Feargal Quinn (Independent)

I welcome the Minister of State, Deputy Billy Kelleher. Before the Minister arrived there was an interesting chat between two past college mates, Senator Pascal Donohoe and another Minister of State, Deputy Calleary. I gather they were in the same class. I beat them by approximately 30 or 40 years and I also did national economics under Professor George O'Brien and Professor James Meenan back in the 1950s.

I mention this because we have had a little history lesson tonight, with Senator Twomey giving a long history of what went wrong. There is a certain place for history but there has been too much study of the past in recent weeks and we should look to the future to see how we will solve these problems. In 1987 there was a similar crisis and we had a major difficulty. The Government of the day indicated it would have to make some very tough decisions and the leader of the Opposition, in Tallaght, indicated his support for that. We must have something like that now. We are hearing too much from those who believe anything the Government is doing or any tough measures are wrong. I have some difficulty with that.

From that perspective I will vote in favour of the amendment supporting the budget. A business leader in good times brings his people with him, as it is easy to do so. There are profits and he can go to unions and employees to see how to share them. When there are tough times, he will outline the tough actions to be taken. I am a little worried to hear that we should be going back to social partnership and getting agreement. If unions do not agree with a course of action, a business leader must outline the tough medicine that must be taken in order to succeed.

British Airways may be losing £800 million and its unions have indicated it will go on strike for 12 days. There are times to support the Government or business leaders as well as times when we do not. A business leader may need support because times are tough, and that is so now.

I understand where Fine Gael is coming from as it is an Opposition party. I am also disappointed because everybody is feeling the pain at the moment. I would like to mention a few points in the wider context that should also be considered. In the context of introducing wide-ranging cuts in expenditure, we must not forget the economic collapse in Iceland. We can also consider what has happened to Dubai in the past number of weeks. It is a warning sign that must be heeded, and it has raised the question of whether a country could default on its debts, or bring about sovereign default. That includes Ireland. Only a few weeks or months ago The Economist was asking if Ireland could survive. It is great to see the newspaper this week state that Ireland has taken the appropriate steps, indicating that "Ireland shows the rest of Europe what austerity really means". That means taking a tough decision at a time when it had to be taken.

Dubai is a small country but the volume of business it does is massive so it has a knock-on effect. Some economists are saying that we in Ireland could move from a fiscal frying pan to a fiscal fire. Dubai's problem could be the start of a bigger crisis so we must take some tough decisions. Dubai's problems have prompted some economists to reappraise the assumption that the EU - I suppose they mean Germany - would come to the rescue if we could not get ourselves out of our current difficulties. What we know is that we must do everything to stop our country from going bankrupt. We need to aim for a cautious fiscal policy along with transparency in order to demonstrate clearly that we are not a tin-pot dictatorship.

We need Opposition support on this occasion. Greece is experiencing severe financial crisis and many commentators believe the Greek Government is not doing enough to steady the ship. There is a perception that the Greeks are not taking responsibility or doing enough to fix their problems. Greece has a deficit of around 12% but representatives have said the public sector and welfare cuts that were announced with our budget last week would not necessarily work for them. We can see what has happened to the Greek economy.

On the other hand, many in the international community and financial journals see Ireland as taking the necessary steps with this new budget. We are seen as a country which is taking proactive measures to improve our position. The fall in Ireland's interest rate premium is a sign that bond markets are viewing the actions by the Government positively. Our unemployment rate of 12% this year is showing some signs of stabilising and our exports are also holding up surprisingly well.

The measures taken by the Minister will help our competitiveness but we need to follow up on many more measures across the board. For example we should look at stronger competition policy and address our energy costs, which remain extremely high. A survey of multinational companies conducted by The Irish Management Institute and National Irish Bank in October found that respondents saw energy costs as their biggest concern, and labour costs in Ireland, at 81%, were rated as the second most expensive operational cost in Ireland relative to sister operations.

A quote by a representative of a multinational company published in the survey struck me:

Cost is the major challenge facing our Irish operation. Virtually all offices globally have a competitive advantage over our Irish operation. I have no doubt that if our company did not now have a substantial presence in Ireland we would almost definitely not establish one.

That is a very worrying sentiment. At the moment, it is extremely hard for businesses and Ireland is a very expensive place to live. We need to reduce costs and such moves would provide the best stimulus for our economy.

We must remember in this country that we are not down and out. Next year, our economy will be back to around 2005 levels. We need politicians and the public in general to be much more optimistic about our country. Manmohan Singh, then the new Finance Minister of India, presented an emergency budget in 1991. In his speech, Mr. Singh pointed out that the new government had inherited an economy in deep crisis. The budget deficit was more than 8% of GDP and the current account deficit was 2.5% of GDP. In the concluding part of his speech, Singh stated:

I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, "No power on Earth can stop an idea whose time has come." I suggest to this House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome. Those were Mr. Singh's words in 1991. Such positive sentiments are needed instead of the political posturing that is holding up our recovery. Mr. Singh set out a programme of fiscal responsibility and other reforms that laid the basis for the subsequent boom in India. As a result, many believe India, largely unaffected by the current recession, will become the world's third largest economy after China and the United States within 20 years. There is no reason we cannot stage a similar recovery. However, we currently need cuts to ensure our survival. Squabbling over what happened in the past and who did right or wrong is not what we need. We have to take responsibility for our own situation and show patriotism in our hour of need. There is a danger that we, in Ireland, despite the great example set during the flooding of recent weeks by people helping their neighbours and supporting one another, can be criticised for selfishness. We act in a selfish manner on too many occasions. I urge everybody to take a long-term view. If we are to succeed, we must take the tough medicine now to make us healthy in the future.