in the background to this report says that since the start of the decade, especially from 2005-07, easy credit fostered a property bubble, bank exposure to property lending soared while reliance on wholesale funding intensified. It says wages rose rapidly and international competitiveness was compromised.

When people write these reports they do their best not deliberately to embarrass the Government, but throughout this report the finger is pointed at bad government. The first thing the Government must accept is its role in dismantling our success. The report clearly states that the real Celtic tiger that was driven by competitiveness, increased exports and increased foreign direct investment survived from 1989 to 2001. That was the real success of the Irish economy. After that, bad Government policies dismantled the Celtic tiger and left us in this situation.

The Government was warned time and again. I have a number of extracts from speeches Deputy Bruton made from 2004 right up to before Christmas constantly pointing out to the then Minister for Finance the dangers of his actions. Deputy Bruton showed that Government spending was outpacing growth in the economy. Economic growth was already focused on a property bubble and taxes that were unsustainable in the long term. Those were the sort of issues Government Ministers knew about. A number of people were pointing out this problem, not just Deputy Bruton.

When people collected their SSIAs in 2007 approximately half of the people used that money to pay off debts and get their credit back in line because they knew something difficult was coming down the line. It seems the Government members were the only people who did not know what was going on. I do not know if it was arrogance, stupidity or if the Government was plainly misleading people, but that is what happened. The Minister has to let us know what will happen next. He must also accept the blame. He cannot say this is just a global economic correction. Ours is a massive 13% contraction in the economy from its peak to where it will be next year.

In time we will know where people's standards of living are back to. It has been pointed out that the average Irish household has lost €150,000 in value. The Minister is correct that for some people it is even worse than that. They have lost their jobs and homes and he has shattered their futures because of the messing that went on in Government Buildings when then Taoiseach, Deputy Bertie Ahern, and then Minister for Finance, Deputy Cowen, were running this country. The Government still refuses to acknowledge there was a problem. That arrogance and the fact that it cannot accept its role in this, is the reason people want the Government out of Government Buildings.

That is some of the history of it, but now we must say what we will do next. That will be incredibly difficult. The Government must cut back on public expenditure and broaden the tax base to tax people more. Unfortunately, with the economy contracting so quickly we are going into a deflationary cycle. If that takes hold we will be in an unbelievable mess and we run the risk of having someone come in and make these difficult decisions for us. That is why the Government must publish the report of the special group on public service numbers and expenditure programmes, SGPSNEP.

I mean no disrespect to the Minister of State, Deputy Kelleher, but that is why the Minister, Deputy Brian Lenihan, should have come in here this morning to talk about this. We need to have some idea of what is going on inside his head and where he is taking us over the next 12 months because the decisions that will be made in the next six to 12 months are crucial. It is only reasonable that the two Houses of the Oireachtas should know what is going on.

It is stupid to ask what the Opposition will do because we do not run this country yet and it does not matter to the Irish people what we want to do or might think about doing until an election is called. Because the Government has gone into bunker mentality, there will be no general election for a couple of years, as it keeps telling us. It does not matter what we think for the next two years but it is extremely important we know what the Government members are thinking so we can have a proper debate on it.

There is a need to control public finances and we want to know what the Government will do. The IMF report says primary expenditure, meaning expenditure by Government, must be reduced by the equivalent of approximately 9.5% of GDP. It also points out that the Government must increase taxes by the equivalent of 3.75% of GNP. The Minister has given us no indication how the Government will achieve that between 2009 and 2014. The essence of his speech should have been pointing out what the Government will do.

The Minister mentioned Government reform in his speech. Government reform has been talked about since 2001 but the Government needs to accelerate the reform he is talking about. The amount of reform between 2001 and now has been almost negligible. There has been very little reform, in fact we have seen an explosion in the number of people and costs in the public service and it has not delivered the increase in productivity one would have expected from the sort of cost involved.

The Government is just talking about what it will do. I have seen nothing concrete from the Minister of State, Deputy Kelleher, or any senior Government Ministers so far about what they are actually going to do. So far it is all bluff and bluster. This is why the Irish people are growing more and more tired by the day of what the Government is up to. The Government must first come clean and admit its mistakes and its role in destroying this economy. It then needs to quickly publish what it will do.

The Governor of the Central Bank came out on the day of the local elections giving us the impression that there were green shoots in the economy. Either the Governor suffers from the same delusions the Government suffers from, or he is too close to the Government and is not impartial. The rate of decline in the economy is slowing, but it is still declining. This report would have been shown to the Governor of the Central Bank before it was published and he would have known these figures. If senior people in the civil and public service and the regulatory bodies, who are supposed to be impartial, are acting as mouthpieces for the Government that is a serious concern for how this country is being run.

That is why people talk about cronyism, people being too close to each other and the Government having been around too long affecting its judgement. If that is going on, this country will end up in a worse state than it is. Our economy remains susceptible to damage from other external shocks. When all this settles and we reach 2010, the people of Ireland will be shell-shocked when they think back to where they were and where they will be next year. The Minister and his Cabinet colleagues are giving them no indication whatsoever of where they are going, but are fooling them.

It will be extremely difficult next year and there is a need for more honesty and truth as to where our economy is now. People are on strike for a 10% pay increase because they are listening to Ministers saying things are not as bad as they are. This IMF report should be read by everybody. It is pretty straightforward and easy to read but it is damning of the Government and frightening for our future.