National Development Plan: Motion.

I move:

That Dáil Éireann:

commends the Government on the progress made under the NDP as evidenced by the 2007 NDP Annual Report, particularly the substantial investment made in consolidating and enhancing Ireland's economic competitiveness;

acknowledges important economic and social progress made over the last decade and the fact that we face the present economic and fiscal challenges from a position of strength; and

commends the Government on the measures it is taking to address the current challenges, particularly the maintenance of policies that support economic and budgetary sustainability, thereby positioning Ireland to benefit from a future upswing in the global economy.

While we face short-term problems requiring action now, our future remains positive. The testimony to that is the national development plan and the progress the Government has made in delivering on that plan. The NDP 2007 report shows the Government's commitment to making the investment necessary to consolidate and enhance Ireland's economic competitiveness. It is clear that NDP investment is tackling our infrastructure deficits and providing the upskilling, training and education that our workforce needs. The NDP is also supporting our enterprise and innovation sector. The most visible progress under the national development plan can be seen in our steadily improving transport network and in the large-scale and ongoing investment programmes of the Dublin Airport Authority, the ESB, EirGrid, Bord Gáis and Bord na Móna. A highlight in 2007 included the completion of Pier D in Dublin Airport which can handle up to 10 million passengers a year.

The NDP investment will help firms in Ireland to produce high quality, value-added and innovative goods and services that will generate competitive exports and create over 9,000 new jobs in overseas companies located in Ireland. These and other investments under the NDP are necessary to continue to stimulate the economy and enhance the quality of life of people all over the country.

Unfortunately, the economic climate has deteriorated over the course of this year. On the domestic front, developments in the house-building sector have proven to be more severe than anticipated when the budget was presented last December and in broad terms this sector is depressing growth by about four percentage points. Furthermore, the sharp increase in the live register in recent months is related to developments in this sector and we all know that there will be further pressures on employment over the coming months.

There is understandable concern about the current conditions and the future prospects for the Irish economy. As one of the world's most open economies, we cannot expect to be immune from international trends and global downturns. Ireland today is feeling the impact of the global slowdown and after an unprecedented period in economic terms when Ireland caught up with and indeed surpassed many of our fellow European nations, we are now facing more difficult times.

People are paying more for their weekly food bill and for filling up at the petrol pump and many people are worried about the possible impact of the global downturn on their job prospects. The situation in Ireland is, of course, not unique as other countries are also experiencing difficulties. Listening to some people in recent days, one might think that the economic slowdown is exclusively an Irish phenomenon.

Internationally, there has been continued turbulence in global financial markets and consequential movements in interest rates; faltering economic growth in the US, the UK and other major trading partners; major exchange rate shifts in terms of the depreciation of the dollar and sterling; and unprecedented rises in oil and energy prices.

In Germany, unemployment has risen and retail sales have fallen for three months in a row. Some economists think Germany may show no growth in the second quarter. In France and Spain, the property market is also enduring turbulent times. In Portugal, GDP fell in two of the last three quarters. In New Zealand, the economy contracted in the first quarter. Denmark is in recession. A diverse set of international circumstances have combined over recent months to place our economy under much greater pressure.

I accept that the source of the problem will not be the primary concern for those people who are currently facing financial difficulties. However, it is important to say that the fundamentals of our economy are strong and will help us withstand this global pressure. The level of economic activity in the first quarter of this year remains at 2007 levels which last year saw GDP grow by 6%; in other words, activity remains at a high level by historic standards. Our workforce now stands at over 2 million, which is a doubling in two decades. A record level of investment in education has created a young dynamic labour force which is highly skilled and flexible. In the past decade, we have invested heavily in the knowledge economy through research and development. Ireland's low tax regime has been a key element in this package and remains attractive for foreign direct investment. Given the progress we have made over the last decade, we are well positioned to withstand the global downturn. We have ended forced emigration and we have achieved historically low levels of unemployment. The Government has used the boom wisely and saved while times were good by recording budget surpluses in ten of the last 11 budgets.

We used the boom to more than halve the national debt as a percentage of GDP, from 64% in 1997 to 25% in 2007. In 1997, €1 in every €6 of tax revenue went on servicing the national debt. By 2007, this had fallen to €1 in every €29 of tax revenue. If the assets of the National Pensions Reserve Fund are taken into account, the net debt position is about 12% of GDP. Over the past 11 years there has been unprecedented capital investment to provide key infrastructure such as roads, public transport projects and third level research facilities. This infrastructure has greatly increased our productive capacity and will be essential in returning the economy to a sustainable growth rate when global conditions improve.

We have also used the good times to give more money back to workers because we believe that they have worked hard for what we achieved and should share in the fruits of their labour. Billions of euro have been returned to Irish workers as a result of tax cuts since my party came to power in 1997. We reduced the tax on business because we believed it would increase investment, economic growth and the revenues that come to Government, and this has indeed been the case.

We have also used the good times to invest in public services. A total of 80% of current day-to-day spending goes on health, education and social welfare. We have significantly increased pensions, child benefit, the carer's allowance and other social welfare benefits. I am determined that a comprehensive welfare system will continue to support the most in need in society and those who are most at risk in the downturn.

Ireland in 2008 is very different from how it was in the dark days of the 1980s and the credit for this transformation goes to the Irish people. Their vitality, ingenuity and hard work have made Ireland one of the world's most remarkable economic success stories. Irish people deserve all the success they have achieved and I am determined to do my best to ensure that the citizens of this country continue to prosper.

Those intent on talking down our economy at a time when we want to maintain confidence in this country, against the background of a general global economic slowdown, diminish themselves and their cause. I ask Deputies to be constructive in their comments in this debate and not to take the soft option of simply playing partisan politics with our economic prospects.

This is not a time for disingenuous criticism nor is it a time for complacency. While we must not overstate the difficulties, equally we must not understate the necessity for decisive action. The eyes of the international community are now firmly on Ireland from a variety of perspectives, politically, economically and from a trade and investment point of view. By making the right decisions, we have a greater opportunity to emerge from the current difficulties within the next two years and return to a positive stable growth rate, as predicted by the ESRI and other independent commentators.

Anybody who experienced the difficulty of getting a job in the 1980s will understand why we are taking tough decisions now to ensure we continue to enjoy the fruits of our hard work. The wrong decisions based on short-term gain will only result in persistent negative consequences. We must act responsibly now to secure Ireland's future and this Government is determined to do that.

For many years we have operated on the basis of engagement within a framework of social partnership. We recognise that the effectiveness of the decisions that we take in the interests of the people is greatly enhanced when they take place in the context of a broader understanding and a co-ordinated approach.

To that end, I wish to make it clear that the Government believes that a renewed consensus in a new partnership agreement is in the best interests of the country. At the same time, it is necessary to caution against sectional interests being elevated above those of the whole community. It is incumbent on all of us to make the compromises necessary to ensure that Ireland emerges undamaged from the current difficult global environment. I should be absolutely clear that within the framework of democratic accountability, we will not abdicate our responsibility to take decisions that are in the best interests of the people.

In taking the corrective action necessary to ensure the period of reduced growth is as short as possible, the Government is committed to the following principles. Our primary emphasis will be on making every effort to maintain employment. Over the past decade, responsible social partnership has delivered a record rate of employment growth. All the evidence suggests that having a job is the most important positive influence on people's well-being. Unemployment in Ireland remains at approximately half the level it was in 1997. We must minimise the negative effect of the current difficulties on employment and avoid any increase in long-term unemployment. We must continue to emphasise securing high quality jobs for our citizens. We will promote sustainability in the economy. We will ensure we take decisions that are in the long-term interest and not merely for short-term gain. We will proceed with those capital investments which will have the greatest impact on stimulating the economy and enhancing the quality of life of our citizens, but we will pay strict attention to achieving value for money. We will prioritise front line services for current expenditure while achieving greater efficiencies across all services. We will examine measures to reduce the cost of doing business in Ireland to stimulate export-led growth and enhance productivityper capita. We will explore initiatives to increase competition to enhance consumer value and dampen rising prices. We will support those on the margins of society for whom the adverse global conditions are making life difficult.

Yesterday, the Government agreed an important step in implementing these principles, specifically in regard to the management of the public finances in the face of reduced revenues due to lower economic growth. After careful deliberation, we have developed a range of measures to limit spending increases. Spending is still increased compared to 2007 but, through a range of measures such as not implementing pay increases recommended for Ministers and senior public servants, we are underlining our commitment to keeping the public finances secure.

The total savings planned for 2008 are €440 million. This includes a saving of €50 million through measures identified as part of the efficiency review process carried out across Departments, which I announced in the budget for this year. A saving of €21 million will come from savings on advertising, public relations and consultancy expenditure. A further €10 million will come from payroll savings.

The remaining €360 million will come from savings on non-front line programme expenditure. This will include a saving of some €85 million which will arise on the allocation for the introduction of the fair deal nursing home scheme. That expenditure will not now be incurred in 2008. Savings of €38 million will arise from the slower than expected roll-out of the package of new developments provided for in the Department of Health and Children's Vote for this year. Savings of €25 million will be secured under the Department of Social and Family Affair's Vote as a result of its continuing anti-fraud initiative.

Given the projected revision to gross national product and other factors, there will be savings of some €45 million this year in the allocation for overseas development aid. The revised total contribution in 2008 will be more than €200 per citizen, totalling some €900 million. Ireland, therefore, will still be far ahead of almost all developed nations in our rate of contribution to overseas development aid and in line with our commitments for this year. There is scope for savings of some €10 million in the Department of Enterprise, Trade and Employment, including in respect of FÁS apprenticeships, where the number of participants has fallen. Finally, responsibility for the REACH programme has recently transferred to the Department of Finance, which will result in savings of some €2.5 million this year.

The remainder of the €440 million will comprise capital savings in 2008 of €140 million arising from projects which are being rescheduled to later years. These include the deferral of the gateway innovation fund, which will yield savings of €40 million; €75 million from the deferral of some projects under the decentralisation programme which have not been advanced to date; deferral of the national sports campus project, making a saving of almost €3.9 million; and savings this year across a range of capital projects in transport which are expected to yield €20 million. These measures are clearly focused on tangible general savings through efficiency, better use of resources, cutting out waste and duplication, streamlining delivery of public services and focusing capital resources on those areas that will return us to our potential growth rate as soon as international circumstances improve.

Some commentary in recent days has suggested that the public service is inherently wasteful and inefficient and is, in some way, the source of our current economic difficulties. On the contrary, the recent comprehensive review by the OECD shows that the public service is relatively modest in size, efficient in its activities and effective in its outcomes in comparison to most OECD countries. However, the review also showed that in Ireland, as in all OECD countries, there is significant scope for improvement in the efficiency and effectiveness with which public business is transacted. The report indicated some areas where the scope for improvement seems particularly significant by international comparison.

That the OECD report was undertaken at the invitation of the Government shows our determination to improve the value and impact of public services in partnership with those who work to serve the public across all sectors of the public service. I announced on my first day in office my determination to give priority to public service modernisation and renewal. All that I have heard since from public servants and their representatives is a welcome for that focus and a willingness to engage in achieving even more for the citizen.

There are many examples of good practice and good value throughout the public service. Many of our services are world class in their performance. I refer in particular to the performance of the Revenue Commissioners, the implementation of the new system of payments to farmers under the Common Agricultural Policy and the e-Cabinet project, which has attracted international attention. Likewise, we have seen improvements in the administrative processes which support the transaction of public business. These have produced substantial efficiency gains in areas like shared services and improved management of procurement. For example, in my own Department, we have joined with the Department of Justice, Equality and Law Reform in its shared services operation, which now manages my Department's payroll.

Similarly, by bringing together three separate agencies in the National Economic and Social Development Office, we have reduced the cost of overheads and streamlined activities, while enhancing the benefit of co-operation and co-ordination in three organisations which play an important role in the broader social partnership process. Similar examples of good practice can be found in areas like the operation of outpatients departments and accident and emergency departments in our hospitals and the management of the planning process in our local authorities. These examples of good practice, and many others, must now become the norm. We must quicken the pace of reform and progress. The best of breed in each part of our public service must become the norm.

In pursuing that goal, it is right that we empower local management and staff to make changes that generate the best outcome for the citizen and the taxpayer. They are the people who understand best how their services work and where changes could be made to best effect. That is why we are implementing these changes in ways that afford flexibility to organisations to approach the reduction in payroll costs and the streamlining of the activities of agencies and State bodies. The alternative might have been to impose a rigid, centralised regime which would seek to control every decision from Merrion Street. That would be ultimately self-defeating, and it would also deny the opportunity to public servants to show their commitment and capacity for change and development.

I am confident this is the better strategy and that it will produce enduring results in terms of achieving greater efficiencies while also delivering more effective services for the citizen. Reductions in planned expenditure are designed so as to minimise the impact on front line services in health and education. These proposals represent a measured and reasonable response to current challenges and I am confident the people will see that we are pursing a sensible course of action.

As I have said, the savings deliver €440 million in 2008 and €1 billion in 2009. Even with these savings, however, the fiscal position in 2009 will be demanding and all spending will have to be rigorously controlled. As we prioritise, we need to show care and common sense in the adjustments that we make. The measures we are taking will help steer this country through a temporary period of challenge and enable us to resume quickly a substantial growth rate in line with our strong economic potential and thus resume prudent but significant increases in desirable public spending.

The Government has sought to prioritise those areas of spending which contribute most to our capacity to weather the period ahead and to respond promptly and strongly to the emergence of more benign international conditions. Equally, we are giving political priority to those who are most vulnerable and most dependent on public spending programmes. This means that everything else must be a lower priority. Again, we make no apology for that. The public will recognise and support that combination of competitiveness and fairness which current conditions require. The prophets of doom would have people believe that this is the worst of times, in the narrow hope that such an approach might gain them some political advantage. The Government sees the bigger picture and we want people to know that despite the negative short-term forecast, our economy is better placed to emerge from the current difficulties than it was in the past. This is why it is imperative that we take the right corrective action at this time. It is a down payment on a prosperous future.

In the past decade, this country has experienced extraordinary success built on the hard work and ingenuity of the people. The Government is fully committed to ensuring that the progress made during this period is secured. Moreover, I am committed to creating the conditions under which we can take advantage of the inevitable upturn in the international economy. While the current circumstances are challenging, I wish to make absolutely clear that the Government is determined to take whatever decisive action is necessary in the best interests of the country.

This is important because all the fiscal projections indicate that if we can stand firm, deliver responsible Government and control public spending, this will give us the capacity to keep Ireland on a stable and upward economic growth path. It is in our hands to ensure that this country remains in the best possible position to withstand that global downturn. As Taoiseach, I pledge to the House all my energies in working towards that objective. I commend the motion to the House.

I wish to share time with Deputy Kieran O'Donnell.

Is that agreed? Agreed.

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

notes that the Government has contributed to the current economic downturn through:

the introduction of reckless inflationary budgets, driven by electoral needs, that killed competitiveness;

implementing huge increases in day to day spending financed by unsustainable property tax revenues; and

stalling public sector reform and abandoning any credible value for money discipline;

condemns the Government for producing a package of measures which:

fails to introduce serious reform in the way the public finances are managed;

ignores the need for a credible medium-term strategy to address our declining competitiveness and provide training and upskilling support for the increasing numbers of unemployed; and

misses the opportunity to embark on a process of economic recovery through reform.

This debate is essentially about the Government's economic competence and credibility. It is about the stark realism of Ireland having been allowed to drift into a situation where we are clearly uncompetitive against international competition. That is now compounded by a real sense of loss of public confidence across the country. Hundreds of thousands of families all over Ireland are now worried about their livelihoods and jobs, their ability to service rising mortgages, the value of their homes and pensions, the cost of living and funding for key local services. They no longer believe the false statements of assurance from a leader who is discredited because of his inability to manage our economy when he was Minister for Finance. The Government is clearly discredited because of its blatant failure to manage the affairs of the nation competently. People no longer believe the Taoiseach because every action and utterance on the economy by him has further diminished his credibility as a leader and the credibility of the Government to steer Ireland away from the deep recession now staring us in the face.

People no longer have any faith in the Taoiseach because when he was Minister for Finance he used every opportunity to tell Irish families and investors, in 2005 and 2006, that house prices were based on "strong economic fundamentals". We now know that he was being told exactly the opposite by domestic and international experts. That is too late, though, for the tens of thousands of young families who have seen their entire savings wiped out by the property crash. Does the Taoiseach realise the extent of the despair felt by young people faced with negative equity in up to 100,000 cases?

People no longer have faith in the Taoiseach because, as Minister for Finance, in the space of just two years, he turned a €2 billion surplus into an €8 billion deficit, the biggest deterioration in the public finances in the history of the State. He was the Minister for Finance who ignored all the warnings about the unsustainability of tax revenues from the property boom, ramping up day-to-day spending in the run-up to the last general election at almost twice the rate of growth in the economy and leaving the public finances hopelessly unprepared for the inevitable downturn. Even when all the omens were pointing to a dangerous slowdown in the economy last autumn, he further ramped up day-to-day spending by over 9% in the last budget, which effectively destroyed the economy's ability to respond to tougher economic times.

People no longer have confidence in the Taoiseach because as Minister for Finance he spent four years expanding the number of Government agencies and quangos, fragmenting our public services, handing them over to consultants, damaging democratic accountability and massively wasting taxpayers' resources. He now realises the folly of these actions and has referred in his speech to amalgamations, reductions and quangos.

People no longer believe the Taoiseach because in April 2007, when he was Minister for Finance, he said that stamp duty reforms were unnecessary and reckless. However, he was then forced unwillingly to eat his words, not once but twice. People no longer trust him because when he was Minister for Finance he said, as recently as last April, that he was not concerned about the downturn in the construction industry. We know now that approximately 25,000 construction workers have already lost their livelihoods. In addition, FÁS told the Government that up to half of those working in the house-building industry — 75,000 workers — might well lose their jobs because of the property crash.

People no longer have faith in the Taoiseach because he was the Minister for Finance who tried to appropriate all the credit when the economy was growing at 5% on the back of cheap credit and a debt-driven housing boom. However, he now disingenuously claims that the Irish economy is simply the victim of international events outside our control, when we know the sharp reversal the economy is experiencing is unique in its suddenness and brutality.

Since last year we have witnessed the biggest fall in growth of any advanced economy, with growth falling from 5.3% last year to the latest ESRI projection of a decline to 0.4% this year. Even the USA, the source of the financial credit crunch, is only seeing growth drop by1%. We are witnessing the biggest increase in unemployment of any advanced economy, with unemployment expected to exceed 6% by the end of the year. Meanwhile, the OECD is predicting that unemployment will fall in 25 of the 27 EU countries. Our projections seem to point to 250,000 being in the dole queues by year end.

We are witnessing the biggest deterioration in the public finances of any advanced economy, with Ireland now facing the ignominious prospect of being the only country this year to breach the 3% borrowing limit set by the EU's growth and stability pact. If the rest of the world economy is catching a cold, we are surely suffering from pneumonia. People no longer trust the Taoiseach when he says that we are witnessing a temporary adjustment to the housing sector and the public finances, and that the fundamentals of the Irish economy are still strong, when they know that the Central Bank is telling us that our cost competitiveness has declined by 35% since 2001. The Department of the Taoiseach is telling us that our export market share has been in sharp decline since 2003. I am not sure whether the Taoiseach and his Ministers meet business people, including exporters, these days, but these are tough times for Irish business. Enterprises are becoming uncompetitive because it is too costly to do business in this country for a variety of reasons. The CSO is telling us that we are the most expensive country in Europe to live in and Forfás says we are the most oil-dependent country in Europe. The National Competitiveness Council states that we are bottom of the international rankings for transport, energy and telecoms infrastructure. That is blatantly obvious when one travels throughout the provinces and speaks to people who are trying to do business in the face of international competition from countries whose infrastructural facilities are so much greater.

Business investment is collapsing and has dried up. Yesterday, one manager in charge of six banks said there had not been a single query for a mortgage in five weeks. Meanwhile, other mortgages that were approved under tightened conditions have not been taken up. Consumer confidence is at a record low. I predict that by this time next year several hundred retail businesses will have gone to the wall. They cannot sustain a situation involving such a loss of consumer confidence across every sector of society.

People no longer have faith in the Government because, to this day, not a single Minister will accept responsibility for the current position. There has been no acknowledgement of the huge mistakes that were made. This is not just about an adjustment to the housing market and the public finances; it is a crisis of confidence in the credibility of the Taoiseach, who is central to having brought about this recession, and in the Government's record of mismanagement of the nation's affairs.

The Taoiseach has squandered the fruits of the Celtic tiger. We are in this position because of a long-standing Government culture of cynical, soft-option politics and a refusal to face hard decisions and implement real reforms. Neither the Taoiseach nor those around him has done anything to change that culture during their long ministerial careers. We have seen a failure, without accountability, to deliver all the promised transformation programmes in health, e-Government, climate change, the spatial strategy and Dublin transport. No target or objective has been achieved. Many have been abandoned and many have become noble aspirations. There has been a catalogue of waste and mismanagement without any accountability, including benchmarking without reforms. It is now five years since we pointed out in Killarney that if the Government was going to pay out €1 billion per annum under benchmarking, then the very least it could do was to determine and agree the increased efficiencies that were going to come throughout the public service as a consequence. The Government missed a glorious opportunity for real reform of the public service at the start of the benchmarking process.

The Government also created 250 new quangos and a completely fragmented public service. How many consultants' reports, paid for by the taxpayer, are lying on the shelves of Departments gathering dust? There were 120 such reports in the Department of Health and Children alone. The HSE is a bureaucratic nightmare. The Minister for Health and Children said when this was set up that it was a once in a generation move to bring about efficiency, professionalism and a world class service for patients. Now we are seeing a return to regional devolution of responsibility and some form of accountability.

The wasteful spending by FÁS was uncovered recently in a document obtained under the Freedom of Information Act by Deputy Varadkar. The PPARS system wasted €200 million, while the e-voting system wasted €60 million. There are overruns in so many of the major infrastructure projects throughout the country, and this is the hallmark of failure for the Government. It is fine to have the money during the good times and to set out projects, but there has been no ability to manage and deliver them in the way the public would expect.

This is the most wasteful Government of the past 50 years — we have never had so much economic strength but never seen such a waste of obscene amounts of public money. There has been an unwillingness to challenge antiquated practices that have held back the public sector as the driver of economic and social transformation that it so needs to be. I agreed with the Taoiseach's comment on the public service. Its officials have always been among the brightest and the best in Irish life, but they have been bypassed by the Government for one consultancy report after another. I guarantee that there will now be a break in the link with the public sector, due to the 3% reduction in the payroll, as the Taoiseach has not spelled out where it is going to happen.

There has also been cynical management of the public finances for electoral purposes, at the expense of longer-run economic stability and competitiveness. The Taoiseach's predecessor put it very well when he said we get in here and our ethic is to stay in here. The ethics of the Fianna Fáil Party in Government has been to bring about a situation where its members assume that they have a right to be in power in perpetuity, to stay in Government at all costs, and to ratchet up public spending before elections.

This recession is not just about bad luck. It is about bad management. It is the legacy of a decade of Government mismanagement, waste and missed opportunity. It is the legacy of a flawed Government culture of tolerance of low standards and soft option politics. Yesterday's announcements by the Taoiseach and the Minister for Finance will do nothing to restore confidence in the Government's economic competence. The response ranked as one of the weakest and most uncertain performances from any Taoiseach and Minister for Finance in recent years. Deputy Bruton remarked that the two men appeared dazed or confused.

We are told by the Taoiseach that the measures will save €440 million this year and will then save €1 billion in 2009, even though these measures include the deferral of one-off capital projects and a delay until next year of implementation of the fair deal on nursing homes charges. Taking €85 million from the health budget is simply disgraceful. The sop of a €12 million increase in subventions is simply a salving of the Minister's conscience, while the further €13 million announced for 200 beds was already announced last January.

The gateway innovation programme of €40 million is gone. How can there be balanced regional economic development when some of these very good ideas are now being put on the long finger? The €75 million earmarked for decentralisation is also gone. This has been a complete shambles. Everybody supports a well planned, well managed decentralisation programme, but what has happened to Departments and State agencies has been a farce. The Taoiseach knows well that many of these State agencies will never move, and he should face that reality. The decision to cut the €75 million needs to be highlighted a lot more.

If the incoherence and bungling of the numbers by the two most senior members of the Government was not bad enough for the country's confidence, even more worrying is the absence of a clearly thought-out plan. Such a plan would set out the anti-inflation measures of this programme and the stimulus for the economy. Despite the Government's attempts to conceal the breakdown, it has now emerged that the biggest cut announced is in health spending for the old and the vulnerable, those who need the most assistance.

We respect the fact that the Government has adopted a number of the proposals put forward by Fine Gael. However, the ministerial pay award has only been deferred, not dropped. Action is proposed on agencies and quangos, but the Government has not explained what that means. Some of the other proposals are so vague as to be meaningless. There was no breakdown of where the €1 billion in savings in 2009 will come from, and one has to suspect that a large portion of it will come from cutbacks in the vital capital projects needed to get this economy back on track. If so, this is exactly the wrong response from Government. There is no detail on what cutbacks are going to be enforced in the health and education sectors. Despite the fact that we were told these sectors were to be exempted, we need to see the colour of the Minister's eyes when talking about front line services. There is no responsibility assigned to individual Ministers to ensure that savings are achieved from efficiencies will take effect. These savings should be in back office bureaucracy, rather than front line services.

There is evidence of county council managers across the country not signing contracts for major water and sewerage schemes, because they have no money to meet their contributions. The response of the Minister for the Environment, Heritage and Local Government has been to appoint more inspectors for the polluter pays principle. I guarantee that the fines paid over a few years would pay for the implementation of these schemes. The Government has left local authorities high and dry with no income stream and they now face a very difficult situation.

This does not represent a credible medium-term strategy to address the serious economic challenges that we now face. Besides lacking a credible strategy to reform our public finances, the Government has remained entirely silent on how it might help to tackle the deep-seated problem of lost competitiveness that is threatening many jobs across the country. A young man spoke to me the other day about his proposal to set up a restaurant and how he was billed for almost €200,000 by a local authority betterment levy. People cannot do this and hundreds of businesses are in a critical state.

There are no anti-inflationary measures in the statement. Fine Gael has proposed a freezing of State charges and a cut in the 13.5% rate of VAT, funded by a carbon windfall tax on power generators.

That is a great plan, cut taxes and spend more.

It is a great plan which the Government should adopt and Fine Gael will give it credit if it does.

No measures are contained in the plan to help the 220,000 people on the live register. Fine Gael has urged the Government to overhaul FÁS to ensure those laid off from the construction industry will be re-trained to work in other sectors. The young apprentices who have started courses with FÁS cannot be left in limbo. No attempt has been made to help the frozen property market. There has been no response or stimulation from the Government to give an opportunity to the thousands who want to purchase their own homes.

There are 100,000 people on housing waiting lists.

Ronald Reagan once said, "If it moves, tax it, if it continues to move, regulate it, and if it stops moving, subsidise it". This is not the type of response the economy needs from the Government. The Government is responsible for this recession. It could have done far more to prepare the economy to deal with international challenges. The consequences of this will become apparent over the next 18 months.

Deputies

Hear, hear.

The main reason the Government gave no details in its planned cutbacks yesterday was it knew they would affect front-line services. From the Taoiseach's speech, I have calculated that 40% of the cutbacks will affect these services. The Government tried to produce a three-card trick yesterday, hoping people would not believe there would be cuts to front-line services.

Various savings have been outlined such as €10 million from the public payroll, €85 million from the fair deal package, €35 million from a slower roll-out of new developments in health services, €2.5 million from the Reach programme and €45 million from the overseas development aid budget. The latter is a sleight of hand. As the economy is not performing as well as forecasted, GDP growth rate is being reduced which allows the Government to rejig the overseas development aid figures. It defies logic for the Government to cut €10 million from FÁS apprenticeship funding when people are being laid off. It has used the crude instrument of cutting 3% of the public payroll with no assurance it will affect front-line services.

The figures do not add up to €440 million either. Apart from the clever use of language, there is a shortfall of €14.5 million. Will the Taoiseach explain where this saving will be made? Either the Government is rudderless and unaware or it is misleading the people. I do not know which is worse. The Government's role is to provide confidence and direct policy.

Typically, the Government blames the international downturn for the state of the economy. It did not blame international factors when the Celtic tiger was roaring. The Government cannot have it both ways. The role of the Taoiseach and the Minister for Finance is to give confidence to the economy, which they are not doing.

The Government claims the downturn is not unique to Ireland. It is unique to Ireland. Recent Irish GDP and unemployment figures are ahead of EU averages, bar those of Spain. The Irish GDP growth rate has fallen six times faster than the EU average. Unemployment is rising at a faster rate than the EU average.

I take exception to the Government's claims that this side of the House is talking down the economy. The Opposition has come forward with constructive polices to deal with wastage and encourage growth. As Deputy Kenny stated, the Government has not taken any steps to stimulate the housing sector. Fine Gael has proposed straightforward measures, such as reducing the VAT rate from 13.5% to 12.5%, to give some impetus to the construction sector. The Government's plans do not refer to a freeze in Government charges. Over the next 18 months, more stealth taxes will creep in.

Until 2000 Irish export growth rates were good. When the construction industry took off, the exports market collapsed to the point that in 2003 it saw negative growth. As the construction industry was tax rich, it suited the Government, for electoral reasons, to go after it. It allowed the economy to become uncompetitive with rising inflation rates. The Government's stealth taxes contributed to more than 50% of the increase in inflation between 2000 and 2006. While there were some international factors involved in the downturn, it was predominantly caused by the Government's policies.

These planned cutbacks are incompetent, the figures do not add up and they directly hit front-line services. The Government, yesterday, thought it would get away with it. It also produced the plans on the last sitting week when no parliamentary questions can be tabled on them.

The Ministers would not answer the parliamentary questions anyway.

We are living in a democracy. In any other situation, an executive summary of the proposals would be provided. The logic of translating the savings of €440 million this year into €1 billion next year is ludicrous. Does this mean this year's cuts will be multiplied by two? The Government must believe we are all fools. The Fine Gael policy document, Recovery through Reform, proposed that the Government change the budgetary process from an incremental basis to a review of expenditure year-on-year.

These cutbacks were made up on the back of an envelope on the way to the press conference. The Government could not find €14.5 million of a difference so it used the term "involved" when it should have used "consist of". These proposals are a disgrace and an insult to the people. The Government must be positive but, instead, its proposals are negative, lacking in leadership, fail to protect the vulnerable or bring about renewed economic growth. I hope the Taoiseach and the Minister for Finance will reconsider these proposed cutbacks.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.