John Gerard Hanafin (Fianna Fail)

I welcome the Minister of State. I am conscious that it is difficult to make cuts at any time. It is very difficult to accept them, but I am sure the people will find themselves resilient and understand that what was undertaken yesterday was necessary. That is the criterion to move forward. However, we had a choice. We could have borrowed again and seen the rates go up in the bond market. We could have pushed out the number of years it would take to repay the debt and have had another year in which the economy would not work in the way it should, that is, being prudently managed. That was the difference yesterday. The Government decided the economy would have to be managed prudently and took effective steps. There has been a positive response, both internationally and in the bond markets. That is not to say, however, that people are not making sacrifices.

When we look at benchmarking and the huge increases achieved in the good years, the reality is that it was never acceptable that benchmarking awards could only move upwards. All of us who took a cut yesterday have to understand that when the private sector is hurting in a severe way, we must do our bit to be part of the social partnership. That is exactly what happened. It was not as if we were preparing the ground for wage cuts in the private sector, as suggested. The private sector has taken wage cuts already. Businesses are in trouble and cutting back. More than anything, what helps confidence in an economy is knowing the people who are looking after it are doing the right thing. That is what happened yesterday.

It was suggested there was a pot of gold to be saved in social welfare, although an Oireachtas joint committee and the Comptroller and Auditor General found the sum to be nowhere near €2 billion. Therefore, Opposition Members have agreed already that there is nothing like €2 billion to be made in savings. It does not serve any media outlet to make exaggerated claims at a very sensitive time. Similarly, there are suggestions huge sums of money go to east European countries to pay for children living in those countries whose parents work in Ireland. Under EU law and the treaties we signed, we are obliged, where a non-national is working in this country whose children are living in an east European country, to pay the difference. People imagine there are vast sums involved but the total figure is €20 million. The numbers claiming are down from 10,400 last year to 9,900 this year. Trade is a two-way street. We export approximately €86 billion worth of goods and import goods to a value of €60 billion; therefore, we are doing substantially well. The European Union has been a very positive feature in Ireland's economic growth.

Yesterday the Minister ensured the less well-off were protected. For those on social welfare, child benefit is protected, as are the vulnerable and the old. Even those who took a cut, those of us who rightly had to share in what was happening in Ireland inc. have seen more than a 6% decrease in prices in the past year. Those of us who buy goods in supermarkets know it is possible to obtain great value. Shopping has become much less expensive and there is much more competition.

The budget was fair and necessary. It contained practical items which were misrepresented. It was not a budget to assist people who like to have a drink, but one that stabilised the price in the Republic in order that the money spent north of the Border - €475 million between January and July - would not continue to be spent there. I support the North of Ireland and what is happening there in every way but not at the expense of what is happening in the Republic. Already, it is being said the North of Ireland has had a growth rate of perhaps 1.25% in 2009. Unfortunately, that was driven by the difference in prices between North and South. The Minister only did what was necessary by adjusting the amount of tax in order that revenue would remain in the Twenty-Six Counties.

Another misrepresentation is that there is a huge big pot of money that has been uncharged and there are people who are not paying their fair share. The reality is that in this State the top 1% pay 26% of income tax; the top 4% pay 48%; and the rest, some 81%, pay 18%. In fairness, this was recognised by the Opposition. Vis-À-vis the rest of Europe this is a very low tax economy with high standards in the public service. We hope that will continue, but we will have to pay our way.

As a small open economy, we are dependent on world markets. What would have happened if we had not taken all the trouble to ensure stability in banking services? In April 2008 we were not even sure whether we would use paper money in the future. Banks were failing in the United States, including Lehman Brothers, AIG, Fanny Mae and Freddie Mac, and in the United Kingdom, including Northern Rock and Bradford and Bingley. None of us knew what the future would bring. However, we started to stabilise, using a three-prong method. First, we had to stabilise the banks in order to stabilise the economy. Second, we had to stabilise the public finances and, third, institute job creation, to which we will look in the next two budgets. It is no harm to note that when we took the decisive step to ensure every deposit in every bank in the country, one of the two main Opposition parties did not support this very necessary measure which ensured the stability of the banking sector. Funds that were flowing out of Irish banks stopped flowing. Initially our neighbours said this step should not have been taken, but nonetheless other major European economies followed suit very quickly and began to stabilise.

Other measures in this budget include measures to protect and create jobs. Despite the criticism of FÁS, and people in this House have been forthright in ensuring that high standards are maintained in FÁS, it is important to recognise that the money being allocated to FÁS is going where it is needed, namely, to training and to support important projects in town and country areas. That is work that must be done, and it is work that is well done.

Other measures in the budget include a one year employers' PRSI exemption for all new jobs and close to €10 million support for the food industry.

I want to refer to an important factor often overlooked when people ask what the Government is doing about the banks. Yesterday, the Minister, and it was not widely commented on, announced a review system to examine credit refusal decisions by the banks. The purpose of that is to get credit moving again. That is important because in the National Asset Management Agency legislation we ensured the Minister could regulate the way the credit system works. Due to the mistakes of the past I ask the Minister to consider for the future a measured amount being the maximum a bank can lend in each sector. In other words, private credit - 30%; mortgages - 30%; commercial - 30%; and perhaps a floating 10% to allow for any variations that could occur. That would ensure we would never again see a situation where banks were giving out billions of euro to developers but the ordinary investor could not get money for a small and medium enterprise. Ireland could be innovative in that regard. It does not exist at the moment. I note the United Kingdom yesterday put a very large tax on bonuses for bankers, which is no harm.

The budget was tough, fair but, most importantly, it was necessary to get us on a sound financial footing to go the next step, that is, the next two budgets which I have no doubt will focus on job creation.