John Gerard Hanafin (Fianna Fail)

The necessity of the budget announced yesterday is clearly outlined by the fact that we spend significantly more than we take in. In the good years, when the money was rolling in - we are now being blamed for the expenditure then incurred - it is worth noting that across every Department, the Opposition was looking for extra expenditure. Not only that, but it blamed us for not foreseeing the banking crisis or the property bubble, yet in its last manifesto, Fine Gael wanted to do away with property tax. This morning, however, we are being asked not to mind the fact that the Opposition sought these increases because that was the job of the Opposition parties and they did not really mean it. That is arrant nonsense.

The €6 billion in adjustments that had to be made yesterday were made in a fair manner across the board. There were some increases in income tax and some decreases in social protection rates. The reason there was a decrease in certain social protection payments was to ensure there would be social protection in the future. How will the Opposition parties reconcile the fact that one wants to see no increase in taxation, while the other wants to see no cuts in social protection payments? How will they ever get a budget through? If they are to be honest with the people, they will have to tell them on the doorsteps that they will have to compromise and change their policies if they are to put together a Government. We all know that will not happen.

I ask people to bear in mind that these were necessary adjustments and that the Government made them n a fair manner and only to protect people. When we look at the decreases in social protection payments, the average figure is 4.1%. The only thing that matters is what a person can spend. The fact that there was an 8% decrease in the cost of living means real spending power has been protected. What would be the use of a 10% increase if the inflation rate was 20%? People are being protected a level that is sustainable and affordable. I am particularly pleased that in difficult times the Government was able to achieve this.

The fact that we are looking at a growth rate of 1.7% has been questioned, with people asking how we can achieve such growth when taking €6 billion out of the economy. As one of the most globalised economies in the world after Singapore and Hong Kong, we will disproportionately share in the growth in world markets which are to grow significantly this year. A growth rate of 1.7% next year will come exclusively from growth in world markets. We have achieved significant increases in exports this year, with manufacturing output up 12% in the third quarter. Export figures were up 7% in real terms in the first half of the year, while corporation taxes were up significantly. This year we will come out of the recession and next year we will see growth. The live register figures are down for the third month in a row, while the number of redundancies is down by 30%.

There are initiatives to look after the unemployed in the budget that are welcome such as the extension of the employer job initiative, the additional 15,000 activation places for the unemployed and the refocusing of the national employment action plan to provide opportunities to avail of education, training and work experience placements. Also to be welcomed is the transformation of the business expansion scheme into a new employment and investment incentive to boost job creation by small and medium-sized enterprises. The amount has also increased and the regulations have been eased in order that it is easier and more efficient for businesses to avail of the scheme, because businesses are always complaining about red tape. This is also to be welcomed.

The necessary adjustments in salary have been carried out by the Government. The Taoiseach, Tánaiste and Ministers have again reduced their salaries for this year, and many public officials have agreed voluntarily to reduce their salaries to the new limit of €250,000, including those in State agencies. At a time of fiscal uncertainty, when we are making necessary adjustments, salaries of more than €500,000 or up to €750,000 in State agencies are unsustainable. There are people who will be happy to accept the changes. The old adage about losing the best and the brightest was the argument used by the banks, and we saw what happened there. We want the best and the brightest. It says a lot about a person that he or she is willing to take a salary cut to €250,000 while continuing to work at a high level in the public service, rather than in the private sector, to do something for the State. Of course, there are benefits to working in the public sector, one of which is security of employment.

Tax must be levied on the basis that everyone contributes according to his or her means, and that is what the Government achieved in yesterday's budget. The income and health levies will now be replaced with a single universal social charge, the employee PRSI contribution ceiling will be removed, and the PRSI rate for the self-employed, high-earning public servants and office holders will be increased. We all took a reduction of 10% in tax bands and tax credits. The excessively generous reliefs on private pensions needed to be tackled. The many tax reliefs that high earners used to establish tax shelters were effectively abolished yesterday, which must be welcomed. At a time of fiscal uncertainty we must have equity, and those who can afford to pay more need to pay more.

If we are taking increased amounts of tax from the economy, we need to give a message of hope. The message of hope has not gone away. Our 12.5% rate of corporation tax is one of the foundation stones of our development, and we are still bringing disproportionate amounts of foreign direct investment to this country. What we say in this forum is not said in a vacuum. To say the economy is a corpse or that it is banjaxed is inappropriate. Those who suggested the economy was banjaxed then turned around and said that was not really what they had meant. They said it was something to do with mechanics and that it was a Dublin colloquialism meaning a car that needed to be fixed. That is arrant nonsense. To say something is banjaxed means it is broken badly, possibly beyond redemption. That is what went out into the international marketplace, and it did this country harm.

One item in the budget which will be significant in the future and which we should consider in terms of underpinning the housing market is the new provision on stamp duty. The property market still has a disproportionate effect on Ireland Inc., and the reduction of stamp duty to 1% will at last give a boost to that sector on which we are so dependent. The reason we are unable to fix the amount the banks or NAMA might need is our inability, in a falling market, to see the floor. We will now, through the efforts of the Government, see a levelling off of the property market, which will be a significant boost. We can clearly see a period of growth ahead, which is badly needed. I welcome that change in particular. There were many other positive developments in yesterday's budget. It is a difficult time, but it was done fairly, and that is the criterion by which I am happy to be judged.