Fiona O'Malley (Independent)

The Senator should not shake his head. I am talking about well before that, going back to the 1980s. We need a constructive debate in this respect. In dealing with the economic crisis, there is a fundamental difference in those who follow stimulus or those who make cuts to deal with the deficit. The right approach is somewhere between the two, as there must be a level of austerity in decreasing the deficit. It is a major problem from which we cannot escape. We must equally consider that if we cut back, we may suffocate the economy. It is a major dilemma and somewhere between the two approaches lies the answer.

We should consider the experience when we cut taxes, as there were benefits in that the tax intake doubled. We must not ignore the fact but analyse it. We must be fair to people and keep an enterprise culture going in the country. If there is one thing we learned since the last recession in the 1980s it was that tax rates do need to come down. We should not impose taxation on work - we should avoid that at all costs. The experience of the past 20 years has shown us that.

The low taxation economy and enterprise culture also gave us what was effectively full employment. That is completely forgotten about now but I ask Senators to think about it. The Government may have taken other measures that were not correct in economic policy but what I have mentioned is fundamental to an economy.

Effectively full employment and a high tax take meant we could enhance public services. We are in a dreadful position now but our income up to now has brought us what will be a complete motorway infrastructure in the country and proper wages for nurses and people like them who were not being paid appropriately. The money was also invested in school buildings and better resources for disadvantaged people. That is what a Government should be doing.

We should not lose sight of such achievements despite the current awful position, which came about as a result of some banking policies. I take issue with Senator Doherty's philosophy because we cannot ignore that we live in the global economy. We cannot ignore the markets as we are completely at the mercy of them on a weekly basis. We can see how important the message we send to the markets is, as the traders on international markets can sink the country. The Government must deal with such issues constantly, which is not really appreciated. We are a proud sovereign nation but if bond holders choose to sink the country, it will be done.

Two years ago the bank guarantee was put in place and the Taoiseach and Minister for Finance were in the firing line when they had to make a decision. All of us have the benefit of hindsight to decide if we should have done this or that. On the night in question, the Government had to make a decision to prevent the country from being traded down. Since then, few have realised this country has stayed the right side of the brink. If we had followed the Labour Party's policy, we would have certainly gone over that brink resulting in the International Monetary Fund intervening.

I support Senator Alex White's calls for a constructive debate on the economy, not one in which Members just knock each other's ideas. A stimulus package, for example, is a good proposal for debate. While I also have concerns about the effects cutting back too much in the forthcoming budget would have on economic growth, I would also be concerned about a government not tackling a soaring deficit. If we do not stick to the short timescale of the four-year economic plan, we will have problems with raising capital in the markets. The European Union, in turn, would also not lend us the moneys required and, therefore, our corporate tax rate would be in trouble.

Most other political parties agree keeping our low corporate tax rate is of vital importance. We cannot take off in a fit of pique to go it alone by defaulting on the markets. We are in this together with our European partners in the euro zone. I do not want to sound alarmist but we need to have a reality check about how close the International Monetary Fund is to taking charge of the economy.

I am tired of listening to people claim the Government does not have a right to govern or that it is on borrowed time. A government has a five-year term. The election was held in 2007, meaning the next should be in 2012. I accept there has been an economic decline since 2007 but nobody knew then what we do now. The Government is not robust enough in fighting its corner. It has every right to govern for the remainder of its term while it enjoys a majority in Dáil Éireann. The Government should be more vigorous in pointing out it was chosen by the people.

This Government will last its full five-year term. I accept it is not popular but then those that cut back services and introduce austerity measures never are. When one is doing the right thing, it is not necessarily appreciated. I understand people's fears and anger about where we are at. This must be harnessed, however, in a constructive way.

Regarding the four-year budgetary plan, the Government has the right to make up an economic plan to run until 2012. If it is going the right way, it will be evident by the next election. It is also important that all other political parties which aspire to be in government make a constructive contribution towards the budgetary plans. It is preferable that others will have bought into these solutions.

The notion that this is a limping caretaker Government is nonsense. It is time people appreciated the Government has a responsibility to bring down the deficit, which is far more important for the economy than the banking situation. The Government must make difficult choices at this point, for which it will not be popular. Senator Norris spoke of the worst cutbacks such as homeless people being charged 50 cent for medical card prescription drugs. While it may seem obscene, unfortunately these difficult measures will have to be taken.

I want the Croke Park deal to be re-examined. How the public service works is vital, particularly when we look at how much the bill for public sector wages and social welfare payments takes from the tax intake. We must think about how all of us can make savings by working differently.

It is also the Government's responsibility to use the resources it has for the benefit of those who cannot provide for or support themselves. How many are in receipt of an annual public pension above €100,000? While it may not save much money and primary legislation may need to be amended, no public service pension should come to over €100,000. We simply cannot afford this. I accept such recipients have given service to the State and have contractual expectations. However, all our expectations have changed. Why should public servants be any different? An annual pension of €100,000 is plenty.

It is an extremely difficult time. Everyone harping on about having another election, however, is not going to help. A cohesive and coherent response to these economic difficulties is required. Another reason not to rush into another election is that the two parties, Fine Gael and Labour, likely to form the next Government are not agreed on as fundamental a matter as solving the banking crisis. That should be a concern for the people.