Dan Boyle (Green Party)

I am tempted to ask for a deferment of my speaking slot. There is not a lot with which I can disagree in terms of what has just been said. However, there are a number of realities. As a country we have come through a period of irrational exuberance. It has not just been about the private sector or public sector or even the political class. I remember an article written by the editor of one of the national newspapers who boasted in 2005 that we could teach the Germans a thing or two about running an economy. That sense of arrogance ran through us collectively as a people.

We had a successful economy from the mid-1990s until 2001. Then there was a second phase from 2003 onwards where the growth in the economy was utterly false. It was an inflated economy brought about by access to easy credit based largely on property values on which we borrowed money and on which our tax base was utterly reliant, and whose asset values have plummeted. It cannot be argued that in the 2007 election all political parties made the one argument. My party was a bit more pessimistic in its projections. We suggested tax increases. All political parties were facing the electorate saying that we could have continued high levels of growth, we could continue to spend more and we could continue to tax less. That never made sense. We are now paying a price for that. The inflation that was brought about by that type of economy resulted in higher levels of pay in the public sector. It also resulted in higher levels of social welfare. When one compares both public sector pay and what is paid in welfare payments to our European neighbours, we are hugely out of step. What we are going through as a country will require a massive adjustment. Senator Harris is correct in the need to prioritise that and put a programme together on who gets adjusted to what extent, when and to what amount. Every single person in society will be affected by the decisions being made, not only in this budget but in the three budgets that are to follow it.

There is some merit in the argument that we are too much in thrall to market forces. The growing spread in the bond markets today seems to be for totally opposite reasons than the reasons that recently got us into difficulty. There was a fear among some investors that we were not able to get our act together or be prepared to make the necessary decisions and that we would fall short. Now it seems that there is a better sense among all political parties and a commitment from the Government to make the decisions that are necessary. The judgment is being made by some that the scale of the existing problem cannot be met in any case. With the markets it seems that one cannot win in any case. We have a responsibility in terms of getting the economy right and doing so quickly.

I welcomed much of what was stated in a similar debate yesterday in the Lower House. I also welcomed some of the commitments given by the two main Opposition parties in terms of how they believed the problem could be addressed. While some of the proposals made marked the beginning of a journey, particularly on issues such as water charges and necessary changes such as the reduction in rent allowance to try to reduce rent payments for social welfare recipients, the overall balance of how much we need to remove from current and capital expenditure figures and what we need to raise by new taxation measures is not properly understood in the context of understanding the nature of the problem. When I participate in these debates, I regularly state the tax base remains too narrow and needs to be widened, as others in society should contribute more. However, maintaining a 50:50 balance between current and capital expenditure cuts and new taxation measures would be deflationary and impact on whether we could achieve growth to get out of the situation in which we find ourselves. New taxation measures could only account for approximately one third of what we need, amounting to €5 billion of the €15 billion required over a four-year period. It would also mean spending €10 billion less. How that figure is divided between areas of current expenditure requires political consensus. An even balance is necessary. If we do not take important decisions on current expenditure, it will be read negatively internationally and not give the markets confidence.

Regarding where we should make cuts in current expenditure, the three Departments which spend the most are the Departments of Health and Children, Education and Skills and Social Protection, which on its own accounts for 40% of spending. It can be said much of this expenditure is on wages, but it also includes direct payments to many people in society. Therefore, getting the balance right is important. I agree with Senator Harris, that we should try to effect as many changes as possible in the four-year period through reducing public sector numbers and wages. However, we will not be able to avoid some of the unpalatable decisions on direct payments. No economic programme to deal with the deficit during the period in question would be able to do so.

When the four-year programme is announced, it will refer to reducing public sector numbers. The debate might be on whether the number is high enough, compared with the recent decision in the United Kingdom to let go 500,000 public sector workers. The equivalent figure here would be 35,000, or close to 10% of the number of public sector workers. Given the sentiments expressed and the fact that decisions must be made and that there is a need to match and explain, we must think in these terms. Cuts in numbers, however, do not always result in direct savings. Owing to the Croke Park agreement and the practices that have developed during the years, someone leaving the public sector and entering the world of unemployment will have a favourable pension arrangement, resulting in an additional cost to the State. We must put our heads together to see where savings can be made in the short term to achieve the long-term savings we require.

While we are obsessing about trying to deal with the short-term effect, the real changes that must be made - I welcome the Minister of State's comments, in particular - are structural in nature. People with whom I attended college in the 1980s did not see a future for themselves in this country and most chose to leave. It is dispiriting, therefore, to hear the same arguments being made again 25 years on. However, many of the lessons of the 1980s have not been lost. As the decisions necessary at the time were avoided and delayed, the recession was longer than it needed to be. Given the seriousness of the situation in which we find ourselves, we have an opportunity to avoid repeating the mistakes and to build the basis of a better and fairer economy. The real question we need to ask is what have we done to avoid a recurrence. Many Senators who have contributed to the debate are correct, that we have been the authors of our own destruction and allowed vested and individual interests to dominate the national interest. If all we do in this process is inflict great pain on many citizens to arrive at the conditions that will allow these circumstances to recur, it will be an even worse betrayal.

We must face the debate in the coming weeks with seriousness. We must understand €15 billion is a real figure, that we must strive to meet the four-year target through all necessary means and that the effect will be real pain following the announcements to be made in the coming weeks. We can choose to beat ourselves up, curse the darkness, demand removals and suggest change, but our circumstances will not change. That said, I am confident that should there be a proper acceptance with the degree of leadership required to get this essential message across, the country can and will get out of this recession. There is so much that is right and good, on which we can build, but our future depends on a mature and honest reflection on where the economy stands and the kind of country this can be.