Liam Twomey (Fine Gael)

I move:

That Seanad Éireann:

noting that:

the Budget forecasts a further cut in employment levels of 65,000 in 2010, after the estimated fall of 165,000 this year;

the OECD, the European Commission and the IMF have concluded that, after the end of the debt-fuelled property and public spending bubbles, a return to the export-led economic growth of the 1990s is the only route for Ireland out of recession and back to full employment;

the National Competitiveness Council has identified high business costs and bottlenecks in energy, broadband and water infrastructures as the biggest barriers to growth in exports;

condemns

the poverty of ambition and vision in the Budget with regard to economic renewal and protecting employment;

the €1 billion cut in the capital programme (which will alone destroy at least 10,000 jobs);

the use of scarce resources to cut taxes on car imports rather than to support exporters, which will lead to a diversion of money out of the economy;

the failure to provide for any across the board cost relief to struggling exporters and other businesses in areas such as employment taxes, local authority rates and energy costs; and

the lack of social solidarity in proposed social welfare cuts which will adversely impact on the most vulnerable in society.

As we approach the end of the year, it is appropriate to have another discussion on the economy and where we are going in that respect. When we had debates on the economy in this House at the beginning of the year, members of the Government parties pointed out that economic factors were mainly responsible for the mess we are in at present. It is interesting that in the first line of the Government amendment to the motion there is a recognition that we are facing the worse economic crisis since the foundation of the State. There is also a recognition that the Government parties had something to do with the mess we are in at present. Unfortunately, the Government is still living under a certain degree of delusion given that the Government amendment to the motion states that "the actions taken by the Government to manage our way through this crisis have been bold, decisive, innovative and effective". I will leave it to the Government spokespersons to speak about what has been bold, decisive, innovative and effective in the Government's management of the current crisis. We have not seen that type of decision making by the Government in the management of this crisis.

This might be the time for us to reflect on what actually happened. The Government has been incredibly slow to acknowledge or even discuss how we ended up in the mess we are in at present. The new Governor of the Central Bank said we should discuss what happened, but the Taoiseach has poured cold water on that idea.

Perhaps the former Taoiseach, Deputy Bertie Ahern, the Taoiseach, Deputy Cowen, the Minister, Deputy Harney and a former Minister, Charlie McCreevy, were Ireland's version of a gang of four. In the same way that China's Gang of Four utterly destroyed that country during the Cultural Revolution, our gang of four or meitheal ceathrar, to use its Irish title, has destroyed our economic future. It is time to have a proper debate on that. Perhaps it is because the Taoiseach, Deputy Cowen, and the Minister, Deputy Harney, are still in power that we are not facing up to what happened in this country during the past decade.

What happened when Fianna Fáil took power in 1997? On what was our economic growth built? Every Member of House knows that it was built on our exports. This country was revolutionised in the 1990s to the point that the growth in our economy was export led. The level of public spending was a great deal lower at the time but ours was one of the most competitive economies in Europe, which is the reason we earned the title, the Celtic tiger economy. We genuinely were a Celtic tiger economy in the late 1990s. Unfortunately, following the then Government's winning of the 2002 election, things started to go wrong. The first action it took was to put the breaks on the economy because there was a slight shock to the world economy. That should have been a warning to the then Government as to what could happen. It seemed to dismiss all common sense, especially in the period from 2004 and 2007, and we saw this country brought to the edge of financial ruin.

There is a need to have a strong debate in this House on what went wrong. Was it something that happened prior to 2004 or something that happened during the short period from 2004 to 2007 that landed us in the mess we are in at present? Was it cheap credit that put us there? Credit was cheap and it was easy to borrow money, thanks to our joining the euro currency. We got very cheap rates in regard to the economy. Was it the behaviour of the banks that caused this problem? They were lending to customers at very cheap rates. Did issues such as the granting of 30-year mortgages contribute to this problem? When I got my first mortgage in the early 1990s, one would not be given a 30-year mortgage. Twenty years was the limit. A limit applied to the amount of one's salary one could use to borrow money and, most importantly, one could not get a 100% mortgage. Suddenly the banks were lending money to borrowers. Was it that which drove prices mad? I remember hearing Ministers at the time, including then Minister for Finance, Deputy Cowen, say the values of properties in Ireland were undervalued according to international standards, yet at that time property prices in the centre of Dublin were nearly exceeding property prices in the centre of London. That was complete madness. That should have been acknowledged but was not.

Could the regulator, if it was truly independent, have stopped this? I raised the question previously as to whether the Governor of the Central Bank at that time was a little too close to the Government and whether he had a role to play in this. We need this sort of discussion about what happened to our economy. Why has it all gone so badly wrong?

We cannot move forward until we have had a comprehensive look at what went wrong in our economy in this period. We blame bankers, regulators and the Government, but we need to apportion the blame in a way that we can learn from this. That is something that has not happened. All members of the gang of four should present themselves to an Oireachtas committee to explain their role in this respect. As long as we are in denial about what happened during this period in our economy, we will not be able to move forward. If the Government members are afraid to do that, I will call on other Members on this side of the House, some of whom have written extensively on this issue. Senator Shane Ross has written a book on this. We should start to put on the record a clear idea as to what the hell happened to our economy during this period.

We also need to get solutions to the current mess we are in, as we did for the mess in the early 1990s when we focused on competitiveness and jobs. We focused on building a competitive, export-driven economy. At that time the world economy was also emerging from recession and we were lucky to be able to ride on that wave and that is what delivered the Celtic tiger to the people of this country. We need to develop an export-driven economy. The Government parties and the Government's pre-budget statements have clearly pointed out that we need to focus on building an export-driven economy for the future, yet we have seen nothing in Government policy up to this point to suggest how we will achieve that. No clear indication was given in the budget that there will be anything to drive forward the export-driven type of economy that got us out of the mess we were in at the beginning of the 1990s. We must consider what is happening in that regard. We need to keep people working.

I wish to focus on the reform of work practices for those employed by the State. Not just Ministers but some of the senior members of the union leadership need to discuss the matter. Benchmarking was initially decided upon to improve productivity and change work practices within the public service and the Civil Service. However, there was no significant change in work practices in the past four to five years. The union management said they collapsed the partnership talks and that all bets are off in terms of implementing reform of work practices. The Government should get back into talks with the unions because if it does not, the only option open to the Minister next year will be to cut public service pay further and undermine pensions and social welfare payments.

The unions should consider the reform agenda and the changes they were proposing before the partnership talks collapsed. They should consider how to implement change in the next 12 to 18 months in order to prevent further erosion of the living standards of civil and public servants. Otherwise, the Minister will have no other option but to make further cuts. This is an opportunity to see whether the reforms and changes to work practices that were due to be discussed at that time could be implemented in order to prevent the need to increase taxes or further cut public sector pay next year. The Minister must go back to the unions in that spirit. There is too much confrontation currently for a country that is in crisis. There is a serious need for the Minister to go back to the unions and see whether we can push forward the agenda for change.

The Minister must also be brave himself. The Government has indicated that the pay of judges is a constitutional matter. That is not true. The issue arises if the State tries to hinder the Judiciary by docking its pay. That argument would not stand up under the Constitution if every single person in receipt of a payment from the State - from those on social welfare to the Taoiseach himself - receives a pay cut. How could that be seen as unconstitutional if the members of the Judiciary are affected? The Minister should include that provision in the Finance Bill in February and send it to the President, who can refer it to the Supreme Court for it to be tested on the grounds of unconstitutionality. The Supreme Court can make rapid decisions on constitutionality that we are afraid to take on board. That issue needs to be addressed.

There is a need for the Minister to show he has the bottle to tackle the issue and not to be looking for quick fixes. He should just do it. That is one issue he should definitely take on board. Solutions exist other than just hitting people who are vulnerable, disabled and poor and taking a carte blanche approach to attacking the public service and the Civil Service whenever the Government is short of a few bob. We cannot be that simplistic in our approach.

There is a need also to have a proper discussion on where we spend money on the capital budget. Broadband is a mess and needs to be addressed. Water infrastructure also needs to be addressed. The leaks about the budget are only superseded by the leaks from this country's water infrastructure. We also need to examine closely the green agenda and whether we can do more. For instance, if the Green Party was so keen on cars being the cause of damage to the environment, perhaps we could introduce a law to ban cars above a certain size in this country.

The Minister must re-examine social welfare changes. I have been contacted by people outlining how difficult it is to get casual labour for building work or people to drive trucks. The reason is that it is so difficult to get into the social welfare system and equally difficult to get back into it following a job offer for a short period. That is causing problems for people who require staff on a short-term basis. Another huge problem arises in terms of carbon tax in that natural gas is not available. That is causing uncompetitive conditions for companies, especially in County Wexford. I await the Minister's response. There is a need for us to have a good look at the economy.