Seanad debates

Tuesday, 6 December 2011

3:00 pm

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)

In presenting the statement on the 2012 Estimates and today's Budget Statement 2012 the Minister for Public Expenditure and Reform and the Minister for Finance have asked the people to make considerable sacrifices in the year to come. An adjustment of €3.8 billion in the public finances, through cutting public spending by €2.2 billion and raising €1.6 billion in extra taxes, cannot be achieved other than through sacrifices. We cannot take refuge in simply stating that this burden will be borne collectively by Irish society because we know that it will be borne by each individual member of our society in a million different ways. The scale of this adjustment reflects the scale of the crisis that we face. The Taoiseach described this crisis as an exceptional challenge. It can also be described as a great test and, to echo the title of a book edited many years ago by the late Francis Mc Manus, these are the years of the great test, a test which we cannot and will not fail.

We must get our economy back to health again so that we can create enough jobs to get rid of mass unemployment, to enable our children to have a future here and to create enough resources to look after the most vulnerable people in our society and not to have to rely on whatever we can borrow to support them. Now, however, the State is spending €16 billion a year more than it is taking in and this is why it is imperative to close the gap between spending and saving by € 3.8 billion in the budget for 2012.

While this budget is the most important step that has been taken by the Government to stem the crisis, it is not the first such step. From the moment it came into office, the Government began to prepare and then implement policies and initiatives to support the economy and tackle the public finances. We have made considerable progress in stabilising our banking system and, importantly, we have recapitalised the remaining pillar banks at a lower cost than expected. Last May, a jobs initiative was introduced that cut VAT from 13.5% to 9% to support tourism and employment. It cut the lower rate of employers' PRSI for lower-paid workers earning below €356 a week. It created more than 20,000 new job and training placements and it brought in a new loan scheme for small and medium-sized enterprises.

The Government secured a lower rate of interest on the country's borrowings that will save us €10 billion over time. We have met our commitments to the EU and the IMF in full and on schedule. As a result, Ireland has regained a good deal of the international confidence that it had lost and it has achieved credibility that others have not. The scale of the crisis is such that efforts must continue to be made for a further three years after 2012. Nevertheless, we have achieved substantial progress in dealing with the crisis in a short time. The process of stabilising the public finances is well under way and exports crucial to underpinning our economic recovery are growing. We have laid the foundations of recovery and the expenditure and taxation measures which were introduced yesterday and today will build on those well-placed foundations.

Although the budget measures for 2012 had to be difficult, it is unavoidable if we are to achieve our target of a deficit of 3% of our GDP by 2015. Despite these unavoidable consolidation measures, a key aim of the budget and of the Government's four-year strategy is to support employment creation. Although we may appear to be a long way from returning to the rate of employment growth that we need, the increase in the total at work of some 17,000 in the second quarter of this year, although largely seasonal, is encouraging. Cutting expenditure and increasing taxes may not seem to be the right way to support employment. However, by making serious steps to restore our public finances to a sound footing and as our deficit moves to sustainable levels, investors will start regaining confidence in Ireland and credit will be made available at better rates. This means that businesses will be able to start borrowing, expanding and hiring again. As I have stated, international confidence in Ireland's economy is returning already and it will continue to grow if we keep on our present course.

The budget also supports jobs in that it includes a series of targeted measures specifically designed to create employment and to get the unemployed back to work. These measures include, among others, a new system of loan guarantees that will enable banks to resume lending and a new micro-finance scheme that will help people to start their own businesses. Uncertainty has added to the problems in the economy. For this reason, budget 2012 leaves income tax untouched. Instead, €1.6 billion of extra taxes that Ireland needs will be raised mainly through indirect taxes although we acknowledge that no tax increase is easy for our citizens. As well as supporting employment creation, the budget reflects the Government's commitment to do all it can to protect the most vulnerable in our communities, including our decision to invest in important health and education infrastructure.

The budget is a hard but necessary step on our four-year path to stability, recovery and a return to full normality. If the Government had the choice of easier options it would have taken them willingly, but it did not and all that was open to it was a set of difficult decisions. Undoubtedly, we will have to make other hard decisions but the reward of our sacrifices will be great within a few years and it will be measured in strong sustained economic growth, falling unemployment, a good future at home for our young people and a decent life for the vulnerable in society.

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