Dáil Éireann díospóireacht -
Thursday, 10 Oct 2002

Vol. 555 No. 1

Private Members' Business. - Public Finances: Motion (Resumed).

The following motion was moved by Deputy Richard Bruton on 9 October 2002:

That Dáil Éireann condemns the Taoiseach and his Ministers for gross misrepresentation of the budgetary position in the run-up to the general election, and for abandoning all prudence in the management of public finances which has resulted in the general Government balance being €5 billion off the target set by the Government itself.

Debate resumed on amendment No. 1:

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

commends the Government for its continuing careful management of the public finances which, since 1997, has witnessed a transformation from decades of budget deficits to a succession of budget surpluses; welcomes the Government's commitment as indicated prior to the general election to keep the general Government finances at least close to balance and notes the regular publication of detailed data since December 2001 on the evolving budgetary position in 2002.

–(Minister for Finance).

Ms B. Moynihan-Cronin

I am pleased to have the opportunity to contribute to this motion. It is a timely motion and I commend the Fine Gael Party for tabling it.

On the Order of Business this morning, a Cheann Comhairle, you said we cannot use the word "lie" in the House any more. That is unfair. To be truthful, bare faced lies were told by the Fianna Fáil Party during the course of the general election campaign, particularly about cutbacks. On 13 May the Minister for Health and Children, Deputy Martin, said there would be no cutbacks and on 13 May the Minister for Finance, Deputy McCreevy, said there would be no cutbacks whatsoever, planned secretly or otherwise. No sooner was the general election over than the floodgates opened and the avalanche of cutbacks began to pour from Government Buildings on a daily basis.

The first of those miserly cutbacks was the increase in income eligibility limits for the drugs refund scheme. Of all the vulnerable groups to be targeted to bear the brunt of the spending cutbacks, the long-term ill, who rely on the scheme, should be exempt from the axe of the Minister for Finance. By raising the limits the Government is hitting at those with long-term illnesses, many of whom are on expensive medication and low incomes. This is a sinister and cynical attack on the vulnerable and is a hallmark of the Government.

I can deal only with a couple of the cutbacks in the short time available to me. I condemn outright the proposal and the threat to re-introduce third level fees. Despite what the Tánaiste said this morning, and what the Taoiseach states, I still believe the Government will re-introduce third level fees. The manner in which the Minister for Education and Science, Deputy Dempsey, has handled the matter is a thundering disgrace. He threatened to re-introduce third level fees days before thousands of students received their offers from the CAO. This appalling attack on students came at a time when many were stressed. Many of those students may have been influenced as to their chosen course given that the Minister raised the issue of the re-introduction of third level at that time.

Last week the Minister was told off by the Tánaiste and we were promised that it was not the Government's policy to re-introduce fees. However, yesterday, in another policy U-turn, the Minister again threatened not to rule out the re-introduction of third level fees. It is time the Taoiseach got a grip on the issue. Is it, or is it not, the policy of the Government to re-introduce third level fees? If it is the Minister's policy to slam the gates of colleges on many thousands of students by re-introducing fees, the Labour Party will fight it tooth and nail.

Has the Minister for Education and Science any understanding of the significant costs entailed when a family member takes up a place in a third level institution? It is obvious the Minister is not from a constituency like Kerry South where every student who wishes to attend a university has to travel away from home. Instead of re-introducing third level fees it would be more in the Minister's line to increase the maintenance grant for students who struggle to live, study and work to keep themselves in college.

The Minister has to be condemned outright for increasing registration fees. His only interest is in saving a few miserly pounds in his Department. He is not encouraging students who have worked hard to enter third level with a view to securing a proper future for themselves.

Mr. M. Higgins

I welcome the opportunity to say a few words on the motion dealing with the mismanagement of the economy. The other day, a young economics student suggested to me that the actions of the Minister for Finance had nothing to do with economics, that they were really the story of a gambler's spree. I wish to put a few questions directly to the Minister who is on the Front Bench. Why was it that we canvassed internationally and got the largest number of votes ever received by a temporary member of the Security Council on the basis that we would meet our overseas development aid target of 0.7% of GNP? The first of the stealth cuts was in overseas development aid, which affects the poorest people in the world. It was done in a disgustingly deceitful way – I hope that is near enough to the word we cannot use. It was announced as a cut of €32 million but turned out to be a cut of €42 million. I have only five minutes but I want to say also that I agree entirely with what Deputy Breeda Moynihan-Cronin said about third level fees.

It would be nice to hear from those heads of third level colleges who have said they have nothing against the re-introduction of fees. What are their views, for example, in relation to access over the years since the poverty conference in 1974-75 in Kilkenny? Why did they not say they wanted more money for access and so that the numbers coming to third level could be increased? They said they might have nothing against the return of fees. Egalitarians they are not, so let us hear from them on the other issues now that they have broken their silence.

I now come to the main point I want to make about the mismanagement of the economy. Why, in a Finance Act, was speculation in housing allowed to receive such an enormous mandate as it did from the present Minister for Finance? I challenge the Minister present, Deputy Coughlan, to go to the Cabinet and make a proposal for a survey of who owns how many houses now in Ireland. Under section 50, which is related to tax reliefs for student accommodation, you can become involved in that one tax remission and make all of your rental income tax exempt anywhere in the State.

What kind of society can accept that it is right to make speculators tax exempt for all rental income at a time when housing is tearing the heart out of the economy? It is immoral and wrong. The Minister for Finance at the same time is involved in the extraordinary exercise of putting millions into the pension reserve fund at a time when the yield to the public is extraordinarily low. Professional economic opinion tells him it is daft, and at the same time he will borrow on the market to meet current needs. Where is the economic justification for that? It is quite extraordinary.

Minister McCreevy stands up regularly and on the odd occasion when he finishes a sentence he suggests that he is writing books about his performance as Minister for Finance. I challenge him to ask his advisors, both new and longstanding, to answer a simple question. Will he look at the capital accumulation in this country during his period in office and contrast it with what is happening in relation to wages? He has shifted resources from the poor and made their situation a great deal worse, particularly in relation to housing, which is destroying our society. At the same time he announces, for example, that the richest with the most surplus disposable income can spend €250 per month and get an additional 25% back from the public. What kind of madness is this transfer of benefits to those who already have resources?

Sometimes I get very irritated about different topics but the one that astounds me above all others is what has happened in relation to housing. It has affected young couples, it has doubled the housing lists and it has had a huge effect on rental income, and all of this is in the name of some strange economic muddle which reflects the gambling mentality of the Minister for Finance as he goes to the races with all of our resources. How pathetic it is that when things are going well he suggests that the expansion and the growth rate are the achievement of the Government, but when things go wrong it is all down to external factors.

Bluntly – Fianna Fáil Deputies can answer these points – who has benefited from the economic growth? Have some people benefited disproportionately? What is the basis, for example, for giving to those who already have? What are their proposals for dealing with housing? It is very interesting that after the report on the private rented sector the Government rushed in with its response on behalf of the landlords. Meanwhile we are still waiting for the legislation which would have given the basic protection that other European countries have for tenants. That tells us an awful lot. We have an ideologically-driven Minister for Finance who really should be in the Progressive Democrats because what he effectively did was deliver the Fianna Fáil Party – which had many decent people in it – into the thinking of the Progressive Democrats. We are all paying the price for it. The advise he is receiving is illiterate in economic terms. I repeat for the record that it is economic illiteracy and morally disgraceful.

Minister for Social and Family Affairs (Mary Coughlan)

I would like to share my time with Minister of State Fahy and with Deputies Conor Lenihan, Brendan Smith and Tony Killeen. I am delighted to have the opportunity to respond to this motion, and in particular to put a number of facts on the record. I see some hyperventilation on the other side of the House—

Mr. R. Bruton

The Minister should read her fellow Minister's speech last night, it was fantastic.

Mary Coughlan

I suppose at the end of the day it is terrible to be jealous, there is a bit of "I wish I was over here" sentiment. Although I very much respect my colleagues on the other side of the House, it is quite difficult to do so given what Deputy Higgins said about "economic illiteracy".

Mr. M. Higgins

I did, yes.

Mary Coughlan

Some people in this House seem to suffer from the fact that 81 and 82 seats is much larger than the numbers on the other side of the House, and it is about time some of them began to realise that the people voted for the innovative policies that this Government had previously—

Mr. R. Bruton

So once the Government has that majority it can do whatever it likes, it is not accountable anymore.

Mary Coughlan

They returned the longest-serving Government in the history of the State outside of the Emergency years. Those who voted for this Government did so as a consequence of sound management of this still fledgling economy, as well as our social policies. Amongst the Opposition the Fine Gael Party changes its ideas as often as its leaders, while the Labour Party went for a quick pick of policy ideas scratched out in a bid to win a lot of Dáil seats but returned here with the same numbers. Those in the Technical group should examine their consciences and ask why the voting public did not deliver them into Government—

Mr. M. Higgins

The Minister and her colleagues should try to find their own consciences now.

Mary Coughlan

I can sleep very well with my conscience clear. Why were the policies of Deputy Higgins's party not seen as visionary? Why were its policies not seen as the only way forward for our country, and why was the party's time in Opposition so fruitless?

The confidence of ability and vision brought us into the European Union. Today we stand on the brink of a new Europe with a new horizon, and as a confident nation we can take that step and vote "Yes" for Europe and "Yes" for Ireland. Against this background of achievement, in particular in the five years of the previous Administration, this Government has resulted in the creation of approximately 300,000 new jobs. Let us ponder that figure for a moment. That is over 1,000 jobs per week for the past five years or new jobs for 100 classes of leaving certificate students each week.

Government debt has been reduced from 74% of GDP at the end of 1996 to 36% at the end of 2001. Those figures probably do not mean much to most people but if you translate them into euro and cent, it means less taxpayers' money is going to service a Government overdraft or loan account. Instead, that money is being pumped into the health services, education, social welfare payments and improving our infrastructure, mak ing Ireland a more attractive location for industrialists which at the end of the day means more jobs.

A radical and extensive programme of tax reform was introduced, resulting in more money being put back into the pockets of our taxpayers. This amounted not just to a few euro or a few cent but to almost €5 billion in personal income tax and PRSI reductions. Outside of economic issues, which we have kept to the fore, there is the necessity to solve one of the greatest problems besetting our island nation – the inter-community strife in Northern Ireland. On an historic day we witnessed the endorsement of the Good Friday Agreement when our people on both sides of the Border endorsed a shared aspiration for peace in our time. That work continues and today our thoughts and hopes are with all of those who are involved in that work for peace.

In my own area of social and family affairs, in which I have long held a professional and personal interest, the Government has worked hard to use this period of national opportunity to invest in vital social services and to lift huge numbers of people out of poverty. I was proud that our recent election campaign highlighted the major achievements in regard to sustained social progress. We told the electorate that we had made inroads in this area but that there was more to do, and we are committed to achieving that. The people gave this Government a ringing endorsement because they knew we had a track record in caring for people and ensuring we did our best in advancing social policy. The electorate knew we would adhere to that.

Mr. Hayes

They did not know anything.

Mary Coughlan

I want to highlight a number of milestones that marked progress in social policy. Before the 1997 election we promised to raise the old age pension to €127. This year, the contributory pension reached €147 and the non-contributory pension reached €134. Well over €100 million has been allocated to community and voluntary activity underpinning the ethos and aspirations of communities throughout the country. We reduced the number of long-term unemployed, one of the greatest causes of poverty, from 86,000 to 24,000. We reduced poverty to historically low levels which took tens of thousands of people out of the tax net, and child benefit has been increased substantially with the rate now treble the 1997 rate.

The Minister for Finance has stressed his prudent management of the economy. We have seen the benefits of sound fiscal policy. This country has one of the strongest budgetary positions in Europe. That brings me back to the question of confidence. The international economy has not recovered as strongly as expected. Equities, IT and other markets have taken a hit. Confidence is at stake, and we have seen what happens when investors lose confidence in a product. We have seen the value of shares in international brands fall through the floor. Confidence is a necessity in Ireland today. We must not lose the confidence to face the future. We must be bold and imaginative to progress in building this country.

Those who shout from the rooftops about our budgetary position are trying to damage our country's confidence. They do a disservice to their own political heritage, whether it be blue, red or some technical hue, but that is not surprising. They do a disservice to preceding generations who worked hard to build this country, and to those who took the confident step of investing here. They do a disservice also to our children who anticipate working in a nation striving towards its destiny, its head held high, its eye fixed firmly on the horizon and with hope in its heart.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Fahey)

Last night I listened carefully to what the Minister for Finance said in his recall of developments in relation to the public finances since the beginning of the year. Having served at the Cabinet table throughout 2001, and particularly during the Estimates and budget period towards the end of last year, I was acutely aware of the economic slowdown which was or at least should have been obvious to all.

Despite the protestations of those opposite, it is the worldwide economic slowdown which is at the heart of the difficulties experienced in the public finances in 2002. When the Minister introduced his 2002 budget, he projected a modest surplus of only €170 million compared with surpluses of up to €3 billion in 2000. The impact of the economic slowdown, given the marginal nature of the proposed surplus, was evident.

I recall in the new year the absolute determination of the Minister for Finance, Deputy McCreevy, to ensure that spending did not breach the target level of increase. The Minister introduced the presentation of monthly expenditure reports to the Government, constantly emphasising the need for careful management and prudence in relation to spending. I am not breaching Cabinet confidentiality when I say that following frank discussions in February and April, during which the Minister refused to allow any increase in expenditure, €11 million had to be found, mainly from the Estimates of other Departments to allow for shortfalls in the on-the-spot fine system and in drugs and homelessness programmes. Again in April, €19 million had to be found for the primary schools building programme. This was funded by cuts, or adjustments, in the Department of Education and Science and contributions from eight other Departments, including the Department of the Marine and Natural Resources. I recall also a no-nonsense meeting in the office of the Minister for Finance, as part of the Estimates process last year, during which the Minister walked over to the door, opened it and told me to "Get out". From my experience, the Minister for Finance did not deceive the people prior to the last election. He has consistently held the line on the absolute necessity for a tight fiscal regime.

Last night the Opposition talked about a con job being perpetrated on the people by the Minister for Finance and the Government. That is not correct, and the facts speak for themselves. It has also been suggested in the recent media onslaught that the Taoiseach is a good leader in good times but is unable to lead in bad times. I assure the House that the Taoiseach stood by his Minister for Finance against the rest of us when it might have been easier to give in and soften the approach being taken in the lead up to the last election.

The reality is that in the 12 months prior to the last election, the Government contained public expenditure. That was due to the resilience of the Minister for Finance in ensuring that we did not allow expenditure to get out of control. It is clear from what the Minister said last night that dramatic changes took place around the time of the election. As he said at the end of May, the Revenue Commissioners indicated that Revenue receipts were €300 million off target. By the end of June, the Revenue Commissioners said Revenue receipts would be €500 million off target. That information only became available at the end of June.

The charges being made by the Opposition also cast a slur on the Department of Finance and its officials. Any suggestion that the Department of Finance officials in any way colluded with the Minister or the Government in withholding information is completely unacceptable, yet that is the charge being made. Whatever we may say about the Department of Finance officials, and we often criticise them, they guard their impartiality irrespective of Government or politics. That is recognised by all parties. To suggest, as has been done, that a con job was presided over by the officials in the Department of Finance is a major slur on them and one that I reject.

The reality is that the Minister for Finance, Deputy McCreevy, was right then and is right now. Fianna Fáil Governments were rightly criticised in the early 1980s for allowing public finances to go out of control and resorting to borrowing requirements which we could not sustain. If the Minister for Finance were to accept the range of expenditure proposals put forward by the Opposition parties, he would be wrong in that action and should be roundly criticised.

I fail to understand the onslaught on the Minister for Finance for doing the right thing, especially from financial analysts in the newspapers whom one expects would know better.

Mr. Hayes

The Government should have told us before the election.

Mr. Fahey

As I explained to the Deputy, it was quite clear at all times – I gave some examples – in the lead-up to the election. It was made clear umpteen times by the Minister for Finance that there had to be a tight fiscal regime and that was there before the election. He also clearly pointed out that there would be no cutbacks above and beyond what would be required in the adjustments.

There will be cutbacks next year, but let us put those in perspective. We had increases in public expenditure of up to 20% in recent years and 14% this year. There will be a substantial increase in public expenditure this year of up to 8%, a figure that many economies throughout Europe would be happy with. However, to reduce increases from 20% to 14% to 8% does involve cutbacks. It involves difficult decisions. We are lucky to have a Minister for Finance who has the courage and determination to ensure that those difficult decisions are taken. As a letter writer to the Irish Examiner said this morning, he should be complimented for his courage in taking unpopular decisions to ensure the future health of this economy.

Mr. B. Smith

I am glad to have the opportunity of contributing to this debate. Deputy Hayes referred to a letter to the former Leader of the Opposition, Deputy Noonan, from the Minister for Finance, Deputy McCreevy. I wish to quote another sentence from that letter that may have escaped the attention of Deputy Hayes but definitely escaped the attention of the media and the Opposition parties in general. In the letter, dated 13 May, the Minister assured Deputy Noonan that there were no plans for cutbacks and went on to say that Fine Gael and most commentators had conveniently chosen to ignore that fact. He goes on to state that with a Government spending programme of €40 billion this year, some programmes will under-spend and others will over-spend. He further points out that, in the history of the State, there is no example of a year when there were no changes whatsoever to initial spending plans. That is an important sentence in the letter to Deputy Hayes's former leader. Deputy McCreevy outlines in the letter the factual position regarding the public finances.

The Minister has not misled anyone. Last January he briefed the secretaries general of all Departments on the absolute need to contain spending in 2002 within the budgetary allocation that had been given to each Department. The Minister has repeated, before and since the election, and again in the House last night, that there would be an increase in expenditure this year of 14% on the out-turn for 2001 and that not one cent less will be spent by Government this year. It baffles me that the Opposition and some media commentators can talk about cutbacks when there are no cutbacks. The reality is, as the Minister has repeated, that the spending programme put in place at the commencement of this year is the one being adhered to by the Government. If anybody can be accused of misrepresentation it is the Opposition parties and some ill-informed media commentators.

I am glad to have the opportunity of complimenting Deputy McCreevy on his stewardship of the public finances and the Department of Finance since 1997 and I look forward to his continuing his positive and practical stewardship of that Department for the next four and a half years. In the period from 1997 to 2002 around 300,000 additional jobs were created. The unemployment rate was more than halved, the general Government debt was substantially reduced and there was a massive programme of personal taxation reform. The reality is that, at present, we have one of the strongest budgetary situations in Europe. Unfortunately that is not what is being said by the media and by some of the Opposition parties.

The reality is that, in recent years, there have been major economic developments and all parts of the country have benefited. I compliment the Minister on his decision to introduce the rural renewal scheme, in which the western part of my own county of Cavan is included. The Minister initiated that scheme to assist those areas that had suffered significant depopulation over the years. The scheme has brought, and is still bringing, people back to live in those areas and has contributed to job creation in industry and the tourism sector.

The Minister also had the courage, determination and foresight to ensure that the previous Government gave Objective One status to the Border, midlands and west region. I remember the debates in which Fianna Fáil backbenchers were advocating the introduction of Objective One status for those areas. Deputy Noonan and other members of the then Fine Gael Front Bench did not come down on any side. They did not have the guts to stand up and say they would divide the country, but the Minister and his colleagues had, although at that time he was leaving out his own county of Kildare.

The Minister has been particularly conscious of the need to bring development and economic regeneration to the less developed parts of the country. I wish to see those policies continue during the lifetime of this Government. I appeal to the Minister and the Government to ensure that if we are ever facing a slowdown in economic activity, we put in place the necessary infrastructure in the less developed parts of the country.

Over the past few years we have not had good value for money in construction projects. I know from speaking to a former member of the National Roads Authority that there was a significant variation in the costs of projects between the Connacht-Ulster area and the rest of the country. In the former areas there was good value for money while in Leinster and Munster there was very poor value.

I would like to see the Minister for the Environment and Local Government and the NRA ensure that the necessary projects in the west, the north-west and the north-east are fast-tracked and brought to construction stage as soon as possible. If there is to be a slowdown in economic activity in the private sector, that is the time when the Government should be investing more in necessary infrastructural projects, particularly in the less developed areas. When there is further growth in the international economy in a few years we want to be in a position to ensure that the less developed areas can attract inward investment to create the necessary jobs and increase their populations.

Mr. Killeen

The election campaign last May was about choosing a Government to manage the economy during an international downturn and a slowdown in growth in Ireland. This time last year everybody was fully aware of the facts about the foot and mouth disease crisis and the fallout from the events of 11 September and there was great concern about their possible impact. There were also difficulties in the IT sector which, if anything, have been much worse since then. Everyone except the Opposition parties appears to have been aware of this reality since last autumn. During the election campaign, when the Government parties were clearly pointing out the difficulties besetting the economy, some of the other parties were engaging in madcap schemes and promises of paying compensation to Eircom shareholders, taxi plate owners and so on.

In his budget speech last December the Minister for Finance predicted Exchequer deficits of almost €3 billion in 2003 and almost €4 billion in 2004. He set out clearly the economic parameters within which we needed to operate. In a sense this debate is about political credibility. Up to now it has been about the credibility of the Government but in many respects it is even more about the credibility of the Opposition. In the run-up to the election Deputy McCreevy made it clear that he intended to abide by our responsibilities under the stability and growth pact. The manifesto stated that any spending would be predicated, and dependent on, continued growth in the economy.

The people proved during the election campaign that they are no longer fooled by auction politics. Unfortunately, things change and since then a number of people have come to the view that they were conned last May. They are clearly wrong in that belief and it is our job to remind them. Perhaps Opposition parties will have to learn to fight elections before polling day and not after.

One of the areas where Mr. McCreevy comes in for much criticism is in regard to health expenditure and health services. There has been an enormous increase in expenditure under this heading, with almost €1 billion more this year than last year. There has been an increase of 114% since 1997 and a huge increase in the range of services. The full range of budget expenditure, with a 14.6% increase, will be expended this year. In fact, the difficulty will be to keep it within those parameters. In County Clare we were perfectly well aware this time last year of the budgetary difficulties. The Ennis bypass project, for example, was put on hold. There were five or six other projects similarly on hold. As little as €100 million would have enabled all five of them to start but it was very clear that kind of money was not available. The Minister made it clear that he was not prepared to put it up front prior to the election, therefore no one can say it was something they learned about following the election. Sometimes it is annoying that no credit is given for the tremendous expenditure in regard to the Newmarket-on-Fergus and Smithstown bypasses.

Parliament, and the Government in particular, needs to ensure there is no repeat of the 1980s failure to contain public expenditure. We have a responsibility in that regard to current and future generations. When previous Governments went down the road of not controlling public expenditure the cost was enormous.

Mr. C. Lenihan

I thank my colleague for speaking so volubly about what the Government has and has not done. As we debate this motion on the economy and public finances it is important to understand that there are three significant contributory reasons why this side of the House is now in Government and not in Opposition. First was the fear and uncertainty occasioned by the economic slow-down resulting from the technology bubble collapsing and the 11 September episode which released a degree of uncertainty into the world financial picture to the extent that voters decided to vote for the status quo. In other words, in the recent election there has been a twofold swing, a swing to the status quo and a swing to the left. There has been greater fragmentation on the Opposition side with a greater presence of Independent left-wing and Sinn Féin Deputies. This is an example of the swing to the left which occurred in political life during the election. Together with that swing to the left was a swing to the centre and the status quo, represented by Fianna Fáil continuing in Government and improving its position in the general election. I would like to think that much of this is as a result of Fianna Fáil's wonderful manifesto. However, the truth is that it has to do with a perception among voters that we are the party and organisation which is able to manage our economic fortunes in a prudent manner. That was not the perception voters had about Fine Gael in the recent election. The perception formed by voters, fortunately or unfortunately depending on whether one believes we should have one single strong Opposition party, was that Fine Gael was making reckless and quite dishonest promises to the electorate both in regard to the Eircom shareholders and taxi drivers. They were shamelessly playing on what I can only describe as the “compo” mentality whereby compensation is there for everyone and the State will pay up at the drop of a hat. That is why Fine Gael lost the election. Deputy Killeen spoke a lot of sense when he said Fine Gael has yet to learn the lesson of the general election, why it lost, why its vote decreased, why there was a swing to the left and to the fragmentary smaller parties of the left and Independents and why there was a simultaneous swing to the centre and to Fianna Fáil and, to a certain degree, the Progressive Democrats. That is the essential message they failed to learn. In their desperation in Opposition they are adopting the famous dictum of Goebel in trying to believe they can arrogantly tell the public a big lie, that they would be susceptible to the big lie rather than the small lie. There were no lies told by this side of the House in regard to the economic picture of the country.

Mr. Healy

There would be no cuts contemplated.

Mr. C. Lenihan

One of the biggest contributory factors for our election success was precisely the fear in the public mind that if that gang and crowd across this House were allowed to manage the affairs of the country we would be in a far worse state than we are today.

People on the other side, including Deputy Michael Higgins, used the phrase "economic illiteracy". I challenge that assertion. The Opposition is guilty of a kind of economic dyslexia where they cannot even read the basic figures the Minister for Finance produced both prior to and following the election. We simply cannot spend what we do not generate in terms of income.

There is a serious decline in regard to income and revenue receipts from tax. Much of this is related to an economic slowdown or the failure of a recovery in the world economy in the second half of this year and last year. There were great expectations that there would be a recovery but that has not materialised. There is a criticism of the Department of Finance which is fair. In the boom times it underestimated the level of receipts from taxation and in the harsher times, which we are now witnessing, it was off target in its predictions in regard to revenue receipts. That is a fair criticism of the Department and the way in which it collects figures. However, it is hardly as serious a misdemeanour as the Opposition indicates.

Mr. Hayes

I wish to share time with Deputies P. Breen, Perry, Healy, Crowe and F. McGrath.

Next Monday marks 150 days since the general election, 150 days of spin, cover up, leaks, incompetence and mismanagement. It marks 150 days since Fianna Fáil and the Progressive Democrats fooled the public into voting for them. No matter what Deputy Lenihan or others say the reality is that the people were fooled into voting for them. It marks 150 days since it became clear that this Government has mortgaged the country's future in an effort to re-elect an inefficient Government. The facts speak for themselves. There is a €750 million deficit despite assurances from the Minister for Finance that the country would remain in the black this year. However, the Government has promised €900 million in cutbacks despite promises in a letter on 13 May to Deputy Michael Noonan that there were no cutbacks planned, either secretly or otherwise.

Cutbacks in the Department of the Environment and Local Government amount to €150 million. The sewage in my county is leaking into what were once beautiful rivers and there are no plans to put proper sewerage schemes in place. Despite promises during and prior to the election, plans for new roads and bypasses are now put on hold. Cutbacks in the Department of Education and Science amount to €150 million, in the Department of Social and Family Affairs to €100 million and in the Department of Health and Children to €50 million, including penalising the poorest people in the world by a €54 million cutback in overseas aid. There are new charges on ordinary workers, including farmers and business people, to pay for the Government's mismanagement. This includes a 60% increase in entry fees to third level colleges despite the fact that it was never more difficult on families to keep children in third level college because of the increasing costs of living away from home. There is a 26% increase in casualty charges, a 21% increase in the drugs refund scheme, an 18% increase in local authority rents, an 18% increase in VHI charges, a 13.25% increase in consumer activity charges and an increase in the VAT rate which will cost average householders €250 euro per year.

These increases are ample evidence that the Minister engaged in nothing less than a spending splurge in the run up to the election to buy votes. This spending has now been pulled back to the detriment of vulnerable people in our society. The Government can dress up the cuts, deceit, mistrust and spin as much as it likes, and its backbenchers can do the same, but the truth is totally different. We know the truth and, above all, the people know it. They will not be fooled again.

I am appalled by the behaviour of the Government but I also know that this debate offers it an opportunity. For the first time since the election, I am asking the Fianna Fáil-Progressive Democrats alliance to come clean, end the shameful cover-up and salvage something of its reputation by apologising to the people for its deception.

I call on the Government to do something to end the cynicism that is in danger of overwhelming this House due to its actions. Any of us on the campaign trail for the Nice treaty are aware that the people know what is happening. The people have a right to know where their taxes have gone. They have the right to know if their public services are being hit and if the quality of their children's education is to be reduced. The people have the right to know if the standard of their health care is to be lowered and if their public transport, so vital to our country, is to be delivered.

Mr. P. Breen

I welcome the opportunity to speak on the motion before the House. It is clear that the Taoiseach and the Minister for Finance grossly misrepresented the State's budgetary position in the run up to the last election. This misrepresentation was a key plank in their electoral strategy. So important was it that when the then leader of Fine Gael, Deputy Noonan, sought clarification of the State's finances, he was told the following on 13 May 2002:

I can confirm that there are no significant overruns projected and no cutbacks whatsoever are being planned, secretly or otherwise.

This will, in time, be viewed as one of the most disgraceful moments in the life of this disgraceful Government. It is now clear that the Government's strategy is to withhold as far as possible the reality of its mismanagement of the State's finances from the public and the Dáil.

Rather than take advice from the Department, the Minister for Finance prefers to take advice from the Fianna Fáil posters. The Government parties may be good at getting money into their own party coffers, but they are not good at managing the State's money.

When the Minister was advised by his officials not to engage in the SSIA scheme, he went ahead with it anyway. We now hear that, rather than the original cost estimate of €127 million which the Minister gave to the Dáil, the scheme will cost €500 million per year. Either the Minister is incompetent and could not estimate properly the cost of the scheme that he implemented or he is not telling the truth. Either way, he should publish immediately the basis for the original estimate of €127 million.

People in my constituency will be getting windfalls from this scheme just in time for the next scheduled election if the Government stays in power for four to five years. Perhaps the Government thinks it can buy votes, but one must remember the scheme is costing over €2.5 billion at a time when we urgently need projects and infrastructure. Earlier, Deputy Killeen referred to the Ennis bypass in my constituency, which was promised by the Taoiseach when he visited the constituency last April but which is now postponed until at least 2003. The Ennis bypass and other projects, including the bypass of Cashel, from where Deputy Hayes comes, are badly needed if we are to have growth in these areas.

There is a €50 million cutback in the health services. In the general hospital in Ennis, an extra unit is out of order since last January and the funding is not being made available by the Department to the health board to replace it. Elderly people are waiting up to three months for extra units.

VHI contributions have gone up by 18% and the threshold for the drugs refund scheme has gone up by 22%. Yesterday, 6,000 students marched in Limerick to protest against the 70% increase in registration fees. Cutbacks of €150 million, resulting in the postponement of many new capital projects, have taken place. For example, two schools in Tulla and Kilmihil in my own constituency now have to make do with extensions.

With regard to job losses, 165,300 people are now on the live register, up 24,000 from last year. If this continues all the industrial and manufacturing jobs created since 1997 will be gone by Christmas, including Tellabs in Shannon airport, where 450 job losses were announced. Those employees will be gone before Christmas. How much more of this kind of thing is going on?

The sort of information is never volunteered by the Government. Freedom of information inquiries and parliamentary questions are required to acquire this type of information. The revelation in the recent Cabinet memo calling for €900 million in budget cutbacks dates back to a time when the Minister for Finance promised no cutbacks or plans for cutbacks, secretly or otherwise.

How much more is being withheld? In mismanaging the nation's finances, the Government has created so much spin that the people are dizzy. The people do not trust the body politic now and I find it very hard to blame them. Therefore, I call on the Government to come clean, purge itself and let us move forward economically. After all, Ireland's economy does not belong to Fianna Fáil or the Progressive Democrats.

Mr. Perry

The budget should seek to develop our infrastructure, improve public services, promote equity, encourage enterprise and investment and do so in a way that sustains fiscal policy. The Minister has failed on all four counts. I compare the Government to the board of Enron, which totally deceived its shareholders. There are huge comparisons to be made. The electorate definitely received a clear indication of a totally different economy. Today we heard people applauding themselves and stating that Fine Gael were the bearers of bad news that the electorate did not want to hear. The Government had many spin doctors who told the electorate clearly about the huge spend on the economy and that the good times were going to roll on. The Minister for Finance was in celebratory mode.

The Minister, in his last budget announcement, was at pains to announce the health strategy, the blueprint for the development of the health services over the next ten years. He was encouraging in respect of the treatment purchase fund, which has already been cancelled. This fund was very much a part of the manifesto of the Progressive Democrats. There are people waiting on lists and the fund has been automatically cancelled.

The Minister should note that there are 25,000 people on waiting lists. We have heard about additional beds, but where are they? What about the range of services for older people? I had people in my clinic who could get only one hour of home help. That is how bad matters are and that is the nature of the increased services.

We hear of the BMW region, the national development plan and Objective One, but that is mere talk. There is no infrastructural development whatsoever. The plan pertaining to the pro posed development of infrastructure by 2006 will not be implemented by 2016. There has been so much deception. The electorate has been totally deceived. There are crude charges associated with student grants and maintenance fees. We are spending people's money, the management of which will lead to many questions in each Department in the future.

It is not acceptable that the Minister, who has the third most important position in the State, can come in here and indicate that he is cooking the books to ensure that there will be a pay day. The Minister announced his budget in December with an election in sight. The purpose of indirect taxation was to give the illusion of spending. Also, the introduction of the euro was used, and every piggy bank was robbed, to ensure the best spin on the economy so the electorate would see it in a positive light. Unfortunately, they did so.

In coming years, the Government will have to face job losses, which are happening daily. Today we heard a story of 330,000 jobs, but what about all the jobs that have been lost in the past year? The Minister made no reference whatsoever to the number of jobs that were lost and the dwindling level of small enterprise.

Small enterprises and companies are the backbone of the economy. Speaking from vast experience of the role of county enterprise boards, it is clear they are getting little or no funding. Approximately €26 million has been allocated in total.

I wish the Minister of State well in his new post. While he was not part of the previous Government, the Progressive Democrats have supported the Minister in his deception. There are many parallels with the board of Enron which failed to disclose figures to its shareholders. The Government failed to disclose the true state of the economy to the electorate before the general election.

People want integrity and the truth. A truth commission is required to ascertain if the Government is telling the truth. Every Government announcement should be tested for its veracity. If not, it should be exposed as more spin. People have worked hard to pay their taxes and do not need their money to be spent badly. More importantly, those who get least from the Government are on lower incomes. It is outrageous that they still pay tax.

I advise the Minister of State not to become too smug because there are many parallels with what happened in 1977. The electorate will send a clear message to the Government in the forthcoming local and European elections.

Mr. Healy

I thank the Fine Gael Party for agreeing to share time. Deputy Conor Lenihan said the Fianna Fáil Party told no lies during the last general election campaign. His idea of the truth is unusual. We are all aware of the letter sent by the Minister for Finance to the then Fine Gael Party leader, Deputy Noonan. It clearly stated no cuts, either secret or otherwise, were being planned.

The Government had planned these cutbacks because on 5 December 2001 it furnished the details to the European Union as part of its compliance with the Union's stability and growth pact. These include the cutbacks reported in the newspapers in recent months. They affect spending on health, education, the environment, roads and in various other areas. The total amount involved is approximately €1 billion. This is in addition to cuts in spending of approximately €450 million, introduced within weeks of the Government taking office.

The Government was totally dishonest about these cuts during the general election campaign. It was a campaign of fraud and deception on the electorate. We were told the Celtic tiger was alive and well, that it would have cubs and that things would never be the same again, that there was plenty of money and that once the Government was re-elected the good times would continue. However, as far back as last December these cuts were planned by the Government in a fraudulent, deceptive and dishonest manner.

These cuts attempt to make the ordinary people, including PAYE workers, social welfare recipients and small business people, pay for the mismanagement of the public finances by the Fianna Fáil and Progressive Democrats Government over the past five years. It is seeking to make ordinary people pay for the huge amounts of money shovelled into the pockets of the rich. CORI has outlined how the gap between rich and poor has widened over the past five years. For example, the income gap between a person earning €50,000 a year and one getting long-term unemployment benefit has widened by €240 per week. It is rip-off time for the rich while there is little or nothing for ordinary people. The Government now wants ordinary people to pay again by way of these cuts. People will not accept this. They no longer trust the Government, which will get its answer in the Nice treaty referendum.

The Minister does not need to make these cuts. In the past ten days, especially at a meeting in Brussels on Tuesday, he confirmed that there will be a current budget surplus in 2002 of €4.5 billion. There is no necessity for these cuts. The Government is being dishonest. The cuts in expenditure of €450 million for this year and the projected cuts of €1 billion for next year could be easily offset by the budget surplus for this year.

Mr. Crowe

During the general election campaign we were told the economy was in great shape. Ministers travelled throughout the country telling people of the great work they were doing. Perhaps in some instances they did some good work, but now, only a couple of months later, we are told the economy has gone pear shaped. If the last Administration had lost the election, it would probably blame the incoming one for this.

Backbenchers from various parties have said the country is rudderless. Perhaps this is because they have been kept in the dark about the economy. The cutbacks are hurting the least well off. Deputy Conor Lenihan speculated as to the reason people voted they way they did. They voted for different reasons. Perhaps some were happy with the outgoing Administration and opted for a steady ship.

I believe people voted for change. They voted for an Ireland of equals and the reinforcement of the peace process. They wanted to see an end to hospital waiting lists, they do not want their children to have to wait six to nine months for an operation. They also wanted to see the housing crisis resolved. Threshold has referred to a local authority housing waiting list of 55,000. The list is getting longer in my local authority area and this seems to be replicated around the country.

The Minister for the Environment and Local Government has suggested that the 20% social and affordable housing development provision in the Planning and Development Act, to be imposed on new developments, may be scrapped. This is another example of the Government helping out its friends – speculators, developers and so on. The Minister for Education and Science, Deputy Dempsey, chose the most vulnerable section in the education system for his cutbacks. It is nothing less than lunacy to cut planned initiatives to reduce the school drop out rate, schemes aimed at attracting students from disadvantaged areas to third level and adult education courses.

There are few areas where we have not heard of possible cutbacks, but they are not actually cuts – we are told they are adjustments. I can imagine some spin doctor sitting up all night to come up with this new term and God knows how much it costs the taxpayer to have them do that. This is Orwellian-speak to say they are adjustments rather than cuts but the reality is that they are cuts. People are asking how the Government got elected on such a shaky platform but clearly anyone who did vote for it is having second thoughts now. It is clear that the Government's popularity has dropped. The Taoiseach or Tánaiste do not have to go around north County Dublin climbing trees to find out what is wrong. People feel they were conned, that they were asked to vote for a particular programme yet it was clear within a matter of days of the election results that we would have a U-turn on these policies.

The well-off are getting better off and the gap between rich and poor is widening. We do not have a situation of greater equality and it is becoming harder for people to gain access to essential services. We are actually being asked to commend the Government rather than condemn it for its ineptitude regarding the handling of the economy. A number of vanity projects have been put forward and we have wasted the wealth of the boom years. We should not be commending the Government but condemning it.

Mr. F. McGrath

I welcome the debate on the management of the public finances. This is a very important debate but it should have been held earlier in the summer. There should have been an early recall of the Dáil to discuss the matter.

We have a major crisis in the public finances and this is a great concern for everybody. The situation has been caused by bad management of the economy over the past five years. The Minister for Finance has to take responsibility for his actions. He was elected on the hard man image of tough management of the economy, yet within five years his policies have gone way out of line. He has adopted the Maggie Thatcher philosophy of life which is not acceptable. I would give him two out of ten for his performance.

The Government has squandered the resources of the Celtic tiger. The 33 poorest schools in the country have to operate on a budget of €7,000 per year and they submit their figures every June and give their costings for literacy programmes, disadvantaged programmes and art programmes. They are always on budget and on time yet we have a Minister for Finance who cannot even do that.

Some 20% of our people are still living in poverty and that is not acceptable. There is a crisis in the health services with 7,000 people in the Dublin area on waiting lists. Of course we have to address the issue of from where the resources come. The first item on the agenda we have to face up to is that tax cuts for the wealthy over the past number of years were harmful to the economy. We have to be creative and radical and look at alternative ways of raising revenue. We have to revisit the debate on corporation tax, although I know some people have concerns about investment. Smokers in Ireland contribute €1 billion to the economy. If one takes the amount of money taken in taxation on alcohol over the past few years there is room to take in more money.

We have to prioritise spending. Investment in poor and disadvantaged areas needs to be the first priority. I do not accept the line that is being spun with regard to the health services, that it is a waste of public money to invest in the health service. Let us take the situation of St. Michael's House in Ballymun which has a waiting list of 345 adults with disabilities. Seven of the parents of these adults are terminally ill yet they cannot access the service. It would cost in the region of €11 million to €15 million to provide the service. We took in €17 million as a result of the Ansbacher investigations.

We also have a situation of economic madness where adults with disabilities in the Dublin region are receiving services in County Westmeath. The services are outside the area in which they live. This does not make social, political or economic sense. Another example of this is a playgroup in Edenmore that looks after autistic children that is €20,000 short this year to appoint a member of staff to work with these children. The health board cannot get the money to run the service. I do not accept that. We need a taxation system which allows us to look after our people, particularly the poor and those with disabilities.

We have a crisis and something needs to be done about it, but the bottom line is that cuts are not the solution. I concur with the points made by previous speakers about some parties making big promises. I disagree with big promises being made before elections. The best thing to do is to be straight and honest with the people and they will respect one for it. The public was misled before the general election. We are now facing cuts of €900 million. Those who agree with them should think of people on the waiting lists, the poor, adults and children with disabilities as well as those with literacy problems who are losing out in the €150 million education cuts. Managing the public finances has to be a priority but it should not be at the expense of the poorer members of society.

Minister of State at the Department of Finance (Mr. Parlon)

I am glad of the opportunity to speak on this motion and to explain how the Government has shown its commitment to prudent management of the public finances. We set out our policy in this regard in the programme for Government, where we clearly stated that we are committed to responsible fiscal policies within the context of the EU stability and growth pact. That pact requires that we keep the general Government finances at least close to balance and that we take corrective action when there is an actual or expected divergence from this aim. The Government will keep this commitment.

It was to make sure that this commitment is met and that public spending growth this year is kept to its target increase of 14%, or €2.8 billion over 2002, that a new system of monthly expenditure reports to Government was introduced at the beginning of this year. When this process identified potential spending overruns, action was taken to deal with them.

With regard to the statements on the alleged misrepresentation of the budgetary position to the public, I believe the record will show that there is no basis for this. The Minister explained yesterday in the House how at the end of every month this year, Exchequer statements were published by the Department of Finance clearly showing the outturn for receipts and expenditure and the overall Exchequer position. In addition, at the end of every quarter this year there has been a media briefing. This briefing gave details of the expected end of year position on tax receipts, spending and the overall Exchequer balance. This represents a clear system of reporting to the public on the Exchequer's finances. In this way the public has been kept fully informed of the developing situation regarding the public finances, both before and after 17 May.

The record shows that while the position of the public finances was disappointing in the early months of the year, it was not unreasonable to believe before the end of May that the budget targets were achievable.

Mr. R. Bruton

Nonsense. Did the Minister of State look at the figures? He should just look at them.

An Leas-Cheann Comhairle

The Deputy will get his chance to reply.

Mr. Parlon

However, at the end of May things changed on a monthly basis, unfortunately for the worse – and this is not limited to Ireland, nor even Europe, it is a global situation.

(Interruptions.)

Mr. Parlon

Facts are facts and unfortunately that is the real world in which we live.

The record shows that the position of the public finances was disappointing. At the end of May the year-on-year increase in expenditure showed a sharp increase to 27% which increased concern about the end of year spending outturn. To ensure spending for the year came into line with the original planned increase of 14% or €2.8 billion action had to be taken. This type of mid-year adjustment is a frequent occurrence in the management and control of public expenditure.

On 19 June, in a written statement, the Minister for Finance stated the forecast Exchequer balance for the end of the year was still for a surplus of €170 million – the budget day target. On publication of the end of June Exchequer statement the Minister published a press statement which noted the Exchequer surplus at the time and stated this was in line with achieving a surplus for the year as a whole, with extra non-tax and other revenues compensating for the shortfall in taxes then projected. However, the budgetary position forecast for the end of the year deteriorated by the end of September.

The facts for every month show the deteriorating position, which was flagged by the Department of Finance and the Minister. There is no basis for the statements that the public was misled about the state of the public finances or about the limits—

Mr. R. Bruton

Who spent the money? Do Ministers not run their Departments?

Mr. Parlon

It is on record. The record shows the Government has managed our public finances sensibly and I am sure it will continue to do so.

Mr. Neville

I wish to share my time with Deputy Kenny.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Neville

I am surprised by the Minister of State's statement. He is almost talking like Fianna Fáil.

Mr. Parlon

I recorded facts.

Mr. R. Bruton

It is a self-serving selective quotation of facts.

Mr. Neville

It is a fact that before the Minister of State was elected to the Dáil there was gross mismanagement of the economy for which the people are now paying. He defends it, although he had nothing to do with it.

Mr. Parlon

I recorded a few facts. If they passed over the Deputies' heads, that is their problem.

Mr. Neville

The public finances are in crisis. The Minister of State was not involved, yet he defends it. I am surprised by that. The public was misled during the general election. We heard from the Minister of State's party and Fianna Fáil, especially the Minister for Finance, Deputy McCreevy, that the level of spending and services during the good times would continue during the lifetime of the current Government. Despite this, within three weeks of taking office, it began to cut and slash and we have seen revealed in a Sunday newspaper a detailed memorandum of cutbacks, something the Government did not want us to see. This was known to the Government prior to the general election. Unfortunately, the cuts will affect the poorer and weaker sections of society, especially the elderly.

I asked in a parliamentary question yesterday about work to be completed under the special housing aid for the elderly scheme. These are essential works for elderly people living alone or with an elderly partner. In the Mid-Western Health Board area 1,385 elderly people await work to be completed on their houses by the board. In the Midland Health Board area 1,077 await work to be completed on their houses under the scheme. Overall, 9,700 elderly people await work to be completed on their houses. We have been told by our health board it hopes finance will be made available to do this work this month. Will adequate finance be available to give 9,700 elderly people some form of decent accommodation under the scheme?

The key issue in the general election was health. The people were told that waiting lists would disappear in two years. With the present cutbacks, surely that does not have any credibility. The first action taken after the Government assumed office was to direct health boards to return some of the money previously allocated to them.

Mr. Parlon

They had received an additional €1 billion.

Mr. Neville

The Minister of State's Department allocated money earlier this year to improve their finances and the minute the general election was over it was taken back.

Mr. Parlon

They received an additional €1 billion.

Mr. Neville

It is like the Minister who had trees planted the day before the general election and had them removed the day after. Does the Minister of State remember that? We will not mention the name of the Minister in question.

Future economic development depends on improved infrastructure and we do not know what cutbacks will take place in this area. I received a call from my constituents asking when the Adare bypass will be built. I could have told them two years ago that the National Roads Authority told me it would be built in three years. We do not know now and cannot find out. No one will tell us when these projects will be built. I could not give my constituents an answer.

Mr. Durkan

The bypass has gone.

Mr. Kenny

Goodbye Adare.

Mr. Neville

The treatment of children at risk is a key issue. It may be considered minor because it does not have many votes in it, but it is important nonetheless. Will the promised seven psychiatric units catering for children and adolescents be constructed in the lifetime of the Government? I do not believe they will. A working group established in 2000 recommended the development of child and adolescent psychiatry and presented its report to the Minister for Health and Children in March. It contained proposals for the development of services for the management and treatment of attention deficit hyperactivity disorder and child and adolescent psychiatric in-patient units. It recommended the enhancement and expansion of overall child and adolescent psychiatric services throughout the country and closer liaison and interaction with the education system and other areas of community health services. It also recommended that seven in-patient psychiatric units catering for children aged between six and 16 years should be established throughout the country with a focus on assessment and treatment of psychiatric, emotional or family disorders, including major adjustment, anxiety, mood and eating disorders and schizophrenia, using a variety of treatment approaches. I understand this will not happen during the life of the Government. Will the Minister of State confirm this? We were expecting work to commence this year, but believe it may not now happen in the life of the Government. If that is so, it is a disgrace.

Mr. Kenny

Deputy Richard Bruton has proposed on behalf of the Fine Gael Party that a Bill should be introduced to give fiscal responsibility and accountability in the public finances. This is necessary because it would bring clarity to the business of public finance and allow for constructive opposition and debate in the House.

Figures released by the Central Statistics Office this morning show that the growth rate is 4.6% which is less than was envisaged. It has fallen from the 10% to 11% of last year. There has been a change from a rapid rate of growth to a rapid rate of decline. The figures produced by the Government show the extent of the massaging which has taken place, such as taking money from the social insurance fund, the Central Bank, State assets and the euro changeover. We are in a position where the ESRI may not be far out in its assessment of the borrowing requirement for next year of €3.2 billion.

It is clear that the first 125 days of the Government have been nothing short of a shambles. It culminated in the leak of a document into the public domain which came, not from the Department of Finance, but from the Department of Foreign Affairs. If the Government's economic framework is in a shambles, so too is every aspect of its policy – every promise, strategy and initiative. If the money is not available, every promise is a false one. It will cripple ordinary people and not those who were the sole beneficiaries of legislation introduced here or the beneficiaries of the acquisition of sites like the Battle of the Boyne or Irish citizens that the Minister for Justice, Equality and Law Reform, Deputy McDowell, is now examining named Masri and Mahfouz. I understand he has some documentation which may be of interest to us all.

The people who will be crippled are those who were conned out of their vote, who face the highest inflation rate in Europe, with casualty charges up by 26%, college registration fees up by 70%, VHI up by 18% and the drugs refund threshold up by 22%. Among them are the 165,000 people on the live register – 24,000 more than last year. If the jobless number increases at the current rate, all job gains since 1997 will be gone. We need a proper and informed public debate on the true state of the public finances and the fiscal responsibility Bill proposed by Deputy Bruton would add greatly to the stature of the House and to the structured debates we should have here.

Mr. R. Bruton

This is supported by the Progressive Democrats, which has a good record on public finances.

Mr. Kenny

The state of the public finances is too serious a matter to shirk because every policy in every Department is affected. The Minister for Finance told Pat Kenny on his radio programme that tax receipts would fall short by €500 million. Five days later he said that the situation would be worse. A week after that, with the Exchequer returns, it was shown to be nearly three times worse with a shortfall of €1.3 billion. He has now embarked on act two of his financial farce. He expects us to believe that after nine months of almost 20% expenditure growth, that it will be kept to just 3% in the last quarter. Is that feasible or realistic?

Mr. R. Bruton

The Department of Justice, Equality and Law Reform is one that will be cut.

Mr. Kenny

This is pure rubbish. More than that it is a farce if not a folly. This year will not be salvaged in terms of the Minister's projections. It is not possible to start 2003 with the millstone of deferred 2002 payments around his neck. This would do irreparable damage to the nation's finances, because he will fool himself into believing that somehow it will all go away, but it will not go away.

The Minister blames economic downturn, but that, too, is rubbish. The reality is that for three years expenditure was allowed to grow at three times the rate of economic growth and it is impossible to slow that down in the last quarter of this year.

Neither Fianna Fáil nor the Progressive Democrats has a mandate to raise direct taxes. Even if the Minister did, by his own admission he does not know how much a 1% increase would generate. He talked about taxing employment by raising PRSI, but he said last year that the social insurance fund was in surplus and could afford to pay €650 million to the Exchequer. I am not sure that is correct.

Events in the Middle East may make fuel prices volatile which will further erode our competitiveness. I advise the Minister for Finance to spell out his best estimate and not a "guesstimate" for 2003. He is predicting a deficit of €750 million for 2002. How much once-off income is included in arriving at this? The Minister must explain how much he is saving by deferring items to 2003. That is a simple enough task. He must spell out for the House, the social partners and the people, how much will be available for public services next year. We spend €31 billion a year. Some €5 billion is spent on social welfare and of the remaining €26 billion, over half is absorbed by health and education. If cutbacks, or adjustments as the Government calls them, must be made these areas will be hit. If the Minister will not call a spade a spade, he should at least have the honesty to admit that spending more money than last year does not mean services are improved. The public understands the concept of inflation, as it should because it has had enough experience of it.

Over the next eight weeks, we will be presented with three vital things: the abridged Estimates volume, the White Paper on income and expenditure and the 2003 budget. It may well be the most important budget for many years. If the Taoiseach, the Tánaiste and the Minister for Finance continue to hide from the truth, as Government speakers have done repeatedly in this debate, then this critical budget will be another creature of spin over substance.

The time for that debate and clear information is now. The Government should agree with the proposal of Deputy Bruton to introduce a fiscal responsibility Bill to allow clarity about the truth of the public finances which would in turn give us clarity in terms of constructive opposition and presentation of our ideas in the House.

I commend the Fine Gael motion to the House.

Amendment put.

Tá

Ahern, Bertie.Ahern, Dermot.Ahern, Noel.Andrews, BarryArdagh, Seán.Aylward, Liam.Brady, Johnny.Brady, Martin.Brennan, Seamus.Browne, John.Callanan, Joe.Callely, Ivor.Carty, John.Cassidy, Donie.Collins, Michael.Coughlan, Mary.Cowen, Brian.Cregan, John.Cullen, Martin.Curran, John.Davern, Noel.de Valera, Síle.Dempsey, Tony.Dennehy, John.Devins, Jimmy.Ellis, John.Fahey, Frank.Finneran, Michael.Fitzpatrick, Dermot.Fleming, Seán.Gallagher, Pat The Cope.Glennon, Jim.Hanafin, Mary.Haughey, Seán.Hoctor, Máire.Jacob, Joe.Keaveney, Cecilia.Kelleher, Billy.Kelly, Peter.Killeen, Tony

Kirk, Seamus.Kitt, Tom.Lenihan, Brian.Lenihan, Conor.McCreevy, Charlie.McDaid, James.McDowell, Michael.McEllistrim, Thomas.McGuinness, John.Martin, Micheál.Moloney, John.Moynihan, Donal.Moynihan, Michael.Mulcahy, Michael.Nolan, M. J.O'Connor, Charlie.Ó Cuív, Éamon.O'Dea, Willie.O'Donnell, Liz.O'Donoghue, John.Ó Fearghaíl, Seán.O'Flynn, Noel.O'Keeffe, Batt.O'Keeffe, Ned.O'Malley, Fiona.O'Malley, Tim.Parlon, Tom.Power, Peter.Power, Seán.Roche, Dick.Ryan, Eoin.Sexton, Mae.Smith, Brendan.Smith, Michael.Treacy, Noel.Wallace, Dan.Walsh, Joe.Wilkinson, Ollie.Woods, Michael.Wright, G. V.

Níl

Allen, Bernard.Boyle, Dan.Breen, James.Breen, Pat.Broughan, Thomas P.Bruton, John.Bruton, Richard.Burton, Joan.Connaughton, Paul.Costello, Joe.Coveney, Simon.Cowley, Jerry.Crawford, Seymour.Crowe, SeánCuffe, CiaránDeasy, John.Deenihan, Jimmy.Durkan, Bernard J.English, Damien.Enright, Olwyn.Ferris, Martin.Fox, Mildred.Gilmore, Eamon.Gregory, Tony.Harkin, Marian.

Hayes, Tom.Healy, Seamus.Higgins, Joe.Higgins, Michael D.Hogan, Phil.Howlin, Brendan.Kehoe, Paul.Kenny, Enda.Lynch, Kathleen.McCormack, Pádraic.McGrath, Finian.McManus, Liz.Mitchell, Gay.Mitchell, Olivia.Morgan, Arthur.Moynihan-Cronin, Breeda.Murphy, Gerard.Naughten, Denis.Neville, Dan.Ó Snodaigh, Aengus.O'Dowd, Fergus.O'Shea, Brian.O'Sullivan, Jan.Pattison, Seamus. Penrose, Willie.

Níl–continued

Perry, John.Quinn, Ruairí.Rabbitte, Pat.Ring, Michael.Ryan, Eamon.Ryan, Seán.Sargent, Trevor.Sherlock, Joe.

Shortall, Róisín.Stagg, Emmet.Stanton, David.Timmins, Billy.Twomey, Liam.Upton, Mary.Wall, Jack.

Tellers: Tá, Deputies Hanafin and S. Power; Nil, Deputies Durkan and Stagg.

Amendment declared carried.

Question put: "That the motion, as amended, be agreed to."

Tá

Ahern, Bertie.Ahern, Dermot.Ahern, Noel.Andrews, Barry.Ardagh, Seán.Aylward, Liam.Brady, Johnny.Brady, Martin.Brennan, Seamus.Browne, John.Callanan, Joe.Callely, Ivor.Carty, John.Cassidy, Donie.Collins, Michael.Coughlan, Mary.Cowen, Brian.Cregan, John.Cullen, Martin.Curran, John.Davern, Noel.de Valera, Síle.Dempsey, Tony.Dennehy, John.Devins, Jimmy.Ellis, John.Fahey, Frank.Finneran, Michael.Fitzpatrick, Dermot.Fleming, Seán.Gallagher, Pat The Cope.Glennon, Jim.Hanafin, Mary.Haughey, Seán.Hoctor, Máire.Jacob, Joe.Keaveney, Cecilia.Kelleher, Billy.Kelly, Peter.Killeen, Tony.

Kirk, Seamus.Kitt, Tom.Lenihan, Conor.McCreevy, Charlie.McDaid, James.McDowell, Michael.McEllistrim, Thomas.McGuinness, John.Martin, Micheál.Moloney, John.Moynihan, Donal.Moynihan, Michael.Mulcahy, Michael.Nolan, M. J.O'Connor, Charlie.Ó Cuív, Éamon.O'Dea, Willie.O'Donnell, Liz.O'Donoghue, John.Ó Fearghaíl, Seán.O'Flynn, Noel.O'Keeffe, Batt.O'Keeffe, Ned.O'Malley, Fiona.O'Malley, Tim.Parlon, Tom.Power, Peter.Power, Seán.Roche, Dick.Ryan, Eoin.Sexton, Mae.Smith, Brendan.Smith, Michael.Treacy, Noel.Wallace, Dan.Walsh, Joe.Wilkinson, Ollie.Woods, Michael.Wright, G. V.

Níl

Allen, Bernard.Boyle, Dan.Breen, James.Breen, Pat.Broughan, Thomas P.Bruton, John.Bruton, Richard.Burton, Joan.Connaughton, Paul.Costello, Joe.Coveney, Simon.Cowley, Jerry.Crawford, Seymour.Crowe, Seán.Cuffe, Ciarán.

Deasy, John.Deenihan, Jimmy.Durkan, Bernard J.English, Damien.Enright, Olwyn.Ferris, Martin.Fox, Mildred.Gilmore, Eamon.Gregory, Tony.Harkin, Marian.Hayes, Tom.Healy, Seamus.Higgins, Joe.Higgins, Michael D. Hogan, Phil.

Níl–continued

Howlin, Brendan.Kehoe, Paul.Kenny, Enda.Lynch, Kathleen.McCormack, Pádraic.McGrath, Finian.McManus, Liz.Mitchell, Gay.Mitchell, Olivia.Morgan, Arthur.Moynihan-Cronin, Breeda.Murphy, Gerard.Naughten, Denis.Neville, Dan.Ó Snodaigh, Aengus.O'Dowd, Fergus.O'Shea, Brian.

O'Sullivan, Jan.Pattison, Seamus.Penrose, Willie.Perry, John.Rabbitte, Pat.Ring, Michael.Ryan, Éamon.Ryan, Seán.Sargent, Trevor.Sherlock, Joe.Shortall, Róisín.Stagg, Emmet.Stanton, David.Timmins, Billy.Twomey, Liam.Upton, Mary.Wall, Jack.

Tellers: Tá, Deputies Hanafin and S. Power; Níl, Deputies Durkan and Stagg.

Question declared carried.