Paul Bradford (Fine Gael)

I am glad to have this opportunity to contribute to the debate. A number of colleagues, including Senator MacSharry, have actively sought such a debate during the past month to six weeks. We are now almost at the 24th hour and presumably the major budgetary decisions have been taken. I do not believe, therefore, that there will be any dramatic changes as a result of this debate in the Seanad. However, I hope that, if we are still in our current positions in 12 months' time, this House of the Oireachtas will be used in a much more proactive way to debate the financial issues facing the country and the budgetary choices available. I also hope this Chamber will be used to liaise with the social partners, listen to their suggestions and present some ideas and suggestions of its own. Notwithstanding that concern and complaint, a matter for another day, I wish to express some of my thoughts on the current economic choices facing the country.

The Minister of State knows better than I that next week's budget will almost certainly be the most difficult ever faced by the Government, in terms of its preparations, and one of the most difficult ever faced by the people. It is unique in terms of the scale of the problems we face and the solutions that will have to be presented by the Government. On the other side of the equation, the Government has one small advantage. Possibly for the first time ever in the history of the State, there is a reasonable degree of acceptance by the public of the scale of the problems. There may be limited public acceptance of the solutions and measures required also. I recall the Governments of the 1980s under the leadership of Dr. Garret FitzGerald and the late Charles Haughey which attempted to bring forward difficult financial measures. One of the road blocks they faced was the lack of public understanding of the scale of the problem. At least this time almost every citizen is able to quote the figures mentioned by Senator Butler that show the country is spending €57 billion, while our income is €34 billion. This cannot continue. If there is light at the end of the tunnel for the Administration, perhaps it is the expectation of difficult measures. People are willing to take some medicine. Everyone favouring cuts, tax increases or revenue curtailments as long as they are in someone else's area is a regular occurrence. Tomorrow week the people must accept that we must all play our part.

A phrase that has annoyed me very much in the economic debates of the past 12 months is, "We did not cause the problem, it was the banks which caused it". As The Sun newspaper might put it, "It was the banks wot done it". The banks have done significant damage to the economy and our society. Several people within the banking institutions are guilty of grave economic crimes. However, even if there was never a banking crisis, there would still be a serious economic crisis and we would still have a deficit of more than €20 billion. To be brutally frank, we have all caused the problem to some degree. In the past decade every citizen has earned somewhat more than he or she should have, spent in excess of his or her income and saved too little. We have all been part of the problem. I am the first to acknowledge that some are a good deal more guilty than most, but we have all sailed along in the ship of State which is now in very choppy and rocky waters. Therefore, we must all play some little part in turning the economic fortunes of the State around.

The throwaway comment to the effect that if there was no banking crisis, there would be no economic crisis is silly in political and economic terms because Government revenue and spending equations have been out of place for some time. When one adds the international economic thunderstorms that hit us, we can see exactly where we are. The question is how can we get out of it. There is a mature political consensus on the need for the correction to be in the region of €4 billion. When one debates from where this €4 billion should come, whether spending cuts or taxation, it falls out of kilter very quickly. However, it is good for the political establishment to have a degree of mature acceptance among all political parties that tough decisions are required.

I welcome the fact that progress appears to have been made with the social partners in the talks to pare back the public sector pay bill. I support and admire our public servants and the public service very much, as does everyone on this side of the House. However, we must recognise that matters cannot continue as heretofore and if they do, there will be no public service or public servants because the country will be forced to transfer responsibility for its financial future to the IMF. If the formula required is a temporary lay off of public servants for ten, 12 or 14 days, that is acceptable. If that measure produces the 5% or 6% cut in the public sector pay bill without embarrassing anyone too much or without anyone coming under an obligation to say what it really entails, we can live with it politically and economically. By one or other means we must reduce the public sector pay bill.

We must consider the big spending Departments, including the Departments of Health and Children, Social and Family Affairs and Education and Science to determine the savings that can be made in these areas. We could continue to live in dreamland or cloud-cuckoo-land and maintain there should be no more cuts, especially in a given area. However, these three Departments spend approximately 75% of taxpayers' money and savings and reductions must be made within them.

A fine contribution was made by Senator Mullen on the education budget. On several occasions in the House he has made an excellent case in outlining the reasons teachers are so important, why the education service must be maintained and developed and why we must ensure investment continues in education. He has been a great champion of this political argument and it is a view with which I agree. Notwithstanding the dreadful budgetary figures facing the country, I trust we will continue to invest in education.

Although stark economic and political choices will be presented to the people next week, we must project a degree of hope. The term "stimulus plan" has been thrown around too easily. We have been informed of the success of such plans in Germany and France. However, they were based on the motor industry. There was a short-term gain but such plans may not succeed in the longer term. However, we must consider investment and job creation. My colleague, Senator Donohoe, pointed out very effectively that every job created was worth almost €20,000 to the taxpayer. This must be at the forefront of our thoughts.

Let us consider Irish society, industry and the economy. How does one stimulate the economy in a manner that will not be dramatically inflationary and will not result in a vast amount of money leaving the country because it is spent on imported goods and services? Irish agriculture stands out as an area suitable for a stimulus plan. There is a production deficit in the European food industry at a time when world food supplies must be significantly boosted. Irish agriculture could play a very significant role in this regard with the help of a stimulus plan. Thousands of jobs could be created if there were reasonable and wise levels of investment. Let us consider the REPS, rural environment protection scheme, bio-fuels and other alternative energy sources. The Minister of State and his ministerial colleagues would be wise to consider the possibility of introducing a stimulus plan based on Irish agriculture which could return rural Ireland to prosperity. Only last week definitive figures were produced showing the drop in farm incomes during the past 12 months, on a scale of between 20% and 30%, which represents a frightening drop. This issue must be addressed.

The specific measures to be taken next week remain secret to the Department of Finance and the Government but there have been some straws in the wind in respect of cutbacks that are a source of concern for many citizens. Child benefit has been the subject of debate for a significant period. The classic argument is that a universal payment for rich and poor alike can be challenged. Members received a huge number of representations from various groups in recent months and these indicate that direct payments to mothers in respect of their children are still extremely important. I hope the Ministers for Social and Family Affairs and Finance will reflect on that point.

The social welfare budget is huge and as unemployment increases, it will become even larger. I hope means-tested payments and old age pensions will be maintained at their current levels. There is a possibility that benefit payments which are not means tested could be examined. If a saving is to be made on the social welfare budget, I hope it will not be imposed on those who are on the basic means-tested payments or old age pensions.

Figures in respect of VAT have emerged in recent weeks. A lack of both consumer confidence and spending power has obviously resulted in a significant drop in VAT revenues. Last year's decision to increase VAT has proven to be a catastrophe. While I accept that a number of tough measures will be announced on Wednesday next, I hope some positive measures will also be introduced. A strong case can be made in respect of reducing VAT. Such a move would result in the generation of additional revenue to the State and would restore consumer confidence and spending power.

As well as presenting the people with stark choices and challenges on Wednesday next, the Government must also give them a degree of hope. The budget must be realistic but people must also be afforded the opportunity to see that there is light at the end of the tunnel. I am of the view that people are up to the challenge. They are ahead of members of the political establishment in this regard and they are aware of the scale of the problem. They are concerned with regard to their jobs and incomes but they also have fears with regard to their children and their children's children. If next week's budget is tough but fair, it will achieve the desired response from the people. I accept that it will be difficult for the Minister for Finance to frame such a budget. However, he must try to match people's expectations.

We have moved well beyond the politics of economic illiteracy. The people are not stupid. They are aware of the challenges we face and of the choices that must be made. I hope the Minister for Finance will introduce a budget that is both balanced and fair.