When we took over on 30 June 1981 we faced the greatest financial crisis this country had ever faced or, please God, will ever have to face. On the basis of the policies then being pursued, current overspending in 1982 was shaping up at 13 per cent of our national output and the public sector borrowing requirement for the same year would, if we had not taken instant control of our financial affairs, have far exceeded 25 per cent of GNP.
Those figures spelt national insolvency. Had we not acted with utmost speed and determination, within weeks rather than months, we would have been delivered into the hands of the IMF, and would have lost any control over the running of our own affairs. This country was saved from that fate most narrowly, by a matter of weeks, if not days, by the defeat of the Government under Deputy Haughey.
Since then, despite the scandal-ridden interregnum of 1982 when some of the financial ground we had gained was lost, overspending on the Government current account has been effectively halved as a proportion of GNP. By 1987 we will have cut it back to 5 per cent of national output and total public sector borrowing, already well down from the horrendous peak under Fianna Fáil, will by 1987 be a fraction of the figure which they were in the process of committing us to in 1981.
Moreover, uniquely, we have done this while turning around the economy. The drastic fall in living standards imposed upon our people by Fianna Fáil's policies has been halted, and our people in the years ahead can look forward to some recovery, even if modest, in their purchasing power. The collapse of employment to which Fianna Fáil policies had contributed, has been halted, and is in the process of being reversed. We can now look forward to a rising level of employment in the three years ahead — a process which, indeed, the Economic and Social Research Institute in their most recent quarterly report believe may already have begun in the non-agricultural sector in the first eight months of this year.
Inflation, which under Fainna Fáil had leapt to a figure in excess of 20 per cent, has been reduced to less than 8 per cent in the last 12 months. We are entering 1985 with the prospect of a 6 per cent inflation rate — lower than anything we have experienced for over a decade.
At another level we have got our actual public spending in relation to the budget under control for the second successive year. After a number of years in which the current budget deficit and public borrowing exceeded by enormous margins the already excessive amounts budgeted for by Fianna Fáil Governments, we are now in a position to report that the current deficit and borrowing in the current year are likely to be somewhat below the figure budgeted for last January. This follows our experience in 1983 when we kept current public spending within one quarter of 1 per cent of the level projected at budget time.
These achievements reflect tight control over public spending and accurate forecasting of public revenue. This is something with which Fianna Fáil never bothered itself when in office and which they could no doubt be counted upon to abandon once again were they ever allowed to get back into power in this country.
There is, I have to say, one figure in the budgetary arithmetic for the present year which we have fallen short of by a significant margin. It is the level of unemployment allowed for in our budget on the basis of the advice officially tendered to us. We had felt obliged to accept this advice in order to restore confidence in our public finances — confidence which had been so distorted by the fiddling of figures by the previous Government.
When the budget was introduced I told this House that I believed that the provision for unemployment was too high, but I was not prepared to allow my personal belief to distort in any way the provisions made for expenditure. I was determined that there would be no repetition of the experience we had when Fianna Fáil in 1982 knocked £115 million off the 1983 Estimates without taking a single policy decision to give practical effect to this stroke of a pen —"stroke" is the operative word. My belief in respect of the level of unemployment in the current year has been fully vindicated. The average level of unemployment for the year now looks like being about 13,000 lower than the figure provided for in our budget. I make no apology to the House for this divergence between our projections and our performance, the only significant divergence in the present year.
Our achievements have not been limited to getting the public finances into order and preparing a sound basis for the three years ahead. The actions we have taken also have contributed to making the economy competitive once again. On behalf of the Government I claim only some small part of the credit for this. The main credit must go to our people, to the workers who have with realism moderated their demands for income increases, to the businessmen, native and foreign, whose dynamism has created the conditions for growth in our economy, and to the farmers whose hard work, despite the discouragement of a very sharp fall in real incomes at the end of the seventies, has produced an increase in real output and, be is said, in real incomes for them in each of the three years since the Coalition were first elected in 1981. Already we are beginning to reap the benefits of the new mood of realism which the efforts of our Government have helped to bring about in the years since we came into office. In these two years public attitudes have been transformed. A sense of reality now prevails. We have come out of the dream world of green papers on full employment. Do the Deputies opposite remember that promise of full employment in five years from 1978?