Damien English (Meath West, Fine Gael)
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Question 67: To ask the Minister for Finance the lessons that have been drawn by him from the failure to achieve the key targets of his Department in economic growth, fiscal sustainability, bank stability and public service reform in the past five years; and if he will make a statement on the matter. [24725/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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While the past few years have been difficult for us all, with many challenges to be addressed, this Government has developed, and is implementing successfully, a number of strategies to tackle effectively the budgetary, banking and competitiveness issues we face. These strategies have been welcomed by many commentators and by bodies such as the European Commission, the OECD and the IMF.

In broad terms, Ireland's economic difficulties in recent years can be traced to a loss in cost competitiveness and a dramatic deterioration in demand in our major trading partners. The deficit in the public finances mainly reflects unsustainable levels of public expenditure as compared to the revenues being generated, although support for the banking sector has also had an impact. The recent reports by the Governor of the Central Bank and by Mr Regling and Mr Watson shed light on the origins of these difficulties and are to be welcomed in that context.

It is also worth noting that many other countries – especially advanced countries – have found themselves in a similar position to Ireland, although I fully recognise that the scale of the problems here is larger than elsewhere.

In relation to competitiveness, Government policy is supportive of promoting an export-led recovery in Ireland. Price levels and wages - including those for the public service - are all adjusting rapidly to the new circumstances and are contributing to improving Ireland's competitiveness. We have also made significant investment in areas such as productive infrastructure which will enhance our competitiveness and capacity to grow.

In terms of the public finances, decisive expenditure-reducing measures have been implemented, and demonstrate the Government's resolve to restoring sustainability to the public finances. Repairing the tax base is also part of the approach. I want to stress that the Government remains determined to implement appropriate measures in the 2011 Budget and in later years in order to reduce the deficit below 3 per cent by end-2014.

In relation to banking, the Government has agreed significant reform to ensure that the structures for financial regulation meet the Government's objectives for the maintenance of the stability of the financial system, for effective and efficient supervision of the financial sector and for the safeguarding of consumer interests. The key change is the establishment of a new single, fully integrated regulatory institution, the Central Bank of Ireland, which will be responsible for both the supervision of individual firms and the overall stability of the financial system. This development is in addition to a series of measures which will help ensure the stability and liquidity of the banking system, which will maintain and rebuild the capital position of our systemically important banks; and which will address the issue of confidence in the asset quality of the banking system via the National Asset Management Agency.

In relation to Public Service reform, it should be remembered that the OECD, in its 2008 review of the Irish Public Service, gave a generally positive assessment of the Irish Public Service and the role it has played in our national development. Following the OECD Review and the report of the Task Force on the Public Service, the Government developed a strategy for the delivery of change in the Public Service which is set out in Government Statement on Transforming Public Services (TPS). The overall theme of TPS is a more integrated Public Service having greater connectivity and linkages across Departments and agencies to deliver an improved level of performance for customers together with greater connectivity. The Transformation Agenda is being headed by a Cabinet Committee chaired by the Taoiseach, and Minister of State Calleary has been given responsibility for driving the Transformation Agenda.

On foot of these policy measures, domestic and international confidence in the Irish economy has been enhanced and there is now general agreement that the Irish economy will begin to expand once again from the second half of this year. More generally, we are positioning the economy to be able to take advantage of the emerging global recovery and we will continue to work hard to ensure we chart a way forward for this country that will be sustainable and that will underpin living standards and employment in the future.