Martin Mansergh (Tipperary South, Fianna Fail)

I thank Senators for contributing very constructively to this debate. As has been stated, the Appropriation Bill is about expenditure, although there is a cross-reference to the financial resolutions passed in the Dáil so, to that extent, Senator Boyle was within his rights, in particular as one of the resolutions referred to the carbon tax.

With very few exceptions, it is not the policy of the Government to tie particular revenue streams to particular expenditure programmes. Senator Twomey is quite right in talking about how expenditure expanded since 2000 to approximately 2008. It was a period in which it seemed we could square the financial circle and it was possible to do everything. We could reduce debt, put money aside into the NTMA, reduce taxes or increase reliefs, increase welfare payments and fund large capital expenditure programmes. In the other House I also referred to the fact that it was the golden era of public service unions, when numbers, pay and conditions all dramatically improved, especially at the middle and upper reaches, not excluding Members of both Houses of the Oireachtas.

We are obviously in a different position now and that is the reason for the measures outlined since July 2008. Senator Twomey asked about projected borrowing, and one of the budget tables shows this is to peak in 2012 at 83.9% of GNP. He also raised the issue of pensions and a distinction must clearly be made between the conditions of new entrants into the public service and existing members. In his budget speech, the Minister stated:

As part of the reform of public service pension arrangements, I will review the current arrangements and consider linking pensions to increases in the cost of living. Pending that review I do not intend to apply the pay cuts I have already outlined to existing public service pensioners.

Senator McCarthy concentrated exclusively on education. I have much sympathy with the ongoing argument that where possible, rather than renting at some cost prefabricated buildings, money should be devolved. There is a devolved grant scheme to schools where they can take charge of accommodation. It particularly applies to small schemes. We have a multi-annual capital programme but we should not get too hung up on what is spent on the capital side in a particular year. If money is not spent, it can normally be carried over to the next year and added to that allocation.

Senator Boyle referred to differences with regard to the carbon tax. I do not speak from a party political perspective when I say it is healthy when, from time to time, Opposition parties not in government take different views on a subject but do not engage in what one might call mindless opposition. To be fair, very few Opposition parties engage in mindless opposition. There are many pieces of legislation including, as far as I know, this Bill, which are not opposed by Opposition parties. Intelligent opposition is always selective.

I agree with Senator O'Toole that there is a significant difference between a general borrowing deficit of 11.6% or 11.7% and 15% or 16%, which is really in the danger zone. One of our important achievements has been to stabilise the deficit, and also to have a strategy to bring it down over a period of years. That is very important for confidence both at home and abroad. Under any circumstances, we will have to borrow very substantial sums of money, with the borrowing requirement next year at €18.7 billion. If foreign lenders have confidence in what we are doing, as this year has shown, there should not be a particular difficulty in doing that. As the experience of another partner country has shown, if foreign lenders do not have confidence, a country can face very serious difficulties.

Senator O'Toole is correct in stating that downward growth will continue to the middle of next year and is then projected to begin turning around. This year it will be on a much lower base. Even a small element of growth would stabilise the size of the economy. It is not immense good news in an abstract way but stabilisation is the first objective, with recovery the next one. This is partly in the context of the legislation we will discuss this afternoon, as well as wider developments.

We have already experienced a sharp improvement in our competitiveness as incomes and costs have been lowered. In a sense, that is what we must do as members of the eurozone. I will repeat what I have said before; we have taken pay cuts before which were disguised by inflation and devaluation. We are now part of a strong currency zone and these aspects cannot be disguised any more. It will clearly still take some time until we adjust to the new world we are in as members of the eurozone. It is not all negative.

As I am sure Senator O'Toole is aware, the budget contained certain measures prolonging mortgage interest relief to secure mortgage holders. My feedback is at least as far as they went, they were, broadly speaking, welcomed by people. President Obama only earlier this week took the banks in America to task over their lending activities and Senator O'Toole pointed out some of the real difficulties. We want lending to take place to viable businesses which are able to go forward and survive; we do not want businesses to fail merely for the lack of some carry-over finance. It is difficult to press and persuade banks to put money into businesses that have, unfortunately and tragically, ceased to be viable. That is the difficulty and dilemma.

Before concluding I wish to make some brief reference to some of the infrastructural investment being undertaken in 2009. We have targeted investment in support of sustainable employment. In February, €150 million was redirected to areas that are both labour intensive and of high economic value. Of this, €75 million was allocated to sustainable energy schemes, including €50 million for the home energy saving scheme, and €75 million to the school building programme. A large proportion of expenditure - €289 million - was allocated to fund science, technology and innovation to support investment in the smart economy. We also provided support for enterprise and sustainable employment creation through the wider investment programmes of bodies such as Enterprise Ireland and IDA Ireland and €50 million through the enterprise stabilisation fund.

This has been a year of great achievement for transport infrastructure investment with €2.4 billion in capital funding spent on transport projects and programmes. There are many projects in the pipeline. The main projects include the opening of a rail line between Midleton and Cork to provide a commuter rail service and the opening of the Luas extension to the docklands in Dublin. Seven national roads projects were completed during the year and we look forward to the completion of the motorway network next year.

A total of €500 million was made available for water services infrastructure in 2009, which reflects the priority the Government attaches to preserving and protecting our water resources as a key element of environmental policy. Certain lapses have underlined the importance of meeting national and EU standards for drinking water and wastewater treatment and we must put in place the critical infrastructure to support industrial, commercial and other development. Assessments recently completed by local authorities will inform the next water services investment programme.

Capital invested in primary and post primary school buildings in 2009 is expected to exceed €525 million, with €200 million being spent in the higher education sector.

In my own area, the increased number of flood events has underlined the importance of the OPW's role in flood relief, which has increased following its acquisition of responsibility for coastal protection. We have discussed the subject at length. There is a great deal happening and scarcely a day passes without a meeting of the head of the engineering division in the OPW and myself to discuss different schemes, difficulties and assessments in many areas. The allocation of funding has been increased.