Feargal Quinn (Independent)

I thank Senator O'Toole for sharing his time with me. The Minister of State, Deputy Mansergh, will be pleased that I do not intend to talk about the past. I will not comment on who was at fault or where mistakes were made because there has been too much of that. I will speak about the future. We have a truly serious crisis. According to a recent newspaper article, the State is spending €20 billion a year over our income. That is just huge money that I can see. The article continues:

Ireland is overspending its income, and having to borrow at a rate of €17 million an hour. This public deficit crisis is more serious than the €30 billion worst case scenario for Nama; the deficit will run up €30 billion of new debt in 18 months and continue to add debt thereafter.

As my former colleague, Mr. Vincent O'Doherty, wrote in the article in question:

In many respects, we are living an Alice-in-Wonderland existence. We are like a household that takes out an additional mortgage every week from an indulgent lender to meet its excess spending. We continue to live in an artificial comfort zone in which we can ignore reality.

The situation is not understood by the nation as a whole. The Government has to spell out what the problem is and how serious it is. Mr. O'Doherty continues:

The situation in which we find ourselves is extremely serious, but it is not complicated. Volumes may be written about the complex story of how we got where we are [I will not talk about that] but the solution to how we get out of it is, in principle, quite simple. The state must cut its expenses and raise its income through taxes to eliminate €20 billion of unsustainable over-spending. A country living so far beyond its means cannot expect renewed growth in the economy and the new investments essential to a fresh start, until it puts its own house in order.

The most recent Department of Finance monthly bulletin sets out the Government's planned reduction in spending over the next five years and estimates, based on IMF calculations, that debt will amount to 80% of gross domestic product by the end of 2013 if we continue what we are doing. Given that the Government proposes to spread the corrective measures over a further four years, the debt is even higher than necessary. The figure of 80% of GDP, or more if the banks need further funding, is comparable to the depressed conditions of the late 1980s when debt reached 100% of GDP. I do not think individual citizens quite understand all these millions and billions but an 80% proportion of debt suggests that 20% of tax revenue will be expended on interest payments rather than health, education or social welfare. Most of this money will go abroad because we are largely supported by foreign lenders.

This is effectively a permanent reduction in the nation's income which we will all experience through increased taxes and reduced living standards. People will say it is not fair but I recall the times when, as an employer, I had to tell a store it had problems. It was not fair but that is the way we were. I have had to decide to impose cuts on my businesses to survive. I was usually able to convince people because they saw the figures. We have to explain the situation to our public. In 1982 I had to close a shop because it could not survive. That hurtful experience is etched in my memory.

We have to return to the standard of living we enjoyed in 2002. If we are willing to accept the social welfare and standards of living we had seven years ago, we will be able to get on top of this crisis.

Will Ireland's populist policies continue with decisions delayed and watered down under pressure from interest groups until the slow progress, the surge in debt and interest and the waning of investor confidence bring in the IMF? I remind Senators of the story of Churchill during the Second World War. He is not someone who is regarded as a great hero in Ireland but he spoke about blood, sweat and toil. We have to take hard decisions now because we are responsible to the next generation. Let us act sooner rather than later and convince the public it is the correct thing to do.