Dáil Éireann díospóireacht -
Wednesday, 9 Jul 2008

Vol. 659 No. 2

National Development Plan: Motion (Resumed).

The following motion was moved by the Taoiseach today:

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.

Debate resumed on 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.

—(Deputy Enda Kenny).

Deputy Eamon Gilmore

I wish to share time with Deputy Penrose.

The Labour Party amendment reads:

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

"mindful of the deteriorating position of the Irish economy, caused primarily by the collapse in the house-building industry;

concerned in particular at the alarming increase in the number of persons on the live register;

notes that the Government's austerity package contains no measures to deal with the worsening employment crisis, and will, if anything, worsen the employment position;

calls on the Government to:

bring forward a medium-term fiscal strategy that will restore order to the public finances on a phased basis, and renew confidence in the Irish economy;

maintain investment in key economic and social areas;

bring forward proposals to offer educational and re-skilling opportunities to those losing their jobs;

maintain and enhance investment in education as the core ingredient in a knowledge economy;

ensure that necessary efficiencies are achieved without impacting on frontline services."

Yesterday, the Government announced a package of public expenditure cuts — no more and no less. Like the famous Conan Doyle story, the vital element of yesterday's announcement was the dog that did not bark. That bit was missing. What the country needs is an economic plan, what we got was a half-baked book-keeping exercise. What the country needs is a recovery package, what we got was a package of cuts. What the Government is proposing will not create a single job in the private sector. All it will do is cut jobs and services in the public sector. This is not the forward-looking strategic approach that will restore confidence in the economy, reignite growth or lay down the basis for necessary future employment. It is a crude and conservative knee-jerk reaction, part of an emerging conservative consensus that views cuts in the public sector as the solution to a recession firmly rooted in the private sector. It will do nothing for the 54,000 people who have lost their jobs in the past 12 months or those who are living in fear that they will be next.

Rather than taking decisive action to restore confidence to the economy, we have a Taoiseach and a Minister for Finance who are muddled and confused. The package they produced yesterday was long on tough talk and short on specifics. Where are the figures? Some of them were outlined by the Taoiseach, but they do not add up to the €440 million to be cut in 2008 or the €1.44 billion to be cut by the end of 2009. If the Government is going to go down the road of cutting public spending, it could at least supply the House with a set of costed proposals. Yesterday, the Taoiseach stated that the proposed 3% cut in the public pay bill would save €250 million over 18 months. From where will the other €1.19 billion come?

We are told that health and education are excluded on the one hand and that the "parameters of this exception for the health and education sector are to be agreed by the Departments concerned with the Department of Finance" on the other. Will someone please translate that? I cannot find a translation of the dialect of "official-speak" to English. It sounds as though the Government will lay off nurses and teachers, but that it is not being honest about it. If that is not the case, from where will the other €1.19 billion come? Is it to come from stealth taxes and charges? In recent weeks, we have been told that there will be no cuts, only savings and adjustments. Perhaps there will not be any charges, only negative expenditures or appropriations-in-aid. When will we see them and who will they hit?

There are proposals in yesterday's statement that are welcome, such as the curtailment in public relations spending or the reform of public procurement, although the €50 million figure attached to that measure is purely speculative. What is not speculative is the disgraceful €45 million cut in overseas aid. Has the Government no shame? Is it honestly saying that our economy is in such dire straits that we must cut aid to the poorest people in the world? Have we been reduced to that? The Government made a solemn vow to meet the 0.7% of GNP target by 2007. It broke that promise. Subsequently, it promised to meet the target by 2012, but there are now to be further cuts. When the economy was doing well, the Government stated that GNP was rising too quickly to meet the target. Now the economy is growing more slowly and there are cuts. Which is it?

On 2 December 2004, an article in The Irish Times stated:

The Minister for Finance, Brian Cowen described as "a fair effort" the €535 million ear-marked for Overseas Development Aid (ODA) next year. The Government recently admitted it would not achieve its stated target of providing 0.7 per cent of the GNP to ODA.

"The problem here is we are a victim of our own success. The growth in GNP is accelerating — thankfully — and obviously that makes it all the more difficult to reach the targets that were set."

He said by 2007 the State will be contributing some €695 million to ODA, a "significant fund by any stretch of the imagination".

"We are seventh in the world per capita in ODA funding. I do not think anyone should question the commitment of Ireland as a country through this ODA mechanism.”“I am sorry we didn’t make 0.7 per cent . . . had we been in recession we would have made it,” he quipped.

When the Government makes promises on overseas aid, it speaks not on its own behalf, but on behalf of the Irish people to the poorest people of the world. The Government may not care about breaking its word, but it is breaking the word of the Irish people, who care.

I am not interested in engaging in a political point-scoring exercise on the economy. Several times, I have made it clear why I believe the recession is the direct result of the Government's mismanagement. However, I want to discuss how we can begin a process of recovery from our present position. To do that, we must start with an honest analysis of the problem, but the Government is refusing to do so. It insists that this situation is due to international factors. That assertion is simply untrue. When the Government does not tell the truth about the problem, it cannot get near a solution.

What is occurring in the economy? The main factor precipitating the recession is the collapse in house building and the problems besetting the broader construction sector. While international conditions are contributing to the problem and inhibiting export growth, the recession is primarily the result of the mismanagement of the property sector by the Government. This explains the mismatch between the short-term outlook for 2008 and 2009 and the medium-term outlook for 2010 and beyond. For example, the ESRI medium-term review predicted an average growth rate of 3.8% in the period 2010 to 2015. This positive long-term picture is based on the opinion that there are strong underlying fundamentals that will drive growth, particularly via services exports.

As of now, it is reasonable to consider the situation as a once-off shock that is reducing activity and employment in one sector, albeit one on which both the labour market and the Exchequer have been heavily reliant. This will reduce employment and income from that sector and will have an effect on the broader economy, primarily by dampening consumption growth.

There are other risks, such as the credit crunch, higher interest rates in response to higher international commodity prices and the competitiveness of the euro in its rise against the dollar. These are significant, but the balance of probabilities continues to be that Ireland will benefit from the resumption of growth in the international economy in 2009 or 2010. In the meantime, we can anticipate serious difficulties for the Exchequer and the labour market in 2008 and 2009. While growth is expected to resume in 2009, the worst effects in terms of unemployment and the Exchequer finances are likely to be felt in that year, with the ESRI expecting unemployment of 7% and a GGB deficit of 3.9% of GDP.

How should the Government respond? The policy emphasis should be on dealing with the jobs crisis and the real economy, not bookkeeping exercises in respect of public finances. The Government must have a strategy for the public finances, but it must also address consumer confidence, the labour market and medium-term growth. While it is important that the public finances are restored to a sustainable path, that can be done quickly or slowly. A rapid adjustment runs the risk of making the problem worse by deepening the recession. Given that Ireland's debt to income ratio is low, a more gradual restoration of the public finances is both possible and preferable. What the Government should do as a matter of urgency is propose a new set of budgetary tables showing how the public finances can be restored over approximately a three-year period.

I agree with the ESRI that the 3% deficit limit in the Stability and Growth Pact should not be treated as the Holy Grail. On the basis of the best available analysis of Ireland's medium-term prospects and given the once-off nature of the collapse in construction activity, a deficit that exceeds 3% would not necessarily be regarded as excessive. Under the terms of the revised Stability and Growth Pact, as amended in 2005, a breach of the 3% reference value need not be regarded as excessive where it is temporary and exceptional. The latter explicitly includes situations where a country experiences negative growth, as is forecast by the ESRI. In assessing whether an excessive deficit exists, the pact also has regard to a range of other factors to do with the quality of public finances. That Ireland's borrowing is entirely focused on infrastructure investment and our debt to income ratio is low qualifies us under this heading.

Yesterday, the Minister for Finance raised the shadowy spectre of people in some quarters calling for large-scale borrowing. I have heard no such proposal. The ESRI predicted a general Government deficit of 3.9% of GDP. This is hardly the end of the world, given the scale of Ireland's infrastructure needs. It is certain that with negative growth and a deficit of this order, the debt to income ratio will rise, but Ireland has no official target for its debt to income ratio.

If the Government were to come forward with a three year programme that provided for orderly adjustment of the finances, it could address any such concerns. Such an approach would make a far greater contribution to the restoration of economic competence and confidence, than the present package. All that yesterday's announcement will do is paper over the cracks and send the signal to consumers that a panicky Government is expecting much worse to come. If the Government has confidence in the economy, let it say so, and let it put forward a set of budgetary tables that show how an orderly transition can be achieved.

The Government stated yesterday there would be a review and re-focusing of capital spending. Frankly, it is amazing it cannot tell us at this point what that will mean. Certainly, there is scope for such an exercise, as there is scope for better project management in capital spending. Depending on the projects that are delayed or axed, however, this review has the potential to cause real and lasting damage. Infrastructure deficits remain a serious problem and cuts imposed now could have a substantial negative impact on future jobs and incomes. The most recent example of this was in 2002 and 2003, where capital spending was severely curtailed, particularly when adjusted for the rise in tender prices in civil engineering. This led to severe delays in the national roads programme that are still being made up.

I have made the point in the House on many occasions that this presents a significant opportunity for the Government. We all know the country needs more school accommodation, including new schools and extensions. Now is not the time to bring down the shutters on school building; now is the time to press ahead with school building programmes, providing employment to people who have lost their jobs and building the schools that Ireland will need for decades to come.

The Government announcement yesterday states, in another masterpiece of nonsense, that "further expenditure for the acquisition of accommodation for decentralisation will await detailed consideration of reports from the Decentralisation Implementation Group". If decentralisation is now part of the solution, is the Minister unable to admit it was part of the problem in the first place? Instead of more waffle, will the Minister be honest and admit the Government's decentralisation plan is now finished? It was an unachievable scheme dreamed up and presented without prior consultation by the former Minister for Finance, Charlie McCreevy. It has caused untold trouble and expense. It has disrupted the operation of the public service and it has misled local communities and towns throughout the country into believing there was some kind of economic salvation to their area at the end of a decentralised agency.

The main priority of Government should be to deal with the jobs crisis. It is simply not doing so. There are serious grounds for concern about the build-up, once again, of a problem of long-term unemployment, unless action is taken. Over the period 2001-06, employment in the construction sector increased by 100,000. This included a significant number of men with limited educational qualifications. The collapse in house building is leading to a major decline in construction employment and more can be expected to follow as the commercial property sector goes into decline next year. Any reductions in the NDP will also have an impact. Although construction will eventually come back, we should not sit around and wait for people to slip into long-term unemployment. A determined and largescale programme of upskilling is therefore required.

The Government announcement yesterday was a conservative knee-jerk reaction. It seeks to solve a recession that started in the private sector with an attack on the public sector. The implications this year will be limited. What remains unclear is what the Government means by its proposed 3% reduction in the public payroll and how that will be achieved. If it means anything, it means job losses, which is a pretty strange way to address the jobs crisis. It will have a particular impact on women, since public administration and public services have been a key driver of employment growth for women in recent years.

Labour is proposing a different approach, one that is not based on the conservative consensus. We agree the public finances must be returned to a sustainable path, within the terms of the Stability and Growth Pact, but this can be achieved over a number of years. A breach of the 3% limit this year, for example, would not necessarily be regarded as an excessive deficit, given the speed of the economic downturn, and the otherwise strong position of the public finances. The Government, therefore, should bring forward a new set of budgetary figures providing for an orderly and not a panicked adjustment. This would contribute to the restoration of confidence, both among consumers and investors.

Second, we must maintain a clear focus on future jobs and incomes by bringing forward a revised capital programme. What is needed now is a real determination to address deficits in economic and social infrastructure, delivering projects on time and on budget. What is needed is not panic, but priorities. We need to set out which projects are most urgent, based on solid assessment of costs and benefits. This cost-benefit analysis should include a strong weighting for carbon emissions. It should not be forgotten that Ireland has international obligations to reduce its carbon footprint and that there is a cash cost for not doing so. Maintaining investment in transport infrastructure is a vital element in any coherent strategy for carbon reduction in Ireland.

Third, rather than make cuts in education, Ireland should enhance investment in that area on a planned basis. Education is a major driver, both of the knowledge economy and of a more equal society. There are major deficits in Ireland's educational system, from literacy, to early school leaving, to the level of achievement in science and maths. They cannot afford to wait for the Government to act. Failure to deal with these issues now will cause problems for decades to come and as I have said, now is an ideal time to start and to continue building school accommodation.

Fourth, it is essential that measures are put in place to avoid the emergence of a new group of long-term unemployed. This requires a substantial programme of investment in skills and qualifications. Re-training options at a range of levels should be put in place, with the institutes of technology and the further education sector having a key role to play.

Fifth, the Government should move, as a matter of urgency, to conclude a pay deal with both public and private sectors to restore certainty in this regard and to provide the basis for coherent fiscal planning. There is no need for the talks process to drag on for months, undermining confidence further. Let us have a deal quickly.

Those five measures would go some way to restoring confidence in the economy and to laying down the basis for economic and social progress. While no-one denies there is scope for greater efficiency in public spending, what is on offer from the Government is a knee-jerk reaction that will damage public services and do nothing to create jobs in the private sector. It is crude and it is conservative. What the country needs now is not a cuts package; what it needs is a jobs and stability package and that is what Labour is proposing.

An Ceann Comhairle

Deputy Penrose has ten minutes.

Deputy Willie Penrose

I thought I had more time than that.

I am pleased to have the opportunity to speak in this important debate on behalf of the Labour Party as the party's spokesperson on enterprise, trade and employment.

I recall the then Minister for Finance, Deputy Brian Cowen, launching the NDP in January 2007, which he described as an ambitious plan which would secure the further transformation of our country, socially and economically, within an environmentally sustainable framework. In his Indecon public policy lecture last November, Deputy Cowen stated his first priority was the delivery of the NDP. I do not doubt the sincerity of the Taoiseach's commitment to the NDP but I consider that the projections of growth in tax revenue on which it was based were absurdly optimistic. When the plan was launched, housing completions had peaked and the Minister must have been aware of how dependent the Exchequer had become on taxes from the building industry. At a time when construction in the rest of Europe comprised about 5% of GDP, construction in Ireland reached a totally unsustainable 11% of GDP.

The Taoiseach must now recall with embarrassment the famous comment of Michael McDowell before the last election that, "we do not need" the revenue from stamp duty. As stamp duty receipts plummet, the Government must surely accept that a tax which was never intended to be a major source of Government revenue became central to projections of tax receipts and consequently, Government spending. As Minister for Finance, the Taoiseach must have been aware the housing boom would come to an end with a consequent sharp fall in employment and tax receipts.

It was clear as early as 2002 that the increase in population would sustain a rapid expansion of the building industry and that the many tax relief schemes introduced in the late 1980s and early 1990s, which my colleague, Deputy Burton scrutinised in great depth, were no longer required. Yet as Minister, the Taoiseach extended some of these schemes when it was apparent to everybody but the Construction Industry Federation that they had outlived their usefulness. He did not take any serious action to curtail these schemes until last year and the result is that we now have hundreds of unsold houses which were built under tax relief schemes rather than in response to real need.

While we have a plethora of poorly constructed and poorly insulated houses, remote from public transport and other facilities which make a mockery of the Government's commitment to sustainable development, the provision of social housing is wholly inadequate. We have a grotesque situation where hundreds of private houses sit empty while thousands are living in substandard accommodation as they wait for the provision of social housing which the Government is unable or unwilling to deliver. As house-building in the private sector declines, the Government must ensure the social housing programme is accelerated. It must also ensure it achieves value for money in these schemes. With declining activity in the construction sector, costs will fall and the Government will be able to ensure a greater level of output for any given level of spending.

Notwithstanding the gloomy comments of economists, many of whom seem more comfortable with recession than boom, it is important to bear in mind that although we must reformulate policy in view of reduced tax receipts, we are not experiencing a fiscal crisis. Borrowing last year was 24% of gross domestic product, GDP, which is minuscule compared to the crisis of the late 1980s when borrowing reached 151% of GDP. The current level of debt is equivalent to three months' tax revenues. The picture is even less alarming if we look at general Government debt, which takes into account the assets of the National Pensions Reserve Fund. On this measure, Government debt is only 14% of GDP, or less than a quarter of the 60% allowed under the EU's Stability and Growth Pact.

While there is no possibility that we will breach the borrowing levels permitted by the Stability and Growth Pact, it will undoubtedly be difficult to maintain the current budget deficit below the permitted 3% of GDP. However, the Stability and Growth Pact should not be used as a bogey man to frighten us into fiscal submission. The Stability and Growth Pact was famously described as "stupid" by Mr. Romano Prodi, former President of the European Commission and Prime Minister of Italy. When France and Germany breached its limits, no action was taken against them. Instead, the Stability and Growth Pact was revised to allow for the 3% limit to be exceeded in times of severe economic downturn. We will not entertain Government claims that the Stability and Growth Pact represents an insurmountable curtailing or limiting factor.

The fiscal situation is not so bad that drastic cuts must be made in the national development plan. If cutbacks are unavoidable, they should not be made in those areas that affect the prosperity and future stability of our society. Of the €184 billion to be spent under the national development plan, more than €80 billion relates to non-infrastructural projects. Much of this spending, particularly in education, is vital not only for economic growth, but to create the just society to which the Taoiseach claims to be committed. The Government's proposals cast doubt on that commitment.

Some 40,000 children are being taught in prefabricated classrooms. Hundreds of schools are without adequate facilities for physical education. Hundreds of elderly people are in acute hospital beds because of the lack of step-down beds. Providing for all these needs would go a long way towards mitigating the decline in activity in the construction industry. In my own area, for example, commitments have been made to provide a national school in Loughegar, to undertake refurbishment and extension works at St. Brigid's national school in Ballynacargy and Sonna national school in Rathowen and to provide a new secondary school at Athlone community college. There are many such examples throughout the State.

The Taoiseach has told us that the FÁS apprenticeship budget will be cut. Only last week, however, the director general of FÁS, Mr. Rody Molloy, made the case that this service should be expanded. This proposal jeopardises our future. Bord na Móna and the ESB are no longer providing the flow of apprentices they did in the past. Mr. Molloy referred to apprentices completing their apprenticeships abroad. What message does this send to young apprentices who have been released by their employers? A knife is being wielded with no thought for the future. Cutbacks in spending may help to balance the books now but will add to costs in the future. Much of the crisis in the health system is due to the drastic closure of hospital beds in the late 1980s. We must not repeat the mistakes of the past.

We generally talk about investment in terms of physical infrastructure or sometimes as research, both of which are crucial for economic development. However, investment in people offers the highest returns. In 2005, the National Economic and Social Forum produced a cost-benefit analysis which showed that every €1 spent on early childhood education yields a return of €7 at a later date. Children who receive pre-school education will be more productive workers who enable Ireland to compete effectively in the global economy. Moreover, allocating resources to pre-school education now will mean we spend much less in the future in dealing with the consequences of crime, unemployment, poverty and poor health.

National development plan investment is vital in terms of attracting foreign investment. The chairman of the Industrial Development Agency, IDA, stated at the launch of the authority's annual report last week that it is absolutely imperative that the infrastructure element of the national development plan be completed on schedule and in full. The great success of the IDA in attracting foreign direct investment has been largely due to the quality of our labour force. If we are to continue to attract investment, we must continue to increase the education and skills of our labour force. This can only be achieved by increased investment. It is a great tribute to the calibre and commitment of our primary and secondary school teachers that they have achieved such impressive results when so little has been spent on educational infrastructure. As information and communications technologies become ever more important in education, there must be no reneging on the national development plan commitments in this area.

Our commitment to the euro means the options available to the Government to stimulate economic growth are limited. Devaluing our currency and spending our way out of recession are no longer options. Instead, we must rely on domestic productivity growth to improve our scope for further growth. To do this, we must continue to invest not only in physical infrastructure, but in enhancing the education and skills of the labour force.

The number of pupils leaving school without a qualification has remained stubbornly high and many of these young people end up unemployed or in unskilled jobs. More than a quarter of the adult population has literacy or numeracy problems, yet spending on adult education is low compared to other EU countries, where the problem is less severe. Third level institutions are still obliged to charge fees to mature students embarking on third level education unless they qualify for VTOS grants for which the income threshold is low. If cutbacks must be made to the national development plan, the last area to be considered should be education and training.

More than half of all planned Exchequer spending under the national development plan is on social exclusion and social infrastructure projects which include a large element of current spending. While there may be some room for reordering these spending commitments or finding more cost effective ways of delivering the programmes, any major reductions will simply reduce the potential for economic growth and store up social problems which will require greater expenditure in the future. I urge the Taoiseach and Minister for Finance to ring-fence the €5 billion that has been allocated to the building and refurbishment of primary and secondary schools. As Deputy Gilmore remarked, this will have the added benefit of stimulating the construction sector.

Since adopting the Stability and Growth Pact, the Government has been enthusiastically entering into public private partnerships, PPPs, as a means of keeping borrowing low. I am puzzled by the Government's eagerness to embrace PPPs given that we have never remotely approached the Stability and Growth Pact borrowing limits. The results of some of the PPPs have been disappointing. Any such future arrangements should be subject to detailed cost-benefit analysis before we commit hook, line and sinker to this method of funding infrastructural projects.

The limitations of the PPP model were made clear when the McNamara group withdrew its arrangement with Dublin City Council for the redevelopment of St. Michael's estate in Inchicore and other locations when it realised the anticipated profits would not be forthcoming. Deputy Gilmore recently visited O'Devaney Gardens, which was also due to be redeveloped under a PPP, and encountered the despair of the residents who are to be left living in difficult and demanding conditions because private developers see no profit to be made from redeveloping their area. I question the efficacy and worthiness of these projects. The schools building programme should not be based on a system whereby the Government sustains the ambition of developers to amass huge profits where they see an opportunity.

I am unconvinced by the concept of public private partnerships. In many cases, the State takes the risk while the private firm takes the profit. The Government must not rely on PPPs for the provision of essential public services. I am alarmed at the substantial sums to be spent under the national development plan on PPPs without adequate cost-benefit analyses of the projects. We are told PPPs offer value for taxpayers' money. In reality, they provide not what the public needs, but what the public sector is willing to pay for. Furthermore, the user charges imposed by firms providing services under PPPs are inherently regressive, unlike taxation which is at least potentially progressive.

Minister for Arts, Sport and Tourism (Deputy Martin Cullen)

I propose to share time with Deputies White and Calleary.

An Ceann Comhairle

Is that agreed? Agreed.

Deputy Martin Cullen

I welcome the opportunity to speak on this motion. The arts, sport and tourism sectors are important areas of the economy as contributors to economic growth and employment levels. Tourism is a vital contributor to our economic and social well-being and plays a key role in projecting a positive image of Ireland worldwide.

The Central Statistics Office recently confirmed that, last year, a record number of 8 million overseas tourists spent almost €5 billion visiting Ireland. This money was spent on transport, hotels, restaurants, retail shopping and cultural and recreational activities. In addition, domestic holiday makers spent more than €1 billion in the State. Fáilte Ireland estimates that the tourism and hospitality sector supports some 250,000 jobs. More importantly, at a time of rising unemployment, research has found that tourism-related activities are far more labour intensive than the industrial average. The tourism industry is perhaps the most significant internationally traded driver of social and economic development. This is true both at regional and national levels in the service sector in Ireland.

Internationally traded services are widely recognised as central to Ireland's future economic development. The fundamental value of our tourism industry and its continuing contribution to the economy are best outlined by the following facts. The tourism industry is largely Irish-owned. Irish tourist businesses continue to compete successfully with the best internationally. Steady growth in tourist numbers from Ireland and from overseas continues. Our market share against competitor destinations continues to grow in a sustainable way. In addition to its direct contribution to exports, jobs and growth, tourism also helps to create a positive image of Ireland in the minds of millions of overseas visitors. This in turn strengthens our attractiveness as a location for business, foreign direct investment and leisure activities. This year will be challenging for the Irish tourism industry given global economic uncertainty and pressure on consumer confidence in key markets. However, the strategic approach taken with tourism in recent years by both the public and private sectors has given the sector the capacity to withstand such cyclical external challenges and to sustain its performance in the coming years.

In a recent report, the Irish Tourist Industry Federation highlighted that the fundamentals of the industry remained strong. Irish tourism is better positioned to withstand any downturn than in the past. We should remember that tourism continues to generate business revenues and employment even in challenging conditions. While tourism is not immune to cyclical pressures it generally does not undergo the same sharp cycles that other sectors, such as construction and even manufacturing, suffer. Our overseas tourism business has diversified across a wide range of markets in recent years. This has given it the capacity better to withstand pressures on particular markets. It goes without saying that we must continue to invest in our tourism product,. our people and our brand. The Government remains firmly committed to the progressive delivery of the investment priorities to be financed under the National Development Plan, which provides for a total Exchequer investment in tourism of €800 million. The level of investment confirms the Government's commitment to the development of the Irish tourism and hospitality sector. The Government is fully aware of the economic and social importance of the industry providing employment for almost 250,000 people.

Investment is planned within the strategic policy framework in New Horizons for Irish Tourism: An Agenda for Action, the 2003 report of the tourism policy review group. In 2006, the tourism strategy implementation group was set up for a two-year period to follow up on the recommendations of New Horizons to review targets in light of performance to 2006 and to recommend a possible framework for a mid-term review in 2008. I have recently received the report of that group and will bring it to the attention of my Government colleagues shortly. It is my intention to publish the report and put in place arrangements for the mid-term review as soon as possible thereafter.

Sport plays an important role in Irish life and makes an invaluable contribution to the social fabric of society as well as the health of the population. The sports sector is also a significant contributor to GNP. The importance of sport is confirmed by studies and analyses of national accounts, the economics of large-scale sporting events and physical inactivity costs, including those of an aging population.

The Social and Economic Value of Sport in Ireland, a study by the ESRI, which was published in 2005, estimated that four areas of activity in the sports sector generated a staggering €1.4 billion per annum. The four areas are volunteers, membership subscriptions to sports clubs, attendance at sports events and spending on sports equipment, sports clothing and the related costs of playing sport. The study also suggested that further additions, such as tourism, Government spending and horse and greyhound racing, increased that figure to €1.86 billion per annum.

The sports capital programme under the national development plan continues to transform the sporting landscape of Ireland with improved facilities in villages, towns and cities. These grants play a pivotal role in ensuring the provision of modern, high quality, well managed facilities around Ireland that attract more people to participate in sporting activities. Every day, hundreds of thousands of people all over the country are involved in sport in one way or another, be they participants, coaches or volunteers. In an age where time and community spirit are valuable commodities, the thousands of volunteers remain vital to the development and activity of sport. These volunteers should continue to be recognised and encouraged through the provision of support for their projects. It is also fair to say that these projects have hugely positive effects on the broader community. In many new and growing suburbs and towns, the sports capital programme is helping to provide the infrastructure to build a sense of community.

A 2003 value-for-money review of the sports capital programme stated that "the programme represents very good value for money". It found that for every €1 invested by the Government a further €2.73 was invested by local clubs and communities in the provision of facilities. The review also concluded that because of the investment under the programme, hundreds of thousands of volunteers in sports clubs and organisations across the country can devote more time to coaching teams and organising competitions, while the sports capital programme helps to fund the facilities they need.

Government support for the horse and greyhound racing industries is provided under the horse and greyhound racing fund. Since the establishment of the fund in 2001, there has been a major period of development of both the horse and greyhound racing industries. This money has underpinned significant employment in both industries. The 2004 Indecon report on the Economic Value of the Horse Racing and Bloodstock Breeding Industry showed that the thoroughbred breeding sector made a gross contribution to the economy of €330 million per annum and that it paid tax in the region of €37.5 million. Employment of 16,500 people was shown to be generated from the racing, breeding and associated industries. Bord na gCon has estimated that there are more than 11,000 people either directly or indirectly employed in the greyhound industry. Horse Racing Ireland also estimates that horse racing accounts for approximately 80,000 tourist visits to the country each year.

Over the lifetime of the current national development plan, we will invest over €1 billion in hard physical infrastructure in the arts and culture sector and creative industries. This year my Department will invest over €240 million in those sectors. That is a real, tangible investment in the economy. The NDP flagship projects and programmes are already in train. The public private partnership process for the National Concert Hall is under way and the design competition for the new Abbey is being progressed. Some €43 million is being invested in regional arts and culture projects which are under way. The extension to the Gaiety Theatre is completed and the Wexford Opera House will be completed next month. The extensions to the Druid and Gate theatres will be completed by Christmas. The National Library and National Museum projects will commence in 2009 and the next phase of the development plan for the National Gallery is going to planning.

The arts, culture and film sectors are primary economic contributors, real businesses and enduring employers. They are differentiators of Ireland as a cultural and tourism destination and are areas that truly distinguish us as a people in a world of more and more sameness. The arts, culture and creative sectors employ at least 45,000 people in this country. The annual output of these sectors is over €2 billion and it continues to grow.

Ireland today builds on the contribution made by our cultural icons in the past and prospers by the talent and ability of our people. The gift of individual talent is to be cherished, nurtured and fostered from an early age. The more this talent is developed, the better we become as a nation.

We are all aware that the Irish music industry makes a significant impact on the economy and on Irish life. Many Irish musicians have made a huge impression internationally. The Goodbody economic analysis carried out on the sector in recent years provides some interesting statistics in this context. For example, at almost €500 million, the value-added impact of the music industry represents just under 0.5% of GDP, putting it ahead of dairy processing and newspaper and magazine publishing. The industry employs more than 8,000 full-time equivalents.

In recent years, two of our museums won European museum of the year awards. The National Library wins prizes internationally for its exhibitions and the National Museum achieved the annual 1 million visitors mark for the first time in 2007. Irish films won 20 prestigious prizes internationally last year, while Irish writers have reserved places at the top table of international literature competitions.

Tony and Emmy awards are now commonplace for the Irish acting and theatre professions. The marketing value to Ireland of films like "Once" and "PS, I love you" simply could not be purchased. Visitors to the cultural institutions and agencies funded by my Department will top 3 million in 2008.

There has been a significant investment of €2.8 billion by the Government both in current and capital spending in the arts, sport and tourism areas in the past five years. For example, the budget to the Arts Council has increased from €66.2 million in 2005 to over €82 million this year, which represents an increase of 24%. In addition, in 2005, the annual budget of the Irish Sports Council was €34.4 million. This year the figure has risen to €57.631 million, an increase of over €23 million or 67.5%.

In support of the savings required for budgetary consolidation this year, the Department of Arts, Sport and Tourism will introduce savings for the remainder of 2008. While these will be challenging for the various areas both this year and next, they are needed. The 2008 funding allocation for the Department of Arts, Sport and Tourism is €713 million, including the Vote for the Department of Arts, Sport and Tourism and the Vote for the National Gallery.

To meet our share of the required savings across all Departments, €5.978 million will be saved between now and year end. The savings will be as follows: €3 million in departmental operated capital programmes for cultural projects; €2 million savings split mainly among our agencies in grant programmes; and an additional €978,000 in savings in administration costs and other efficiencies across the Department, the National Gallery and our agencies.

Deputy Mary Alexandra White

It is good to have this opportunity to debate the economy. The speed of the global downturn has awakened international economies to action, which is what we now have. Before talking about current action on fiscal and economic challenges, it is important to remind ourselves that Ireland is not fully responsible for the current challenges. Make no mistake about it, this is a global downturn. As the sun sinks over the Hang Seng each evening, simultaneously rising on the FTSE screens each morning, it is the same shiver that goes down the traders' spines. The last 12 months has seen a global credit crunch as the reverberations of sub-prime mortgages have impacted upon us. Global food prices have risen, driven by rising demand, drought and escalating fuel prices and interest rates, and Ireland is not the sole trader on these issues. Public spending plans for this year are now too ambitious and so we need a modicum of fiscal pruning in order to harvest the benefits of such an act in the future. The savings announced are welcome, but I want protection for the most vulnerable and marginalised in society to ensure that they will not be aversely affected by these fiscal adjustments. My party and I will ensure that those in need of greater support with fuel allowances will not have to endure a greater burden during the lifetime of this Government because of rising fuel costs.

As we adjust our public finances, let us look towards the future and the possibilities and opportunities for our people and our economy. Sometimes the best opportunities come at times of great difficulty. I started a business in the 1980s, when the economic landscape was bleak. If one shows innovation and is dogged, determined and different, fortunes can be turned around. The Government will lead the way in this regard and I have no doubt the entrepreneurial and hard working people of Ireland will respond. We have opportunities in areas such as tourism, where the number of people visiting this country from January to March this year was up by 60,000 on last year.

We also have opportunities in the renewable energy sector, and the huge investment in renewable energy research and supports for the sector are resulting in new employment opportunities every day. The recent energy demand side management study shows that €3.6 billionin economic benefits could be accrued through energy efficiency alone. The German state of Schleswig Holstein has seen 48% of its new jobs come from so-called green collar employment. There are opportunities in the area of exports, as the export of financial and IT services has led to growth and employment. In its recent medium-term review for 2008-2015, the ESRI documented this fact.

Opposition Deputies regularly spend their time asking what the Government is doing to improve our competitiveness. Let us not forget all the successful structures in place in this country which are encouraging both indigenous industry and foreign investment. These include the better regulation programme, the implementation of reports from the enterprise strategy group and the small business forum, the national skills strategy — which will see €150 million spent by the Government this year on training the Irish workforce and those trying to enter it — the strategy for science, technology and innovation, the national development plan, the work of Enterprise Ireland and certain reforms in this year's budget such as the extension of the business expansion and seed capital schemes. I have no doubt that any successful conclusion to the current review of Towards 2016 will again sharpen our competitiveness.

This country was awash with debt 20 years ago and was lacking in hope. People rallied together. Much has improved and we must remember that those improvements, along with prudent Government action and guidance, will steer us through these difficult times. We in the Green Party are ready to play our part to drive change, to be innovative, to create jobs and to ensure that the poorest in our community do not suffer. This country has a good future. Quo quis sapientior eo beatior est should be our motto. He who knows more is wiser. A wise Government with wise policies will ride out the storm. The ship of state is seaworthy and will survive the current global storms.

Deputy Dara Calleary

I welcome the opportunity to discuss the current developments in the economy. I welcome the initiatives announced yesterday, but these are only part of the solution and there are other actions that we can take that do not necessarily involve expenditure reviews. It is important to remember that the fundamentals of this economy are still very strong. The foundations that have been put in place since 1987 have ensured that we will survive this downturn in a much better way than if those decisions had not been taken and if the various investments made by this Government over the past ten years had not been made.

We can look at a number of areas. First, the era of restrictive tendering should be done away with in the current environment. A large number of perfectly qualified and competent contractors are not able to tender for Government contracts due to the size of their turnover and other restrictions. That is not helping competition and is not helping to keep prices down. I ask that the Minister examine the issue with a view to restricting it. Second, the PPP mechanism has worked well so far, and I would encourage that further large scale capital projects be investigated, particularly the area of schools. Schools are a solid investment and we should ensure that we continue to invest in our people. By investing in proper school facilities through the PPP mechanism, we will assist that process.

One of the opportunities of this downturn lies in the small business sector. Small businesses will hopefully get the access to cash and the support they need to weather the storm, while those who have been made redundant can open up their own business. We need to tackle the issue of red tape and reduce its burden as much as possible. That could be done in a cost-neutral way, and it would encourage a lot more people to move into that sector. Our county enterprise boards need greater support, and I hope that they would be immune from any adjustments that are being made to budgets. These boards drive investment and job creation.

It is important to state that the boom was not wasted, as is the chief cry of some people. There has been enormous investment in capital projects and in welfare payments to parents and families. We now have one of the most generous welfare systems in Europe. There has also been a major investment in road and sports infrastructure, as outlined by the Minister a few minutes ago. Such investment is continuing. The Minister for Communications, Energy and Natural Resources announced the new national broadband programme, while the rural development programme will begin to roll out in September, ensuring the continuation of the successful Leader programme.

The only happy people at the moment are economists, who can tell us they got it right after ten years. They spent ten years predicting that this would happen, and ten years later they can finally say that they got it right. These commentators have a responsibility to protect confidence in the economy, to protect consumer confidence, and to provide a rational and fair analysis of the situation. They should not be predicting Armageddon on every occasion they comment. I have confidence in the ability of our Taoiseach, in the ability of our Minister for Finance and the Cabinet to deal with this issue. They will need the full support of the House in dealing with it, and that support will be provided by this party. It is not completely within our control to deal with some of the issues that are affecting the situation, particularly the international element. However, if we support the decisions taken now, we will survive.

Deputy Jimmy Deenihan

Listening to a number of speakers, it is obvious that some of the people from the Government are trying to rewrite the economic history of this country. In 1977, when Fianna Fáil won a landslide victory in the general election, the national debt stood at €5.370 billion. When it left office in 1982, the debt had risen to €14.816 billion, an increase of €9.446 billion. The foreign debt inherited by the Fine Gael-led Government in 1983 was €18.274 billion. By 1986, it had increased by €8.97 billion to €27.244 billion. The rate of increase declined significantly under the then Government which had inherited a wretched economy. I was a Senator at the time and I am glad Garret FitzGerald, Peter Barry and other members of that Government are receiving recognition for their contribution to the country.

In 1977 , I recall, even though I was not in politics then, that when Jack Lynch was elected Taoiseach he acknowledged the good health of the public finances. It must also be remembered that Fianna Fáil was in power for five and a half years during the 1980s, while Fine Gael was in power for four and a half years. All parties must share responsibility for what happened during the 1980s. Some Members have a selective memory of the period, blaming one particular party for all the problems.

The last time Fine Gael was in Government between 1994 and 1997, some commentators suggested the party would not be able to take over the reins of power. I am infuriated by this unfair statement coming from people who should know better. Between 1994 and 1997, under the Bruton-Spring Government, real GDP grew by 10.1%, as opposed to 5.7% between 1998 and 2004. Inflation stood at 1.5% between 1994 and 1997, but increased by 2.2% during 1998 to 2004. The rainbow Government was producing 1,000 jobs a week; the current Government is responsible for the loss of 635 jobs a day over the past month. If one is going to match the economic performances of Governments in the past 20 years, it must be acknowledged that Fine Gael made a positive contribution in this regard. When the history of the Celtic tiger is written, this should recognised.

Personal borrowing has taken over from State borrowing, most of which was for house purchases. Every house built was worth €100,000 to the Exchequer. In one year housing output came to 80,000 units, which is worth €8 billion. This year, only 25,000 units will be built, leaving €2.5 billion. It is obvious where the money has gone. People are up to their tonsils in debt.

A firm commitment was made to replace the Naval Service's three main vessels, LE Aoife, LE Emer and LE Aisling, over the next three years. Will these go to tender soon?

Last week, Simon Brouder gave a good analysis in The Kerryman of the county’s economic position. He stated:

Data from the Central Statistics Office (CSO), the Central Bank, housing surveys and Kerry County Council for the first quarter of 2008, all show a marked downturn in Kerry compared with the same period just 12 months ago.

The most obvious place to begin is with the jobless figures and, in the past year, Kerry has seen the number of people receiving social welfare benefits surge upwards by 34 per cent.

Last month live register figures reached their highest level in ten years with the number of signing on reaching 8,179 in the county, with half of these in Tralee alone...

In the last 12 months the number of planning applications made to Kerry County Council dropped by 49 per cent; the number of new house starts plummeted by 57 per cent; and one-off house completions plunged by 34 per cent. . .

Planning applications from developers of multiple houses projects across Kerry have decreased by 53 per cent. In the first quarter of 2007, developers applied for permission to build 405 multihouse developments in Kerry; in quarter one of 2008 this dropped to just 126.

House prices have also seen a stark drop . . . The sale of new cars in May 2008 was down by 29 per cent on May 2007 across all makes of car including luxury cars.

Overall, high-street spending in Kerry is down considerably. Most alarming is that:

According to figures from the Central Bank and Cori, Kerry has the second lowest level of disposable income in the State, at €17,000 per person annually. Some 17 per cent of Kerry's population, almost 24,000 people, are now living below the official poverty line.

I appeal to you, a Cheann Comhairle, as the most powerful politician in County Kerry, to ensure that projects such as Kenmare hospital, which is very dear to you — I have seen announcements by him and Deputy Jackie Healy-Rae about it — and the new school for Ballybunion are not shelved. In that case, the contractor is ready to start building. The day before the general election last year, the then Minister for Transport, Deputy Cullen, announced construction of the Castleisland bypass would commence at the beginning of this year and the money would be provided by the NRA. I hope none of these projects will be cut back. I appeal to the Ceann Comhairle to use his influence in this regard.

Kerry did not experience a Celtic tiger like the rest of the country. When one takes off from Kerry airport and travels to Dublin Airport, one feels one is landing in a different country.

An Ceann Comhairle

I do not have to remind Deputy Deenihan that, irrespective of the colour of the jersey he is wearing, he may not involve the Chair in the debate.

Deputy Jimmy Deenihan

My apologies.

Deputy Tom Hayes

You are not without influence though, a Cheann Comhairle.

Deputy Pat Breen

The same problems are reflected in Deputy Deenihan's neighbouring county, Clare. Prior to the general election, Fianna Fáil published its manifesto, The Next Steps Forward. It claimed Fianna Fáil in Government has led the transformation of Ireland's economy. What a transformation it has been. Yesterday, €2 billion was wiped off the ISEQ and a €1.5 billion shortfall in tax revenue for the first half of the year was announced. An extra 10,100 people have joined the live register in June, the second highest increase on record, and the construction industry is in serious decline.

In Clare, an extra 469 people, or 9.3%, signed on last month. For the past 12 months, jobs have been haemorrhaging from my county. Last week, redundancy announcements were made by Advocent Limited with 57 job losses and Sykes Engineering with 83 job losses, with another 20 jobs lost at Laser Cut Technology. The warning signs were ignored and now belatedly the Government has woken up to realise the economy is in a recession. This has all happened under the stewardship of the Taoiseach, Deputy Brian Cowen, when he was the Minister for Finance.

What is needed now is leadership and vision to restore confidence in our economy. A Government plan has been presented but it lacks vision and clarity. Fine Gael's spokesperson, Deputy Bruton, stated there was no evidence of a clearly thought-out plan and that it was just a cobbled together response to the Government's self-generated recession. We are told this package of measures will involve savings of €440 million and that cutbacks will not affect health and education, yet there are no specifics.

However, we have already established that €85 million is to be cut from the most vulnerable, the elderly, as the fair deal falls by the wayside. A further €38 million saving is to be achieved from the slower rolling out of projects and €21 million from what are termed "other savings".

What will happen to the commitment given by the Minister for Health and Children for the €39 million redevelopment of Ennis General Hospital? At a meeting with the Minister in May, she informed us an announcement on capital projects would be made before the June bank holiday weekend. We were told a visit to Ennis General Hospital was imminent. However, nothing has happened. What has happened this project? Will it go ahead as planned? The Minister gave a commitment it would be a priority.

The same may be said of the slowdown in the roll out of cancer screening projects in the mid-west region. There are 746 women on the waiting list for mammograms in the mid-western hospital area and the only procedures being carried out are in symptomatic cases.

How long more will we have to wait for the roll out of broadband? The Minister for Arts, Sport and Tourism, Deputy Cullen, spoke about tourism. The loss of the Shannon-Heathrow service took place last August, nearly a year ago and has had a major impact on connectivity and industry and tourism in the region. I hope there will be no cutbacks in the tourism development plan, which was funded last year by his Department. These matters are very important because the tourism season all over the western region is back, particularly American and European business. I know there are other speakers but these are a few of the things I wanted to ask about, particularly the hospital situation and the development plan, which are of major importance for the people of Clare.

Deputy Tom Hayes

Before I discuss what must remain of central importance in our spending, I must reiterate that a strong and competitive economy is the key. We need to cut Government waste, get the most from value for money programmes and expand the reviews of quangos. Fine Gael has advocated such an approach for a long time. Every euro counts in shops today, and we need every euro to count in Government. Let us start with a new sense of responsibility for the hard-earned euro of the taxpayer. This should have been a byword in the boom, but let the Government at least take it on board now.

My concern is that cuts affecting the most vulnerable have already occurred, silently, sneakily, even before this new programme. We must protect the older people, and not abandon them. I discovered this week that the home care package provision run by the HSE is not being adequately funded. There are now waiting lists, recycled funding and worst of all, cuts.

We have had no promised fair deal from the Department of Health and Children. The €10 million for that should be ringfenced for older people. If not there will be cuts. What we see as regards the innovative hospital in the home programme are cuts. Some 220,000 in total suffer from fuel poverty. People just cannot heat their homes to a safe and comfortable level. The solution is a fuel allowance of €18 per week for only 30 weeks of the year. A constituent told me last week he had recently spent the same amount on oil that it had taken to fill the tank last year and got 550 litres less. The Government needs to increase the number of weeks for which the allowance is paid. This summer has been cold, wet and damp and people are already struggling. The amount paid out needs to be increased. The Government needs to initiate this now and not wait until next year. The shocking increase in fuel prices has been compounded by rising food costs, especially as regards basic goods. I have heard older people say they have to choose between food and fuel and this is not good enough in this day.

Agriculture and tourism are major industries that have sustained Ireland in the past. While building on many other areas we need to focus on both those industries, which have the capacity to perform well. Given Ireland's ability to export food products, we are well situated to contribute to the alleviation of the global food shortage. In terms of tourism, the infrastructure is ready and waiting. We have hotels, bed and breakfast outlets, heritage, cultural and historical centres right across the country. I have no doubt that tourism will grow. We have priced ourselves out of the market, however, and I believe both of these industries must be supported. We have listened today to the Minister, Deputy Martin Cullen, talking about the ability of sporting organisations, particularly the racing industry, to expand and the amount of employment that can be created. I agree with him that there is enormous potential in the agri-tourism and equine related area and we certainly need to build on it.

Deputy Deirdre Clune

We, on this side of the House, have been accused, as have economists and media commentators, of being prophets of doom. One of the major prophets of doom was the Minister for Finance, Deputy Brian Lenihan, as seen recently on national television talking about the construction industry coming to a shuddering halt and his misfortune in being appointed Minister for Finance at this time. That certainly sent forth a negative message and indicated the Minister's own lack of confidence in his abilities, in not being happy to be in that position. I hope to see some leadership from Government and positive measures to indicate it knows how we are going to get through the economic crisis. The announcement made yesterday comprised a few issues cobbled together that really had little meaning, and did not instil confidence as regards the Government steering us out of this downturn in the economy.

I would not give it any credit for foregoing the ministerial rises, since that was well flagged. Perhaps it had not been intended to announce it yesterday, but no doubt it was to be a bargaining chip in the social partnership talks. It was not a surprise, in any event, and the Government has missed the boat as regards gaining any credibility in that regard. It should have shown leadership and done this a long time ago.

On today's debate, I wish to highlight some points in an ESRI report that appeared in the last couple of weeks which did not get much media attention. It was a special report the ESRI produced on Ireland's innovation performance from 1991 to 2005. I am sorry the Minister of State with responsibility for innovation has left the House. Innovation activity, the report stated, is particularly vulnerable to economic conditions, especially to economic downturn. This was evidenced in the downturn in the hi-tech sector between 2002-03, when there was a sharp fall in the level of innovation. If we have been over-dependent on the housing and construction sector, the way forward is through innovation and the knowledge economy, encouraging people to turn their knowledge into creative and economic activity. We must continue to support innovation and ensure Government policies are working. One of the report's conclusions is that policy is not transferring into significant innovation increases among companies. If we are to develop a knowledge economy, create innovation and encourage creativity, we need to ensure we have policies that work so we can encourage universities and other third level institutions to enter into collaborative arrangements with business. There are many issues in the whole area of innovation and policies that need to be implemented to support research and development in creating innovative processes and products. It is the key to the future of the economy and it is very important the policies are in place to ensure it happens.

Minister for Social and Family Affairs (Deputy Mary Hanafin)

I wish to share my time with Deputy O'Hanlon.

An Ceann Comhairle

Is that agreed? Agreed.

Deputy Mary Hanafin

I welcome the opportunity to detail for the House the actions that the Department of Social and Family Affairs will be taking as part of the Government's collective approach to controlling short-term expenditure in the interests of Ireland's future prosperity. As the Taoiseach and the Minister for Finance outlined yesterday and today, with the downturn in the global economy and the adjustments taking place in the Irish housing sector, the amount of revenue received by the Government from taxation so far this year has been much lower than expected and the outlook for the tax intake for the rest of 2008 remains weak.

Taking action now is essential if we are to enable the Irish economy to weather its current difficulties and realise the more favourable growth rates that the ESRI and others believe can be achieved within the next few years. The measures that were announced yesterday are the result of careful consideration by the Cabinet as a whole. They are designed to ensure that we work together to bring overall expenditure more in line with income. They reflect our collective determination to act now in order to protect the future. More importantly, as the Taoiseach has made clear, they are also informed by a desire to protect the most vulnerable people in Irish society during these challenging economic times.

As Deputies will be aware, the number of people on the live register at present is much higher than had been anticipated, with the seasonably adjusted figure for June 2008 representing an increase of a third on the same period last year. The live register is not a register of unemployment, as people claiming jobseeker's benefit may be working up to three days a week while seeking full-time positions. However, it is a measure of the number of workers who need assistance from the State. The actual unemployment rate is estimated to have risen to 5.7% last month. Behind these figures lie real families experiencing real difficulties — people with children, with mortgages and with worries about the future. These are people whom the Government is determined to prioritise.

While statistics are of little consolation to the person who has lost his or her job after many years of hard work, it is important to note that the fundamentals of our labour market are still good. We currently have more than 2.1 million people in employment, following record job creation during the past ten years. A total of 53,800 jobs were created in the first quarter of this year. While some sectors of the economy, most notably construction and traditional manufacturing, are experiencing a slowdown, other areas such as services are continuing to grow.

It is also worth noting that while the unemployment rate for June is much higher than had been anticipated, it is still a long way from the 10.4% rate of June 1998, let alone the very high rates of the 1980s. It also compares favourably with the kind of rates being experienced by other EU countries. Furthermore, CSO figures show 75% of those on the live register last April had been on it for less than a year, while 42% had been on it for less than three months. Therefore, the unemployment situation, while not as we would wish to have it, is still a long way from the bleak position of previous times.

At the same time, our social assistance system is in a much better position to help the unemployed than ever before. Basic social welfare rates have increased by 79% since 2002, which is more than three times ahead of the 23% increase in the consumer price index, or a real increase of 56%. In addition, improvements in child-related payments mean that a welfare-dependent family with, for example, a child of three and a child of ten, will receive more than €8,000 in direct child income support this year.

More significant, however, are the improvements in measures designed to facilitate people in entering or re-entering the workforce. A wide range of initiatives have been introduced in recent years to help people to improve their employability through education and training, to remove barriers to work and to eliminate poverty traps. Under the national employment action plan, people who are approaching three months on the live register are referred to FÁS for interview with a view to job placement or an offer of training. A team of 40 facilitators is also in place in the Department of Social and Family Affairs to provide additional, more intensive assistance for those that need it such as people who have been identified by FÁS as needing further support. As part of the priority now placed on activation, the Department's facilitators are working closely with FÁS and other agencies at national and local level to target their assistance at such groups. I recently met the director of FÁS to discuss how our respective organisations can further enhance their co-operation in the period ahead.

As an immediate priority, it is intended to refocus the work of the Department's facilitators to target specific attention and support at certain categories of people with a view to minimising the risk of them becoming long-term unemployed. This includes, for example, younger people signing on for the first time and people who have completed the employment action plan process but who are still on the live register. This targeted approach will involve active case management with the development of an individualised personal progression plan. The facilitator and individual will work together to identify the most appropriate method of progressing to training or employment.

We are also committed to removing barriers to work and eliminating poverty traps. Significant progress has been made in that regard in recent years through improvements such as changes in means-testing arrangements for certain payments and the tapered withdrawal of benefits. In addition, the Department has a range of supports such as the back to work and back to education allowances for those who leave welfare to go into full-time work or education. Taken together, the improvements in payment rates, the focus on activation and the removal of poverty traps that have been prioritised in recent years mean that a solid system is now in place to help people get back to work.

Nonetheless, it is expected that expenditure by the Department of Social and Family Affairs on income support payments will be significantly higher than originally forecast this year. The final level of social welfare expenditure this year will be affected by the performance of the live register. The figure underpinning the 2008 Estimates was an average live register of 170,000 for the year. Unfortunately, it is now projected that the average live register will be in the order of 210,000. The main schemes affected are jobseeker's benefit, jobseeker's allowance and insolvency and redundancy payments. There will also be a knock-on effect on the supplementary welfare allowance scheme, particularly in the area of rent and mortgage interest supplement. My priority is to ensure that vulnerable people dependent on social welfare continue to be protected while at the same time ensuring that resources are directed only towards those who are entitled to them.

The Department of Social and Family Affairs already has a fourfold approach in place to combat social welfare fraud and errors through prevention, detection, deterrence and debt recovery. Last year, claim reviews and employer inspections generated control savings of nearly €450 million. The targets set at the beginning of this year aimed to realise savings of €511 million. We are on course to achieve that target.

In the context of increased expenditure on welfare payments, it is important to increase the Department's control activities to keep fraud and errors to a minimum and to eliminate incorrect payments. As part of the measures announced by the Taoiseach and Minister for Finance yesterday, the Department is therefore targeting additional savings of €25 million this year from control activities. Particular emphasis will be placed on ensuring that people on the live register demonstrate that they are actively seeking employment and that they engage fully with the employment action plan and other opportunities to re-enter the labour market.

I intend to generate further savings of €4.8 million from the introduction of efficiency measures by the Department and the agencies under its remit. In particular, expenditure on advertising and public awareness activities will be reduced. This action is being taken in a situation where information on the full range of social welfare schemes and services is available from the Department's local offices and the nationwide network of citizens information centres. In addition, many people access information on the websites of the Department and the Citizen Information Board. Essential advertising campaigns will continue to be undertaken as required.

The Department will also be able to generate savings of more than €3 million this year on a more gradual deployment of IT and e-Government related projects. In some cases these savings arise because it has taken longer to develop the technology underpinning the new systems than was anticipated at the beginning of the year. In other cases, the Department is considering how a more gradual deployment can be effected without impacting on day-to-day delivery of services.

In regard to the agencies that come under the Department's remit, in line with the announcement by the Minister for Finance, the Department will review the roles and operations of the agencies under its aegis. In this context, opportunities for achieving efficiencies through shared services, absorbing functions into the Department, or amalgamating or abolishing bodies will be examined.

The statutory basis for the introduction of a personal advocacy service under the Citizens Information Board was provided for in the Citizens Information Act 2007. It is the Government's intention to introduce this service at an appropriate time. However, having regard to the current budgetary circumstances, the service will not be introduced this year and savings of around €500,000 will be generated by the Citizens Information Board as a result.

I want to reiterate, however, that the advocacy service remains a priority. In the meantime, significant resources have been and will continue to be provided for the provision of advocacy services to people with disabilities under the auspices of the Citizens Information Board. The community and voluntary sector advocacy programme has been developed by the board since 2004 and currently has 47 separate advocacy projects. The overall focus of the programme is on representative advocacy for people with a disability. Projects either operate within a specific geographic area or are focused on a particular disability type. The Citizen Information Board is monitoring the programme to ensure that the projects are operating in accordance with the board's advocacy guidelines.

The board already provides advocacy through the citizens information services focusing on access to services, welfare entitlements and employment rights. This type of mainstream advocacy is also open to people with disabilities and the community and voluntary sector advocacy programme is creating close links with the citizens information services to ensure that people with disabilities are encouraged and supported to use the mainstream services where possible. This advocacy capacity is being strengthened through the support of nine advocacy resource officers.

In regard to the Family Support Agency, I reiterate that I am committed to supporting families and value the role that the family resource centres play in communities throughout the country. Funding from the Family Support Agency helps with staffing and equipping these centres. By the end of 2007, the number of family resource centres had expanded from an original ten to 106 nationwide. The funding for the programme increased from €317,000 in 1994 to nearly €19 million in 2007.

In the context of the national development plan, it was intended to expand the number of family resource centres by up to six centres this year and to provide some existing ones with additional staff. However, with the exception of a new centre in Killeshandra that was approved earlier this year, no new centres will open in 2008. It will also not be possible to increase the staffing complement of the existing centres. These measures will enable the agency to save €2.5 million in 2008. It will achieve a further €400,000 savings by deferring the refurbishment of offices of the Family Mediation Service.

Government support for family services will however remain strong. Last year, additional staff were funded for 40 family resource centres. It should also be noted that only last month I approved counselling grants of almost €11 million to 600 voluntary and community groups supporting families nationwide.

Another body which receives significant funding from the Department is the Combat Poverty Agency. Savings of €165,000 in the agency's 2008 expenditure are to be achieved mainly though reductions in spending on advertising and awareness raising activities. A number of conferences which were under consideration will not proceed at this time. As Deputies will be aware, a wide-ranging review of the agency is almost complete and that will inform decisions on its future position.

Over the past decade or so, this Government has significantly improved the standard of living of welfare-dependent and low-income households generally thereby making a decisive impact on poverty and social exclusion. Income support levels have been dramatically increased and the welfare system has been reformed and modernised to reflect our new society. We have clearly demonstrated our commitment to protecting the vulnerable and in these more difficult times we will continue to do so.

I am conscious of the fact that all Departments are making savings in order to meet the expenditure pressures generated by increases in the live register; these are the people whom we need to support most. I am also committed to ensuring that the Department of Social and Family Affairs plays its part in helping to control expenditure in these more challenging economic circumstances. The savings committed to by the Department will deliver efficiencies and reductions in areas such as IT and advertising, while protecting the improvements in welfare payments that have been put in place in recent years.

Deputy Rory O’Hanlon

I thank the Minister, Deputy Hanafin, for sharing time with me. I support the motion and commend the Government on taking action at this time. It is important to take it now so the pain will be short-lived. In his contribution, Deputy Deenihan referred to Fine Gael in government from 1983 to 1987. He did not tell us all the story but he referred to the national debt, which doubled from €12.5 billion to €25 billion in those four years.

Deputy Olwyn Enright

Was he cleaning up Fianna Fáil's mess?

Deputy Rory O’Hanlon

In 1986 we were borrowing 15.2% of our public sector requirement.

Deputy Seymour Crawford

Deputy O'Hanlon should go back to 1977.

Deputy Rory O’Hanlon

Deputy Crawford remembers it like I do: tax rates of 65% with 8% pay-related social insurance, unemployment at 18%, bank interest rates of 20% and the highest level of industrial disputes per thousand workers in the EU. All that changed, but at that time and in those circumstances very tough decisions had to be made and implemented by Government. One lesson that can be learned from 1987 is that Fine Gael, led by former Deputy Alan Dukes, adopted the Tallaght strategy and supported the changes and difficult decisions that had to be implemented, as did the social partners. The Irish people accepted them and we brought about an unprecedented level of prosperity in the country.

While we do not want to return to the 1987 situation and we do not like to see a slowdown in the economy, in particular to see people lose their jobs, there are totally different circumstances today. We are still one of the most prosperous countries on this earth and are well placed to deal with the temporary difficulties facing us. I will enumerate some of the economic and social factors in our favour. We have a young, dynamic and adaptable workforce with 2.1 million people in employment. The size of the workforce puts us in a much better position to support our far more extensive social programmes. We have flexible markets, including the labour market. These markets are characterised by a light regulatory burden. Greater flexibility in the labour market has been the key to the creation of 700,000 jobs over the past decade. We have a pro-enterprise environment in which the burden of taxation on both capital and labour is low. This has facilitated greater entrepreneurial success and the significant growth in small and medium sized enterprises that are key to greater balance in regional economic development. General Government debt is forecast to be approximately 26% of GDP at the end of 2008, one of the lowest ratios in the euro area. This low level of general debt gives us the possibility to borrow modestly to invest ambitiously in key infrastructure.

One of the issues that must be addressed by Government, all the Members of this House and everybody working in the public service is that we should seek to effect the required savings through efficiency rather than a reduction in the level of service. For example, this year the health service is receiving €16.1 billion. When I was Minister for Health in 1987 I received a budget of £1,100 million, approximately the same in euro as the five big Dublin hospitals receive today for one year. That is an indication of the progress that has been made in the level of funding available to support our health service. With a budget of €16 billion and more than 100,000 people working in the service, everybody should look to see how they can effect efficiencies. For example, they could eradicate duplication. Given the multidisciplinary nature of the health service, there is a question of better communication to ensure patients will not wait longer and will not be kept in hospital any longer than necessary. If we all look to see how savings can be effected through efficiencies we will minimise any fall-out from the measures that have to be taken.

I support the motion. I am satisfied that the economy is better placed to emerge from the current difficulties than it ever was in the past. We are still one of the most prosperous countries in the world and it is important that we do not talk ourselves into any more difficulty than we are experiencing. I believe it will be short term as a result of the measures the Government is taking.

Deputy Olwyn Enright

I wish to share my time with Deputies Crawford, Perry and Sheahan. I ask the Acting Chairman to tell me when seven minutes are up.

I welcome this debate. It is important to have it, even if it is in the closing hours of this Dáil. Yesterday's lack of detail shows a mastery of timing and, despite this debate, I believe the real specifics will come to light in far more graphic detail in the coming weeks and months.

The Government's argument seems to be that these are not cuts, but savings, many of which arise because projects are not ready to proceed with. For example, the fair deal scheme which was announced first on 11 December 2006 was due to start on 1 January 2008. A full 18 months later, nothing has happened. Money has been taken away, the scheme has been delayed by at least another year and today we were told that the savings in respect of this scheme will be in the order of €85 million. We were told that the pause is because of legal difficulties and on the advice of the Attorney General. The Government does not seem to realise that this was its proposal, which was simply not properly thought out in the first place — another grand announcement with no follow-through.

A sum of €3 million that was to be spent by Professor Tom Keane to employ specialist cancer consultants will not now be spent. How exactly does this fit in with the Government's policy on cancer care? Whose job is it to ensure we can attract and employ much-needed experts to work in our designated specialist centres? We were told that one of the main reasons these centres were required was to attract top doctors to work here. The money is now being cut, or saved because these people, we are told, are not yet available.

A sum of €38 million was due to be spent on new developments in cancer care, disability care and services for the elderly. This is now also being cut, or not spent, depending on one's perspective. The Minister has promised no cuts to front-line services in health. I ask her to explain how cancer care, disability care and services for the elderly do not qualify as front-line services. The Government has taken money away from the people who need it most.

Still on the area of health, I wish to refer to the clear divergence between capital and current spending, of which there are numerous examples in my own constituency. The new state-of-the-art Midland Regional Hospital at Tullamore has been completed for a number of years now. Indeed, we had a lovely open day before the last general election so that everyone could be assured of its completion and see how wonderful it is. To date, a few departments have made the transition from the old hospital. However, the majority of the hospital remains unopened and is not functioning. The HSE has committed, in writing, that all remaining departments will make the transition between now and September but we have yet to see any evidence of this happening.

Since last September a 12-bed ward has been closed in the old hospital. The knock-on effect of this is that four orthopaedic surgeons are only being sanctioned to carry out between one and two operations, not per day, but per week, despite the fact that there are several elderly people living in severe pain. These surgeons still have to be paid at the end of the day, while their waiting lists continue to grow. The patients will be operated on eventually, either after years of agonising pain or after their families have done a whip-around to try to pay for surgery. Where is the economic sense in that kind of system?

Other capital projects lying idle include the new accident and emergency unit at the Midland Regional Hospital at Portlaoise and the dementia unit in Mountmellick, which is supposed to serve counties Laois and Offaly. Investing millions in such vital and long-awaited infrastructure and then leaving it idle or totally under-utilised is bad planning, bad management and bad Government.

I appreciate that because there is less money available, due to this Government's own flawed management, savings must be made. However, I am bitterly disappointed that no commitment has been given to retain front-line services, which are already being hit. A detailed plan of how the HSE will proceed should have been laid before this House before the Summer recess. I have no doubt there will be a drip-feed of information about cuts over the coming weeks.

I wish to turn now to the Department of Social and Family Affairs. The Government has referred to €25 million in savings from anti-fraud activities. I wish to see a clear outline of what exactly is meant by this, which was not included in the Minister's statement today, and of how she intends to address this issue. I find it amazing that a Minister can come into the House and baldly state that she will save money through anti-fraud measures when that is something that the Department should have been doing all along, in any event. Does it take a recession to make people wake up to the fact that we must have adequate anti-fraud measures in place?

I have questioned the current Minister for Social and Family Affairs, Deputy Hanafin, and her predecessor on this issue several times and have always detected complacency. The general Government line is that the amount of fraud is small compared to the overall budget for the Department but that is neither here nor there. The overall budget is the biggest of any Department so a supposedly small amount of fraud can add up to millions of euro. Even from a Government which can describe the waste of €180 million on PPARS as "small change", this is difficult to accept. If we can save €25 million now at the drop of a hat, then any reasonable person could ask how much more could have been saved in each of the past 11 years.

I asked the Taoiseach last week about the progress the Department of Social and Family Affairs has made in ensuring that landlords, who are the ultimate recipients of rent supplement payments from the Department, pay income tax on this money. The Comptroller and Auditor General raised this point at a recent meeting of the Committee of Public Accounts. There is a clear possibility of saving money in this area through ensuring that proper tax is paid on rental income yet, as in so many other areas, there is a lack of cohesive governance on the issue.

The State, through the Department of Social and Family Affairs, pays rent supplements to tenants, who pass it on to landlords. The latter are supposed to be registered with the Private Residential Tenancies Board, which includes supplying their PPS number. However, there is still no proper structure in place to ensure that this information reaches the Revenue Commissioners or that the community welfare officers can check if the landlord is registered.

The current Minister, Deputy Hanafin, made much of the fact that there would be no cutbacks in her Department when she was interviewed recently, as if it was something of a personal victory for her, rather than what one would normally expect at a time of rising unemployment. However, she was incorrect in her predictions. All we have heard from the Government in terms of where the money to address rising unemployment will come from is an expectation that savings can be made in the area of fraud, which has yet to be proven, and a few references to the cancelling of conferences and so forth. We still do not know where the €25 million saving will come from but it will have to come from somewhere.

I am also disappointed at the lack of foresight in yesterday's announcement in terms of the implications of rising unemployment for the Government's overall social welfare policy. The Government has failed to put sufficient, if any, emphasis on ensuring that work actually pays. There is insufficient concentration — despite the reference to activation, which to this Government is only a word and not a reality — on poverty-proofing. The Government must ensure that its policies do not result in people being forced to remain out of work because they would be worse off in employment. The potential loss of secondary benefits such as medical cards, rent supplements or family income supplements can have a serious effect on people's choices.

I was also disappointed that the Minister made no reference to the possible impact of yesterday's announcement on pensions. This is an issue which the Government appears to be happy to put on the long finger.

I have been supplied with figures which indicate that approximately 1,000 young people on FÁS apprenticeships are unable to complete their apprenticeships because of the downturn in the construction sector. Some of them have completed two years, while others have completed three. Effectively, they have lost their apprenticeships because their employers have let them go and there is no facility in place to ensure that they can complete their training. This means that vulnerable young people who have taken up a trade will be left with no qualifications. I call on the Government to think outside the box on this issue, get in touch with FÁS and the institutes of technology and find a way of ensuring that these young people can complete their apprenticeships.

Finally, I am gravely disappointed at the Government's decision on the regional gateway fund.

Deputy Seymour Crawford

I welcome the opportunity to contribute to this debate. It is unreal that just 12 months after the last election, when commitments were given on how well the country was doing and how important it was that the incumbent regime remained in place to maintain this success, that we are here today discussing what is nothing short of a serious crisis.

I note that my colleague, Deputy O'Hanlon, decided to go back to 1987 and make comparisons with figures from that time. I ask him to go back further, to 1977, when the then Fianna Fáil Government brought about an economic disaster for this country from which it took us almost 20 years to recover.

My party leader, Deputy Enda Kenny and party colleague, Deputy Enright, have already raised the issue of the €85 million that is being removed from the budget for the care of the elderly. Front-line staff in the HSE are not being replaced and beds are being closed down, despite the fact that the Taoiseach stated yesterday that health and education would be exempt from cutbacks. As far as the people of Monaghan and Cavan are concerned, the mismanagement and cutbacks in the health sector are causing serious concern, especially to the elderly and disabled. Approximately 100 beds have been removed in the past ten years from the service of the public in Monaghan General Hospital and further cutbacks are on the way. No public nursing home beds have been created, which means that subvention is vital for those who cannot get accommodation in the public sector.

The other major shock for Cavan and Monaghan is that the long-awaited decentralisation programme has also been axed, with the loss of 110 jobs in County Monaghan and 325 in County Cavan. More than 85 people had already planned to move to a new social welfare Department in Carrickmacross while some members of departmental staff are already in place in Cavan town. A total of 325 other people with full-time jobs in Cavan town would have created the much needed workforce in the area and taken up at least some of the oversupply in the current housing market. The biggest anxiety of regions such as ours is that, historically, this Government has failed to supply any foreign investment in this region. If the further cutback of €1 billion for next year is to go ahead, the future certainly looks bleak. Jobs have been lost in the pharmaceutical and food industries. Unemployment in County Monaghan has increased by over 40% in the past 12 months and by almost 30% in County Cavan.

Before yesterday's cutbacks were ever mentioned, plans for schools such as Rockcorry national school, which was promised a new school building last year, have already been put on hold. The new restructured primary school for Virginia announced on 5 April 2007 is also on hold, as are many others.

Commitments were given at the final peace talks in St. Andrews. The Taoiseach as Minister for Finance was part of those talks. It is vital that all the commitments made in that final agreement, which is so important to the peace process on this island, are actually carried through. In my own region, I am speaking about such issues as the Ulster Canal and the motorway from Derry city and Donegal town to Dublin.

The price of oil and international markets create problems for any government but, clearly, our Government's failure to deal with these situations is in stark contrast to that of our European colleagues such as Germany, France, Holland or even the UK. The facts are that this Government has failed to manage and it is at its door that we must place the blame.

Deputy John Perry

During the last general election, Fine Gael told the people that Fianna Fáil had lost its way and had become ever more complacent and incompetent as the years in office have grown. How sad that our analysis has proved to be so obviously accurate so quickly.

We in Fine Gael have consistently pointed to the Government's responsibility for and indifference to the sustained loss of international competitiveness. We have relentlessly pointed to the economic dangers and personal risks of the domestically generated housing bubble. These are problems largely of the Government's own making and have little to do with international factors.

The Government ignored all our warnings about these serious problems. Regrettably, we now face the probability of recession while other countries face an economic downturn. The manure has certainly hit the fan, in spectacular fashion I might add. The projectile matter carries a very clear Fianna Fáil ministerial address. There is no point in the Government trying to duck and weave and it is futile for it to try to blame external factors. The Government messed up on the economy just as it messed up the Lisbon referendum campaign.

It accuses us of talking down the economy, which is typical Fianna Fáil arrogance, as it chooses to completely ignore the fact that it is actually responsible for taking down whole sections of the economy. Talking honestly and factually about the economy is not about talking down the country. The only talking down to be done is to talk down the false perception of competence that this Government has sought so carefully to cultivate.

The consequences of Government incompetence are now visible everywhere in the latest CSO figures, in the mid-term Exchequer figures and in last week's Black Friday for jobs. The services sector and the high-tech sectors are also showing headline-grabbing job losses. At local level in Sligo, we have seen a constant haemorrhage of job losses. The consequences of Government incompetence are flowing into the real economy and the lives of ordinary people.

There is nothing in these cutbacks to recognise that we need a renewed focus on job creation efforts. There is an urgent need to review the effectiveness of the incentives used in the development of the indigenous manufacturing sector. This sector must get renewed priority so that investing in productive capacity for solidly based growth becomes more rewarding. The problems are not just confined to those who are losing their jobs. For example, a woman who wanted to bring her 12-year-old daughter home from a rehabilitation hospital was told that this was not possible.

Before the last election, there was much Government talk of developing Sligo and the north west generally. There was much discussion of the national development plan and the national spatial strategy, with Sligo being designated as a gateway city with funding of over €300 million. Where is that plan?

The announcement today by Professor Tom Keane is the most appalling announcement of all. A total of €3 million has been curtailed due to an inability to employ specialist cancer consultants. This is the clear message now being conveyed in Sligo in respect of the closure of the massive service there, triple assessment and the transfer of 4,000 patients, 4,000 mammograms and 2,000 colorectal inquiries from Sligo. They are now being told that this service will be closed and transferred to Galway with one bed on offer. Despite the fact that only €550,000 was allocated for every centre of excellence, I need clarification in respect of the €3 million allocated from Professor Keane's budget to employ cancer specialists. This is an appalling announcement. Despite the massive campaign in Sligo for the retention of services, we hear today that €3 million is being cut from Professor Keane's budget to employ specialist cancer consultants. How many minutes do I have left?

I want clarification regarding the funding in respect of the N17, N4, the N15; the pedestrianisation of Sligo; and the massive improvements in the gateway status that have been announced by this Government. The most defining issue in Sligo in recent years has been the retention of cancer services. I want a solid explanation as to why the minimal funding of €3 million allocated to Professor Keane to employ specialist cancer consultants is now being cut. This is a total contradiction that needs clarification from the Minister of State, Deputy Devins; Deputy Scanlon; and Senator MacSharry who represent this constituency.

Deputy Tom Sheahan

I will direct my comments and observations to the Taoiseach and former Minister for Finance. Before I entered this House, I would have said that the former Minister for Finance and current Taoiseach was the one man who nurtured and developed the Celtic tiger. Why are we here today where we are now looking at a deficit of €3 billion? It is because of the former Minister for Finance and his actions and inaction in respect of the economy when he was at the Department of Finance.

As the new Minister for Finance has said, it was his misfortune that he inherited the finance portfolio. The construction industry is the one factor that has caused many of the problems we face today. I remind my colleagues opposite that house completions stood at 30,000 in 1999 and 60,000 in 2002. The differential between the stamp duty take in 1999 and 2002 was €0.7 billion to €1 billion. In 2003, we built 70,000 units with a stamp duty take of €1.6 billion. In 2004, 78,000 units were built with a stamp duty take of €2 billion. In 2005, 88,000 units were built with a stamp duty take of €2.7 billion. In 2006, 90,000 units were built with a stamp duty of €3.7 billion were built.

We should note the explosion in stamp duty take during this period and its direct relationship with the construction industry and economy. According to an article in the Irish Examiner on 17 August 2007:

Detailed results from the 2006 census on housing show 266,000 units — or about 15% of the total housing stock — were classified as vacant. It means nearly a sixth of 1.46 million homes in the Republic are lying empty.

The article went on to state that:

However, only 50,000 out of 266,000 unoccupied dwellings are formally classified as holiday homes, leaving 175,000 houses and 42,000 apartments across the country empty.

Neither we, nor the then Minister for Finance, saw it coming. Following the 2006 census, he failed to notice that one in six properties in this country was vacant. This clearly pointed to a construction bubble. It was a boom in VAT and stamp duty receipts of a once-off nature. As Minister for Finance, the Taoiseach failed to notice that the swell in public coffers was directly related to the construction industry. Rather than exercise responsibility, he exercised recklessness and squandered the public purse in purchasing the 2007 general election. The Taoiseach and former Minister for Finance failed to manage the finances of the country. Fianna Fáil has failed in government and has failed the people of the country. The young people who had to take out a mortgage of €100,000 to give it to the Taoiseach for the pleasure of a roof over their heads will not forget it.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher)

I wish to share time with Deputies Ardagh and Michael McGrath.

I welcome the opportunity to speak on this matter and that we extended the sitting days of the Dáil in order to discuss it. This should be acknowledged.

Listening to the speakers opposite, we would be in breach of the Stability and Growth Pact rules because of the amount of money spent in the past 20 minutes of contributions. We are trying to achieve stability, to protect what we have achieved to date and to have a fiscal policy that gives confidence to the people and investors from around the world who look on Ireland as a place in which to invest.

The commentators, particularly those outside the House, who are almost gloating that the word "recession" can be used again, are slightly irresponsible. We must accept that we in a changed economic climate, in Ireland and internationally. Reference was made to the open nature of the Irish economy. It trades internationally and has been successful in recent years but it cannot be immune to challenges. There is an international credit squeeze, the cost of fossil fuels has increased dramatically, there is volatility in financial markets and there has been an increase in commodity prices, food in particular——

Deputy Tom Sheahan

And half a billion invested in Zimbabwe.

Deputy Billy Kelleher

——all of which had a major impact on the international climate.

This is coupled with the fact that we have come to the end of the boom years. Everyone accepts that the rapid growth of the past ten years was not sustainable. Listening to the Opposition, one would think we had squandered the boom years. This has been the mantra from commentators. Let us put this in perspective. In 1997, the national debt was 64% of GDP; it is now 25%, and if one includes the pension reserve fund it is 12%. What we did in the past ten years was to unburden the next generation of debt and borrowings with which previous generations had burdened my generation.

The Government has consistently run budget surpluses and reduced the national debt in good times. It has also brought forward ambitious national development plans. Going around the country and seeing infrastructural development, investment in education, health services and other key developments, one would have to acknowledge that the national development plan has been successful to date. The continued spending by the Government on the next phase is something of which I am proud, as a member of the one of the Government parties.

When everyone states that we are in a recessionary crisis, it undermines confidence. The basic reality is that we have a sound economy with a large employment base. Over 2 million people are working, whereas in 1997 it was 1.3 million. In recent times we have achieved a great deal.

The package announced yesterday to ensure we remain within spending limits is a sensible way to address this. I would be interested to read the comments of the leader of the Labour Party. I do not accept his comments that this is a problem in the private sector, with the public sector now carrying the can. One cannot take either sector in isolation. We have had a social partnership process since 1997 and it has stood the country in good stead for many years. Difficult decisions were made in previous times and policies were developed of which we now enjoy the fruits. Those representing the public sector do not want a situation where the private sector is ignored and all the burden is placed on one sector of the economy. We cannot live in isolation. I am hopeful that, over the coming weeks, the social partners will recognise the new reality, particularly in the context of the new, structured pay deal in the private and public sector. I am confident that the resourcefulness and imagination of the social partners will ensure a pay deal with the new realities that exist.

Deputy Tom Sheahan

Not if something is not done about inflation.

Deputy Billy Kelleher

The wish list brought to the table by all sides may have to be parked but the fundamental issue is to bring forward a pay deal that reflects the new reality. All sectors of social partnership, and Members, should outline the realities that exist without undermining the competitiveness of the economy.

Over the past number of weeks, in the context of the publication of the report, the Government was aware of the challenges. The Minister for Finance last year gave an indication that growth rates would be dramatically reduced coming into 2008, over and above what was experienced over the previous years. The Government took remedial action at that time. To say that the Government was unaware of the challenge presented by the fact that we would not have 7% growth year on year suggests people have missed something.

Deputy Kieran O’Donnell

"A soft landing" was the term used.

Deputy Billy Kelleher

They should read the speech of the Minister for Finance in the budget last December. Corrective action was announced in recent days.

Deputy Tom Sheahan

It is a bit late.

Deputy Billy Kelleher

Those who experienced the gain in recent times must also share in an element of the pain to get us over this difficultly in the next 18 months or two years.

Deputy Tom Sheahan

No pain, no gain.

Deputy Billy Kelleher

The Taoiseach and the Minister for Finance outlined what they are trying to achieve. Confidence is being restored in the economy and investors and consumers know that the Government has a strategy.

Transport 21——

Deputy Tom Sheahan

Deputy Kelleher should not go there.

Deputy Billy Kelleher

——and the national development plan, across all aspects of the economy, are matters we should highlight and about which we should speak positively.

The 3% reduction in payroll is a matter to which speakers opposite have referred. This is not a cap across all areas of the public sector. It allows local management to ensure front line services will not be affected. This is a fundamental matter. It is not an embargo or a pay cut across the board. It is a saving in the context of the payroll, allowing for flexibility and for managers in agencies or services to make strategic decisions to ensure they comply.

Deputy Kieran O’Donnell

A 3% payroll cut is a 3% payroll cut.

Deputy Billy Kelleher

A 3% payroll cut is not necessarily an embargo, as some would like to suggest. It allows flexibility at local level.

Deputy Tom Sheahan

Fewer roads will be done in every council.

Deputy Billy Kelleher

The difficulty from my point of view is that while the Opposition outlines that we must take corrective measures, Deputy after Deputy spends more money and does not tell us where savings will come from. To date, the Opposition has not told us where savings could be made or where savings should have been made in recent years.

Deputy Ruairí Quinn

We would have started with the Ministers of State.

Deputy Billy Kelleher

Over the past number of months, I have listened to the Opposition highlighting inadequacies in the services and then stating that there should be cutbacks in the public sector and savings there.

Deputy Tom Sheahan

The Government blew it on the last election.

Deputy Billy Kelleher

I would like to know where the Opposition would make savings because I only hear the same mantra, that the boom times were squandered.

Deputy Liz McManus

What about e-voting?

Deputy Billy Kelleher

This is one of the most important debates we have had in a long time and it should not be trivialised. We can be very proud of having substantially reduced the national debt over the past ten years.

Deputy Kieran O’Donnell

What about the 54,000 people unemployed last year?

Deputy Billy Kelleher

The Opposition continually asks what was done with the budget surpluses. This is what was done with them. The national debt was reduced substantially, with major investment in the National Pensions Reserve Fund and the national development plan——

Deputy Kieran O’Donnell

How does the Minister of State explain PPARS and electronic voting?

Deputy Billy Kelleher

——and these areas of the economy are sound.

We must ensure we remain competitive. Wage restraint and keeping taxation low will be of fundamental importance during the next 18 months. I urge all those involved in social partnership to sit down, ensure they come up with an agreement which protects the vulnerable and the low paid and ensures everybody across society carries this burden during the coming years to ensure we do not undermine our competitiveness.

Deputy Kieran O’Donnell

Will the Minister of State freeze Government charges?

Deputy Billy Kelleher

At the end of the day, the most fundamental issue is that we remain competitive and I am sure my colleagues will continue to speak in this vein. What we are doing is right and proper and the Opposition making nice, juicy soundbites will not serve any citizen, be it those under pressure in the construction industry or in other areas.

Deputy Paul Kehoe

The Minister of State has not looked for home help during recent weeks.

Deputy Michael McGrath

I welcome the opportunity to speak in support of the Government motion on the national development plan and the economy. The sharp deterioration in the public finances during recent months was crystalised last week by the publication of the mid-year Exchequer returns. It is clear the expected shortfall of €3 billion in tax revenue poses significant challenges for the public finances and these challenges are being faced in a decisive fashion by Government. The announcement yesterday, with further details today, is intended to achieve savings in public expenditure of €1.44 billion to the end of 2009. These savings are necessary to ensure the public finances are managed on a sustainable basis.

Comparisons were made between the position we are in now and that of 1987. There is no valid comparison. The Ireland of today, by any objective measure, is unrecognisable from the country of more than 20 years ago and we will not go back to the failed approach of managing the public finances in an irresponsible fashion, thereby causing long-term damage to the economy. The steps being taken by the Taoiseach, the Minister for Finance and the Government are necessary and appropriate. International conditions will improve during the next 18 months and we must be ready to take full advantage when they materialise.

The credit crunch in the US triggered a period of sustained turbulence in international financial markets with consequences for every open economy in the world. The unprecedented surge in oil prices and the weakness of the dollar and sterling further impacted negatively on trading conditions. The sharp downturn in residential construction after years of remarkable boom has directly reduced our GDP output by several percentage points.

Against this backdrop, it is testimony to the resilience of our economy that economic output this year will be on a par with last year, give or take less than 1% in either direction, depending on what economic forecast one believes. This is in the context of our economy having doubled over the past ten years. It is vital that we keep public finances under tight control, spend wisely and target priority areas which will maintain the standard of essential public services and help restore confidence in the economy.

The 3% reduction in public sector pay by the end of 2009 which the Minister of State, Deputy Kelleher, alluded to is achievable. Managers in Departments and State agencies must step up to the plate, make difficult decisions and identify areas for efficiency improvements without affecting front-line services. It is right and proper that health and education are protected as part of this process.

Controlling public expenditure will not in itself reposition the economy for future growth. It is now clear the next budget is an important opportunity to continue with tight fiscal management and include measures to stimulate economic activity and restore confidence in the economy. The issue of confidence is a critical intangible and is having a negative impact on the economy at present. Every Deputy knows people in business, buying their first home or moving up the property ladder who are waiting for the downturn to bottom out. They have the money but they are waiting because the confidence is not there to invest at this time.

It is essential that we rebuild confidence among consumers and in the economy generally. Every initiative we take should be focussed on generating more economic activity. In making public expenditure decisions, focus should be on projects and programmes that would make a practical contribution to the economy. We must encourage investment and reward risk takers. I am disappointed to see some suggestions by commentators that we increase taxes. This would be the wrong road to go down. The burden of small and medium-sized businesses in terms of administration, regulation and costs must be addressed. We cannot have over-reliance on multinationals.

Many fundamental positives still prevail in the Irish economy, such as low levels of public debt, the low burden of direct taxation, improving infrastructure, a skilled workforce and more than 2 million people working. We must take the necessary steps to ensure that when the upturn takes place, we are well positioned to avail of it and return to a period of growth.

Deputy Seán Ardagh

I am delighted to have the opportunity to contribute on this motion on the economy. We have been used to significant growth rates, averaging 5% to 6% year on year over the past decade. We were used to new initiatives and many of our expectations have been met with regard to infrastructural and other projects.

Householders with a constant increase in real wages could aspire to a new flat screen television or to remodelling the kitchen. However, without an increase in wages we must review and consolidate our position and work towards the future when the increase will come about. We could use hire purchase or consumer loans and suffer the burden of debt and borrowing but this would not be prudent and most would agree it would be the wrong thing to do.

Ireland is in this position. It used to have growth rates of 5% to 6% but circumstances, largely beyond our control and I will return to them in a moment, have brought us to a situation where temporarily our growth rate has been reduced considerably. As a nation, we must reduce our expectations and become more efficient, less costly, improve our competitiveness and position ourselves to take advantage of the situation when the world economy improves and this, all commentators agree, will happen in the short term rather than the long term.

I stated certain circumstances were beyond our control and I want to reiterate this because it all started in 2007 with subprime mortgages in the United States, which were normally securitised and packaged as a product to financial institutions throughout the world. Many of these subprime mortgages suddenly became bad and thereby all of the securities based on them became bad.

Deputy Ruairí Quinn

They were never good.

Deputy Seán Ardagh

I agree with Deputy Quinn. As a result of this, financial institutions throughout the world suffered and, in turn, us consumers now suffer through the non-availability of loans, particularly mortgages at reasonable rates for young people. Recently, a businessman with a large number of assets went to a bank seeking a small loan and was refused because the bank had no money to lend. This problem will stop development, business, growth and building and it will take time to overcome.

As Deputy Michael McGrath stated, the price of oil has doubled in dollar terms. Fortunately, the weakness of the dollar has helped somewhat but our trading position vis-à-vis the United States has disimproved. Sterling has become weaker vis-à-vis the euro but we have not received the benefits. We still pay consumer prices at the high sterling rate. Food supplies have been caught in a pincer movement throughout the world. On the demand side, in emerging economies incomes are increasing and demand for staples has increased to such an extent that countries in south-east Asia are out of rice because they are so poor they cannot afford it. At the same time, on the supply side, agricultural land is being used to grow bio-crops, which is taking from the availability and supply of food. All these issues have resulted in an 8% increase in the price of food and a cost of living increase of almost 11% in Ireland. We are a republic and it must be ensured in correcting the downturn in the economy that those who can best afford it will pay for it and the least well-off, who have been well looked after over the past ten years through welfare increases and health services will continue to receive such increases and services. Those who can afford it must take responsibility and suffer the pain that is inevitable.

Deputy Ruairí Quinn

I wish to share time with Deputies McManus and Morgan.

The response of the Government to the critical downturn in the economy is too little, too late. It promises unspecified pain and delivers no hope. The Government claims we are better off now than in the early 1980s, which is true, but it behaves as if it had no room for manoeuvre. The corrections in current expenditure should have been prepared earlier. The Government parties did not need to wait for the mid-year Exchequer returns to establish how bad is the position. The then Minister for Finance, Deputy Cowen, knew when he announced his final budget how bad things were and he failed to make the necessary, prudent provisions. No contingency planning or preparation was undertaken by the Department of Finance and we have been sadly lacking the leadership needed since this year's budget was delivered.

The Minister for Finance and the Taoiseach do not have the courage or the ability to deliver the political and economic leadership needed. They have two complementary tasks to preform. First, current expenditure must be reduced to address the massive fall in tax income and, second, productive investment must be boosted in areas of need. With regard to current expenditure, in addition to what is proposed, the Government should go further and repudiate, not postpone, the recommended pay increases of the high level review group for Ministers and senior public servants. The same repudiation, not postponement, should also apply to the recently recommended increases in the salaries of chief executive officers of commercial semi-State bodies.

If the Government is to secure the co-operation of the social partners, to which the Minister of State, Deputy Kelleher, referred, it must lead by example. For the first time ever, a 24-month pay freeze must be introduced in the public sector for all grades above assistant principal, with a flat rate cash increase for all grades below that, which would have a progressive impact on the many lower paid public servants. Decentralisation should be postponed indefinitely and I welcome the Minister of State at the Department of Finance, Deputy Mansergh, who is partly responsible for that programme. In light of what we know is facing us as a nation, the programme is not sustainable. The cost of its carbon footprint and the effect on efficiency in terms of institutional memory and meetings was not foreseen when the proposal was first made, mad and all as it was at the time.

With regard to investment, the Government should move effectively and quickly to commit to capital projects that are ready to proceed and that are desperately needed. I will confine my remarks to the school building programme. A total of 40,000 primary school children are housed in prefabricated buildings. A number of schools building projects are ready to proceed, which could be undertaken immediately and which would pick up the slack in the building industry as a result of a reduction in house completions from 88,000 in 2006 to a projected 35,000 this year.

I refer to Our Lady's primary school, Templeogue, in a neighbouring constituency of mine. The builder was due to go on site on 23 June, but the school was instructed not to proceed on 22 June. The project involves a €4 million extension and the school, its pupils, parents and teachers have waited nine years for it to commence. Money is available within the borrowing capacity of our economy and the resources of the NTMA and it was an obscenity to learn that €500 million of taxpayers' money is invested on our behalf in Zimbabwe by the National Pensions Reserve Fund, which could be invested in our children's future education. If this is the type of leadership we can expect from this Administration at a time of crisis, then God save Ireland.

Deputy Liz McManus

I have serious concerns about the approach being taken by the Government, which is planning a swathe of staff cuts across Departments. A total of 5,000 public sector jobs will go if this plan is successful. It is a crude approach and there is a danger that the wrong cuts will worsen our position and damage, rather than assist, our chances of recovery. The need to invest in skills and technology does not reduce because of an economic downturn and in a more competitive environment, it becomes more acute.

Much attention has rightly been given to cutbacks affecting the old, the sick and the disabled, but I am greatly concerned by the absence of a strategic approach to what is proposed. Forfás has expressed alarm at the scenario where investment in information and communications technology puts Ireland almost at the bottom of the EU league. While the Government is expanding broadband penetration, Ireland is still lagging behind most OECD countries. Broadband access is still not available in some parts of the State and there is no sign of the long promised national broadband scheme. This is untenable and I have fears that the cutbacks announced yesterday will impact in ways that will hold us back as a community and disable our economic development.

In a recent paper on next generation networks, the Minister for Communications, Energy and Natural Resources grandly promised €435 million in capital investment to tackle the digital divide, but that amount had been declared in the national development plan and since then the Taoiseach has said the allocation is subject to budgetary constraints. How much of that budget will survive? There is a great deal of debate about the knowledge society but, at the end of the day, the amount the Government is willing to invest will affect the delivery of aspirations. That includes investing in staff and expertise, yet we are aware, on the basis of recent freedom of information requests, that staff in the Department of Communications, Energy and Natural Resources are under "extreme pressure". Since 2006 officials have been warning of inadequacies in staffing and that it was "fast approaching major difficulties". The people were not in place to carry out Government commitments in a complex, technical and essential area of public policy.

We have regions that cannot access broadband, yet in Northern Ireland access is universal. When he was Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern promised that we would lead the way and be to the forefront in broadband development.

Deputy Dermot Ahern

No, the Deputy is wrong.

Deputy Liz McManus

However, other countries have powered ahead on the digital highway while we are struggling in Johnson's motor car. Recent Governments squandered opportunities and the current Government is so conservative that it is too cautious to breach the 3% target in the Stability and Growth Pact and too myopic to recognise that, by failing to resource technological development, we are denying ourselves the best opportunity to emerge from this recession well armed to compete internationally.

This is an opportunity to raise individual cases in our constituencies. It would not be appropriate to do so unless the reasons were extreme. A section of the N11, a major European route, is so dangerous that people have lost their lives on it and more will be lost unless investment is made. I urge the Taoiseach and the Government to ensure that the money is safeguarded to carry out lifesaving work on essential infrastructure.

Deputy Arthur Morgan

We are supposed to be debating the economy, but the Government has not put in place even a short-term plan to stabilise it or to deal with the plight of those who have lost their jobs or are at risk of losing them in the near future. Stemming the rise in unemployment and creating alternative employment is crucial. State spending on unemployment benefits is increasing as tax revenue falls. Some 19,000 people joined the live register between May and June. How does the Government propose to meet these rising costs and how, for example, is the Department of Social and Family Affairs, which is expected to achieve a 3% cut in payroll costs, supposed to deal with the considerable increase in the volume of clients accessing its services?

For all the spin of yesterday, the reality is that the Government is introducing cutbacks that will hurt the most vulnerable. Yesterday's much hyped announcements will not address the wider problems facing the economy. Instead, we have a set of proposals to deal in a limited way with a gaping hole in the public finances. Clearly, we will need to wait until December's budget to determine how the Government intends to deal with the revenue shortfall, although it is becoming clear that serious cuts in public services are looming. Cutbacks in public services and failing to deal with those whose need is greatest will result in a prolonging of the period of recession being experienced. Recovery demands that investment in key economic and social infrastructure and services be maintained.

There has rightly been criticism of the Government's management of the economy during the past decade, primarily that the fruits of the boom were not distributed equally or fairly and that the money generated was not used to deliver necessary improvements in quality and capacity in public services. Had the Government acted differently, would it have been possible to minimise the negative effects of a global economic downturn? Undoubtedly, the answer is "Yes".

The Government's claim that we are facing economic and fiscal challenges from a position of strength is blatantly untrue. The argument that the economy's fundamentals are sound does not stand up to scrutiny. Since the start of the decade, economic growth has been driven by consumer spending rather than export growth, a fact that the Government failed to address. Measures announced yesterday testify that wastage and inefficiencies have been normal practice to date. Only now is the Government proposing to deal with tribunal costs and the unnecessary use of consultants and PR companies. Value for money must always be central when public money is being spent. There is no room for wastage or inefficiencies in times of recession or boom.

In addition to the money wasted through the failure to achieve value for money, including cost overruns, absence of fixed price contracts and so on, a significant amount of public money was misspent on tax breaks for the wealthy. While many people became almost obnoxiously wealthy on the back of tax breaks that had little social or economic value, the economy's overdependence on the property sector was further fuelled. We may never know the extent of the money wasted in the past decade, but it should and could have been used to deliver the necessary improvements in public infrastructure. That we failed to address the substantial deficiencies in public infrastructure — school buildings, hospitals, social housing and public transport — during the most sustained period of economic buoyancy is the disgraceful legacy of 11 years of Fianna Fáil-led Governments.

Today, the Taoiseach, Deputy Cowen, mentioned that the State is not unique in the economic difficulties facing it. While other European states are experiencing the effects of the global economic downturn, none of our neighbours is experiencing a similar dramatic contraction in public finances. The peculiar nature of and reasons for this contraction do not seem to have been recognised by the Taoiseach.

During the past decade, the Government cut income and other taxes to unsustainable levels, thus allowing the Exchequer to become precariously overdependent on revenue related to construction and consumption. This is a major reason for a collapse in public finances, the extent of which has not been witnessed elsewhere in Europe. The Government ignored warnings that revenue from construction and consumption was open to fluctuation and ignored the fact that the amount of revenue derived from an over-inflated property sector was unsustainable.

The problem with the Government's current approach to the public finances is that it is not based on addressing the root cause of the dramatic contraction in tax revenue. The Government is approaching the current economic and fiscal problems in a shortsighted manner. In dealing with the shortfall in the public finances, it appears that the only option under consideration is cutbacks in public spending. Assertions that the most vulnerable will not bear the brunt of such cuts are not credible because experience tells us otherwise. While the Government is claiming that recruitment freezes and payroll reductions will not affect front-line services, this has not been the experience to date. There is mounting evidence across many services, including health and education, of cuts that are already beginning to hurt the most vulnerable.

The Government is spinning that these cuts do not affect the health services and pretends that it is safeguarding patient care. This is false. Long before yesterday's announcement, patient care was being affected by cuts. Since last September, the HSE has imposed major cuts, with its ban on recruitment putting patients and front-line workers in our public health services under further pressure. The Labour Court ruled that the HSE was in breach of Towards 2016 and the EU information and consultation directive in the manner in which it introduced, without prior consultation, those staffing restrictions in September 2007.

The IMPACT trade union points out that the €38 million budget cut for new developments announced by the Minister for Health and Children, Deputy Harney, means that planned service expansions in areas like disability, mental health and care for the elderly have been put on ice. With further cutbacks threatened for next year, these badly required services are effectively cancelled indefinitely.

At a meeting on Friday, 11 April 2008, the Irish Nurses Organisation and other health service unions were advised by the HSE that a range of measures were being considered, including the closure of wards, the reconfiguration of seven-day wards to five-day wards, the closure of accident and emergency departments that do not have consultants, the suspension of primary care developments and a limit on expenditure on statutory schemes, such as the drug refund and long-term illness schemes.

The cuts represent a base betrayal of the electorate that voted for the parties in government, which promised an improved health service. They also expose the gross mismanagement of our public health service by a Government that prefers to subsidise the private health care business. The Government must outline the measures that it will introduce in the short term to stabilise the economy and to introduce a medium-term recovery plan that includes steps to restore competitiveness and measures to retrain and upskill workers. We must also start planning for a longer-term reorientation of the economy to ensure that it will be built on a solid foundation and that future economic prosperity will be used to eliminate economic inequalities and to develop proper infrastructure.

Minister for Justice, Equality and Law Reform (Deputy Dermot Ahern)

May I share time with the Minister of State, Deputy Barry Andrews?

Acting Chairman (Deputy John Cregan)

Is that agreed? Agreed.

Deputy Dermot Ahern

It is difficult to listen to lectures from Deputy McManus, who has left the Chamber, on broadband. We have one of the fastest growing broadband markets in the EU.

Deputy Charles Flanagan

From a low base.

Acting Chairman

The Minister without interruption.

Deputy Dermot Ahern

That is accepted, but it is an historical issue. To be lectured by the Labour Party, which hardly mentioned broadband in its election manifesto, is difficult. The Labour Party's record in office was abysmal, as was Fine Gael's.

Deputy Charles Flanagan

Some 11 years of shame. The Minister should tell the House about the cuts.

Deputy Dermot Ahern

Deputy Morgan lectured the Government on the economy. Were this and previous Governments not required to spend so much money chasing paramilitaries out of the country, we might have had more money today and in previous economically difficult years. However, I am pleased to have this opportunity to support this motion and to join with my colleagues in calling attention to the substantial economic and social progress of the past ten years, including the achievements under the NDP which are documented in the 2007 annual report. There is no doubt we face real challenges both now and in the immediate future but we do so from what many other countries would regard as a very enviable position.. The priority now is to continue to manage the current situation sensibly, to take prudent, corrective action so that we are well positioned for future growth and prosperity. No one is denying that the necessary financial economies will be difficult. It is clear they will require discipline and prioritisation across all Departments and Government agencies. As we discuss and plan the implementation of these measures, however, we must not lose sight of the great extent of the resources that will continue to remain available for the provision of public services. Prudent financial economies need to be made but they should be viewed in a proper perspective.

In the areas under my Department's aegis, we are taking immediate steps to deliver the required savings of €8.731 million in the current year. This will not be easy but with an overall budget in this sector of €2.68 billion in relative terms, this amount is modest, being less than 1%. When one considers the dramatic rise in the Vote between last year and this year — in the region of 11% — this is a very dramatic increase, year on year. With good management, it will certainly be possible to deliver this saving without material damage to the extent or quality of public services provided.

One of the areas highlighted by the Government has been the need to achieve efficiencies between and within agencies, including through sharing of services. My Department has already made major progress in reducing costs by way of shared financial services within the larger justice agencies such as the Garda Síochána, the Irish Prison Service and the courts. It is estimated that the overall saving to the Department and its agencies has been in the region of €2 million annually. This initiative has been developed further with the Department's financial shared service centre, which operates out of Killarney and which now provides financial services, including payment processing and payroll to a number of other Departments and agencies. As stated by the Taoiseach, the payroll for the Department of the Taoiseach is paid out of the financial shared service centre run by my Department in Killarney. This is a clear example of sharing these services to achieve best value for money. These organisations are already achieving real savings as a consequence. This project has established a proof of concept that the Civil Service and the wider public sector can provide business support services by adopting a highly successful private sector business model. I suggest that Deputies or a committee of the House should investigate the organisation in Killarney because it is a very good template for future sharing of services.

Similar opportunities exist in the field of human resource services, as well as information and communications technology. Furthermore, pooled procurement activity, particularly in respect of telecommunications and energy services, can maximise our economies of scale and yield savings across the board.

All these opportunities are already being aggressively pursued by my Department and this is precisely the type of thinking we will be bringing to the task of achieving the savings required by Government. Individual budget headings are now being examined in each of the justice sectors Votes with a view to confirming exactly where these savings will be made. Expenditure on advertising and consultancy will be heavily pared back under all headings and general administrative and payroll economies will also be identified in each of the Vote areas.

We expect to be able to deliver in the region of €5.5 million of the required €8.7 million savings from efficiencies within the agencies and other bodies associated with the Department and we will be reviewing the scope for achieving future savings on this front. More than 30 bodies, both statutory and non-statutory, are associated with the Department and we intend to take a long, hard look at the function and role of each. We will be asking whether the function continues to be an essential one and whether the role could be performed as effectively by the Department. Where the need for a separate identity exists, there may be opportunities for functions to be merged and the organisational structure of the body will need to be the most efficient and cost-effective. In recent years, where it has been necessary to establish a new specialised public service, my Department has favoured doing so by means of an executive office as a leaner alternative to a fully separate agency. This is a move which all Departments should consider. This would avoid the need to set up expensive separate support functions and structures. Where such offices have been established they have tended to serve to energise and refocus existing resources within my Department.

There will not always be straightforward solutions to be had in each instance, but at a minimum the overall justice sector will be brought to work together to take advantage of its size, pool its resources, eliminate wasteful overlap and face the current economic challenges intelligently and creatively.

By taking this approach we will be able to ensure that what has been achieved in terms of effective service delivery continues to be sustained. Those achievements have been made possible by the enormous investment which has been made in the justice sector over the past ten years. Services to prevent and detect crime have expanded enormously, management of the courts has been transformed and prison capacity has been hugely expanded and modernised, and this will continue to happen. Land registration has been modernised and innovative new approaches have been pursued to manage young offenders. The structures and supports to promote equality in our country have been expanded significantly.

We need to bring a rigorous and creative approach to squeezing efficiencies in all quarters. This drive for coherence and efficiency will not exclude those elements of our national human rights infrastructure where an element of overlap and customer confusion may be emerging at this juncture.

I reiterate my support for the motion and my commitment to managing the considerable resources in the justice sector so that we can sustain our economic and social progress into the future.

Minister of State at the Department of Justice, Equality and Law Reform (Deputy Barry Andrews)

The House is debating the national development plan and the current health of the Irish economy against the background of a global economic slowdown. I had occasion to watch "Newsnight" on the BBC last night and I was struck by the similarities between the circumstances affecting the UK economy and ours. I refer to reports of construction workers losing their jobs because of a slowdown in the construction sector, the credit crunch and the lack of availability of finance. Strangely enough, the opposition there is accusing the British Government of having been the architects of the slowdown or the correction in the UK economy, or however one wishes to describe it. This would be the case in any other economy similarly affected by the global credit crunch and the global economic circumstances. One could hold up a mirror and see the same circumstances as are pertaining here. We sometimes exaggerate our successes but there is no doubt that the Opposition has completely underestimated the degree to which we exist in a global economy. We are an open economy and are more affected by global conditions than any other economy in Europe.

Nevertheless, we are in a good position to recover from the prevailing economic winds when circumstances change. This is because we have been planning long-term strategies from day one. It must be acknowledged that since 1987 we have invested heavily in education and training and more recently in the National Pensions Reserve Fund. Some people have asked what we did with all the money from the past ten great years. We brought down the national debt from 53% ten years ago to a net figure of 14% today, when the money put into the National Pensions Reserve Fund is included. Any objective analysis of the Irish economy will come to the conclusion that we are in an extremely strong position.

However, this is of little or no consequence or consolation to anybody who has lost his or her job in the past six months. It is a gross insult to the many people who were forced to emigrate in the 1980s to draw a comparison between now and then. We have moved on significantly in this economy and we are in a much stronger position under any heading. Some 2 million people are employed in the economy compared with 1.4 million ten years ago. We have the second strongest purchasing power of any European nation. We have a much lower national debt than the European average. We will create 13,000 new jobs this year. Our banking structure is much stronger than that in the UK, our biggest trading partner. People are blaming the European Central Bank and the fact that we have no control over interest rates. However, if we were in an independent monetary situation and had our own currency we would be in a considerably worse position than we are in the euro zone. Let us forget about that canard that has been circulated by many people.

There are increases in international oil and commodity prices. The easing of domestic demand and exchange rate factors should result in some moderation in the rate of inflation in the second half of this year. Inflation is forecast to average at 4.3%. I hope this will provide some comfort to those negotiating the new national partnership agreement. The Taoiseach and the Minister for Finance have consistently urged the need to continue the roll-out of the national development plan, which is vital to our sustained economic growth. The taxpayers' money is now being invested in fixed-term contracts, which is welcome as we are now in a buyer's market. We could not get contractors to work for us for anything of that sort in the past. We now have much tighter capital projects than we had in the past, which is to be welcomed.

We are making vast improvements in the transport system, which are reducing travel times throughout the State as anyone with their eyes open would accept. Even the Opposition Members, in their very brief intervals of generosity and lucidity, would concede that. We are improving competitiveness under many headings. We will need to concentrate almost exclusively on the issue of competitiveness in the next 18 months as it will put us in a position to recover more strongly. I believe we will recover and be in a position to take advantage of either lower interest rates or the euro easing against the dollar, which will also be a significant influence.

The national development plan is committed to delivering many child care places in coming years and that continues to be the case. These are real measures that provide for improvements in social inclusion. Regarding the savings announcement of yesterday, the Labour Party had described the HSE as a "bureaucratic Frankenstein" that required a reduction in staff numbers. There was not a word of welcome on any Opposition lips last week when the Minister, Deputy Harney, announced the HSE reform process and the redundancy package that was being discussed with trade unions. Instead, there was condemnation and criticism. A voluntary redundancy scheme for health service staff has been sanctioned by Government. I am confident that the Minister for Health and Children will deliver on her commitment to save €144 million within the sector. The Minister made clear this morning that the national children's hospital will proceed without delay. Regardless of the argument about its location, all patients and their parents will benefit from its construction without delay. It is about services, not about parking and all the other extraneous factors that are often brought into the discussion.

Much was said yesterday about youth justice and the question of Oberstown campus in Lusk, County Dublin. The development will increase the accommodation capacity in the detention school system from 77 to 167 places and it will be carried out on a phased basis between now and 2012, with a second phase by 2014. A notice inviting tenders from interested parties to provide a full team to design the new facilities was published in June with the closing date for receipt of tenders next month.

It is also an opportune time to discuss the question of capital efficiencies that can be achieved at community level. Those of us who have been politicians for any length of time will often arrive in a town and find a community facility on one side of the road and a national lottery funded facility on the other side of the road. There will be a community crèche down the road and empty rooms in primary and secondary schools, all of which are funded by the State. There seems to be a lack of coherence and of joined-up thinking that could lead to inter-agency savings.

We now need to focus our attention — perhaps we should have done so all along — on what savings can be achieved by asking all these community groups to begin to pool their resources. They need to agree to sharing community halls with people operating crèches, providing facilities for older people and discharging their obligations under the national recreational policy to provide youth services, whether they be youth cafés or youth clubs, or even to accommodate youth work. If all these can be achieved within the one campus a mechanism must be created whereby those types of capital applications will attract either fast-tracked funding, extra funding or ring-fenced funding, or some other mechanism to encourage people in a community setting to apply for funding in a more pooled and joined-up way. In this way we will make capital savings appropriate to the circumstances in which we now find ourselves. In any case they are the kinds of efficiencies we should be achieving.

I am confident that we will weather the current economic downturn and will be prepared to take advantage of the upswing when it arrives. The Government has taken proactive action in recent days. We have not sat back and waited for the budgetary process to roll round. The savings being sought will not come without difficult choices but that is what the people expect. In 2001 and 2002 Ireland faced similar economic troubles on that occasion induced by the slump in the ICT sector. Better than most, we quickly recovered our ground and within 12 months recorded growth rates of 7% to 8%. Owing to the swift action of the Government, I expect the economy to return to trend growth rates in the very near future.

Deputy Charles Flanagan

I wish to share time with Deputies Timmins and McCormack.

Acting Chairman

Is that agreed? Agreed.

Deputy Charles Flanagan

I am somewhat disappointed that neither the newly appointed Minister of State at the Departments of Health and Children, Education and Science, and Justice, Equality and Law Reform, nor the Minister for Justice, Equality and Law Reform availed of the opportunity while in the House to tell us exactly where the savings are to be made and where the axe is to fall because it will fall. It is disappointing that the Minister for Justice, Equality and Law Reform did not tell us how he proposes to reduce the payroll in his Department by 3% by the end of 2009. The Minister spoke about inefficiencies and said he planned to make savings in the order of €5.5 million by addressing inefficiencies. However, he did not identify or if he did he did not inform the House of the inefficiencies where savings can be made.

He talked about a review of bodies and agencies associated with the Department. However, the specifics are sadly lacking. Does he propose to cut frontline gardaí or Garda overtime in an era of rising crime rates where gardaí on the beat and engaged in intelligence gathering have never been more vital? He received a warning from Department of Finance officials about the Garda overtime bill and yet he remains mute and silent about what is about to happen.

During the boom time successive Ministers for Justice, Equality and Law Reform were happy to squander taxpayers' money. The last Government paid €30 million for the site at Thornton Hall, which was eight times the market value. The vastly inflated price that the then Minister was willing to hand over to buy land for a new prison is indicative of the attitude of the Government that squandered the country's hard-won wealth. According to the former Minister for Finance, Deputy McCreevy, his Government colleagues partied like there was no tomorrow. Now we are paying for that and today is just the start of it.

Not every incident of waste by the Department of Justice, Equality and Law Reform is as obvious as the Thornton Hall saga. The bastion of the Minister, Deputy Dermot Ahern, is also guilty of wasting money in more subtle ways. For example, every prisoner in the State is costing Irish taxpayers almost €100,000 per annum but our ability to rehabilitate prisoners is nil. Consequently, half of prisoners reoffend within four years of release, while 27% are back in prison within a year.

Money is also wasted in a myriad of other ways. For example, the criminal fraternity, which costs the State a fortune, is far better equipped than the Garda, which until recently had no place to engage in firearms training while gangs travelled overseas for target practice and expert training on a regular basis, a practice that has not been stopped. After ten years the Garda lacks a reliable digital radio service. In 1999, when the current Ceann Comhairle, Deputy O'Donoghue, was Minister for Justice, Equality and Law Reform, he promised that a national digital radio service for the emergency services would be fully operational by 2003. The Department of Justice, Equality and Law Reform has since squandered money on two pilot projects in the same Dublin area to test the technology and report on it. We were told earlier this year, after ten years, that contracts have been signed for a national scheme to replace the current obsolete technology. That announcement was made in fanfare of publicity. I am pleased that the use of spin doctors is to be reduced. The Department of Communications, Energy and Natural Resources has since intervened to delay the process and, potentially, to undermine the recent contract agreement. How much has this mess cost the State at this stage? Is duplication or triplication of pilot projects one of the forms of inefficiency the Minister has isolated as a means of saving money in the future? We do not know because he has not told us.

My issue with spending in the Department of Justice, Equality and Law Reform does not relate to how much is spent per se but to what the money is spent on. Is the money being spent wisely? I would have thought the Minister would have commented on that in his speech. How much has been spent on drugs task forces, for example? How much do we spend on all such quangos? We are spending money on Garda initiatives aimed at tackling illegal narcotics at a time when our coastline is wide open. Many of our ports and smaller airports are not much better. The Customs and Excise is resourced with a single cutter and a single container X-ray scanner to intercept the masses of illegal drugs coming into this country on an almost daily basis. Many of our private and smaller airports have never seen customs officials. They might as well not exist because they do not visit. Is it any surprise that the State is awash with drugs? Is it any surprise that cocaine abuse has trebled in the past five years? Is it any surprise that the level of heroin addiction has never been higher? Cost is the reason given for the Government’s skeletal approach to customs. What is this disgraceful neglect ultimately costing the State and the citizen?

I would like to speak briefly about my constituency. I was interested to hear that gateway funding, under the much vaunted national spatial strategy of 2002, is to be slashed. It is disappointing that the strategy in question has been as much of a disaster as the failed decentralisation programme. The rate of unemployment in County Laois is the highest in the country. It has increased by approximately 60% in the past 12 months. IDA Ireland, which is the key Government agency responsible for attracting industry to the regions, has systematically neglected County Laois over many years. My constituency colleague, Deputy Fleming of Fianna Fáil, was quoted in a national newspaper today as saying he does not "believe the IDA even know where the county is". I respectfully suggest he might have a word in the ear of his party colleague, the Tánaiste, Deputy Coughlan, if he wishes to do something proactive about this problem. Portlaoise business park has just one tenant — it is a ghost park, in effect. It is not enough for the Government to take a "build it and they will come" approach. The Government and agencies such as IDA Ireland must be more active in bringing investors to the midlands, particularly the towns of counties Laois and Offaly.

The Minister for Education and Science said today that the VEC sector will suffer cutbacks. What impact will the cutbacks have on the provision of second-chance education, which is more vital than ever in counties such as Laois as the unemployment figures spiral out of control? What will happen to the rapidly increasing numbers of unemployed people in County Laois, mainly in the construction industry, now that the Government has decisively blown the boom? What solutions can the Government offer the county, which has the most rapidly rising unemployment figures in the State? I called last week on FÁS to engage in training and upskilling, but I learned today that the budget of that organisation is to be cut by €1 million. How does that tally with the need for training and upskilling in the interests of shortening dole queues?

I am aware of a primary school in Portlaoise that has been waiting ten years for a new complex. Over 15 months ago, the parish priest in the area spent €2.25 million on a site for the school. The Government took no action despite having been handed a free site. After ten years of economic boom, 80% of the children attending Scoil Bhríde in Knockmay are being taught in prefabricated classrooms. The Government's solution to this problem is to convert the local ice skating rink, which is supposed to operate as a recreational facility for young people, into an educational shanty town from next September.

The existing schools in Portlaoise, which is one of the fastest growing commuter towns in Leinster, are bursting at the seems. The State was willing to spend €22 million on fighting parents who were looking for special needs education for their children, but it is unwilling to provide the basic classroom infrastructure needed to educate the children of Portlaoise and the rest of County Laois. What is the future for the pupils and teachers in the county in this era of cuts?

The maternity unit at the Midland Regional Hospital in Portlaoise is a health and safety hazard. The proposed 50-bed unit will not be developed. While an accident and emergency unit has been built, it remains idle while patients and staff work in the old unit, in conditions that are reminiscent of the days of Charles Dickens. There is a shortage of beds for elderly people throughout County Laois who require residential care. The Minister for Health and Children has announced that the fair deal is not going ahead. There are ridiculous waiting lists in the midlands. Mammography services were suspended in Portlaoise after years of financial neglect eventually led to a crisis. Deputies will remember that the House debated this matter of life and death last autumn. Neither the Minister, Deputy Harney, nor the head of the HSE, Professor Brendan Drumm, visited the county to offer a solution to the problem. If such circumstances are being encountered in the good times, what hell will the sick and vulnerable of counties Laois and Offaly face in the era of cutbacks?

The Minister of State, Deputy Barry Andrews, spoke about child care, for which he is responsible. Foster carers in counties Laois and Offaly have received correspondence that I regard as offensive. They have been informed that a stinging swathe of cuts would result in costs heretofore incurred by the HSE being passed on to them. The HSE officials in question, such as all Fianna Fáil Ministers for Finance in the past ten years, should hang their heads in shame. They have demonstrated nothing but incompetence. Elderly people, children and foster carers, the most vulnerable people in society, are about to pay the price, in terms of loss of quality of life, of the reduction in services. I will return to this most serious matter in the autumn. It is disappointing that the Minister for Justice, Equality and Law Reform and the Minister of State with responsibility for youth justice are not here to listen to this important aspect of the debate.

Deputy Billy Timmins

I am sure the Acting Chairman, Deputy Cregan, is tired of listening to Government spokespeople coming in here to make announcements. I have heard many such plans in the past 11 years, but none of them has come to fruition. I do not believe the measures outlined by the Taoiseach and the Minister for Finance yesterday will come to pass. They will unravel with the passing of time, not over the years, but over days.

My old friend, the Commissioner, Charlie McCreevy, used to speak about breaking open the champagne. I do not know how the Government managed to move from the champagne-opening era to the gruel-stirring era. It did not happen in a flash — if one glances casually at the speeches made by Deputy Bruton in recent years, one will learn that signs of economic concern were there to be observed. If the members of the Government were working as lighthouse keepers, they would have been sacked a long time ago as we would have had many shipwrecks.

The Taoiseach made three main blunders when he was Minister for Finance. First, he introduced inflationary budgets which meant that current spending was running at two and a half times the rate of growth of the economy. Second, he sanctioned an increase in day-to-day expenditure which was politically motivated for electoral purposes. The increase, which killed our competitiveness and, accordingly, led to a dramatic reduction in export levels, was financed by unsustainable property taxes. Third, he failed to make any reform decisions and abandoned value-for-money discipline. These three errors gave rise to what I call "Cyclone Clara", which left a trail of destruction in its wake. The rate of GDP growth reduced by 5.7%, the general government balance, as a percentage of GDP, decreased by 3% and the rate of unemployment increased by 1.3%. That is what we got from Cyclone Clara in the past four years. Like St. Peter at the Garden of Gethsemane, the Government fell asleep on its watch. Unlike St. Peter, however, it has not awoken.

Some €35 million was wasted on the vanity project that was Media Lab Europe, with nothing to show for it but some empty buildings on the quays of Dublin. Some €19 million was wasted on unused accommodation for asylum seekers. There was an overrun of €201 million on pre-1953 pensions. It is unfortunate that the great futurologist and philosopher, the Minister, Deputy Dermot Ahern, who introduced that scheme, has left the Chamber. When one mentions other wastes of money, such as the Stadium Ireland project and the Dublin Port tunnel, one feels like one is reading the rolling credits from a horror movie. The Government has failed to reform the public service and to complete the decentralisation programme. I spoke once to the former Minister, the late Séamus Brennan — may the Lord have mercy on him — after we had appeared on "Prime Time". When I asked him when the Department of Arts, Sport and Tourism would be relocated to Killarney, he told me he hoped it would happen by 2012. He was a realistic politician, God be good to him. The decentralisation proposals are the greatest scam ever perpetrated on this State, destroying efficiency. I instance the moving of 30 or more employees of Bord Bia to Enniscorthy when ten or more of them were working abroad. There was no thought to it and it was a complete political sham.

With respect to the cutback of €45 million to Irish Aid, the Government will argue that we are still on target for 0.54 of GNP this year, with the hope of reaching 0.7 in 2012. However, due to the ineptitude of the Government the most vulnerable people on the planet will be short of €45 million this year. That is the cutback in real terms without reference to an improved health service. I note that the Minister of State, Deputy Power, is entering the Chamber. We are talking about putting food in the stomachs of people and basic health requirements, which are affected by the loss of the €45 million.

The Fine Gael spokesperson on finance will outline the measures proposed by our party which he has termed "Through recovery to reform". We envisage cutting the growth of day-to-day spending to 4%, requiring all Departments and agencies to find a saving of 1%, and cutting back on the 250 new quangos created by Fianna Fáil in the past decade. The Leas-Cheann Comhairle will not sleep lightly in his bed tonight, thinking of that figure.

I spoke to an individual recently who told me he had visited the offices of a Department of State. He went into the canteen at 10 a.m. and found it packed. At 10.45 a.m. not one person had left it. That is the reform we have in the public service. What are the legacies the Taoiseach will leave us? The housing crash. Since 2005, 100,000 house owners have moved into a situation of negative equity, we have the slowest rate of growth since 1983, the biggest balance of payments deficit in the history of the State, the highest rate of unemployment in a decade, with 50,000 extra workers out of a job since December last year, and the biggest deterioration of public finances in the history of the State, from boom to bust, from champagne to gruel. It is sad because in this society the vulnerable will suffer.

Deputy Pádraic McCormack

The Government cutbacks illustrate how its chickens are coming home to roost. They result from its mismanagement of the economy and the way resources were squandered when money was freely available during recent years.

The Taoiseach has given false assurances that frontline services will not be affected by the proposed cutbacks. He and the Minister for Health and Children, Deputy Harney, have said that the most vulnerable in our society will be protected. This has already been proved incorrect and I offer an example of how such people are being hit. In the western area, the HSE has notified all providers of services to the disadvantaged sections of our communities that their budgets have been cut by 1%. Those cutbacks will directly affect, among others, the service provided by Ability West, formerly the Galway Association, the Irish Wheelchair Association, Enable Ireland, Rehab Care, the Brothers of Charity and Autism West. This week, Ability West was obliged to inform the parents of 430 adults and children in Galway city and county about the cutbacks it has been forced to adopt because of a reduction in its budget, despite rising costs this year. The same will apply to other services. In the case of Ability West, parents have been informed of cutbacks under eight headings. I have a copy of that letter, sent to 430 parents, outlining where the cutbacks will fall.

The most heartless examples are, first, the cutbacks in food which had been available to day users of the service and, second,the cessation of the weekly allowance paid to workers in the various work centres. The allowance amounted to only €5 or €6 a week in some cases and up to €25 or €30 in others but it gave the participants a sense of the value of their work.

In addition, Ability West will not now be able to guarantee occasional respite care for families of mentally or physically handicapped offspring. This will be the last straw for the parents of such children who struggle to continue to provide critical services for the disadvantaged members of their families. How much more will they be able to take? How much more will it cost the State to provide institutional care for such persons? The cutbacks in all social services make an enormous difference in the quality of life of the sick, the old and the disadvantaged, and their families. What galls the parents and families in such cases is seeing the vast amount of money that the Government has squandered in recent years. It gave millions in tax breaks to the rich and now the most vulnerable in society are being punished.

Parents who have dedicated their entire lives to the welfare of the disadvantaged family member must find it impossible to understand why their services are being cut back by the Government and the HSE. At the same time they see the HSE has awarded 111 high-ranking administrative staff over €1.2 billion in bonuses, an average of €11,000 each, over and above their annual salaries, which in some cases amount to over €400,000. I got those most recent figures from the Committee of Public Accounts. The HSE also created an extra 263 managerial and administrative grades between 2005 and 2006. That figure is also extracted from the minutes of the Committee of Public Accounts, page 227.

The Minister for Health and Children, Deputy Harney, is silent at this time of cutbacks. The Taoiseach stated, falsely, that the most vulnerable sections of our community will not be affected. The Minister is not here. She is not interested and will neither listen nor hear. She has deserted the most vulnerable in their hour of need. Action speaks louder than words. I call on the Minister to discontinue the order of cutbacks to those bodies which provide such excellent services and to ensure that they receive at least the same budget as last year. Let the Minister find her cutbacks from the bonuses and inflated salaries of the monster she created when she established the HSE. The disadvantaged families have taken enough of them.

This morning the Taoiseach referred to cutbacks as a down-payment for the future. He is damn right, the cutbacks he imposes on the most vulnerable in society are a down-payment for what those people and their families will suffer over the coming years. The disadvantaged will pay for the rest of their lives. I appeal to the Minister of State, Deputy Devins, who is in the Chamber, the Minister for Health and Children and the Taoiseach to reverse those charges. The eight service providers I mentioned have been cut back in the same way. I gave only the example of Ability West. Let the Taoiseach tell the Minister to restore the grant to the HSE in order that those bodies can continue to provide the great service they have provided down the years.

Deputy Charles Flanagan

Hear, hear.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Jimmy Devins)

Our economy is at a watershed. Today my colleagues in government spoke of difficult and prudent savings decisions taken across a range of areas to correct the current fiscal downturn. The downturn affects not only the Irish economy but a number of major global economies, which in turn impact negatively on the situation here. What we have done is appropriate, prudent and timely and is a mature recognition that the nettle needs to be grasped very firmly indeed.

Notwithstanding the difficult economic situation, the Government has recognised the vital importance of sustained investment in my area of research, development and innovation. The major investment, begun under the strategy for science technology and innovation in 2006, has been underpinned and the agreed funding will be substantially maintained in 2008. In 2008, just under €320 million is available under subhead F of the Vote of my Department of Enterprise, Trade and Employment to build the skills needed for a modern knowledge-based economy and to strengthen Ireland's research base.

This funding is provided to build a robust research system and to support efforts to bring the output of Ireland's growing research base to the marketplace. By allocating these moneys the Government is supporting the efforts of the enterprise community to develop new products, stay competitive and win new markets. Under the national development plan these investments enable Enterprise Ireland to meet its export targets and IDA Ireland to win high quality foreign direct investment.

Deputy Billy Timmins

That is no bother to the Minister of State.

Deputy Jimmy Devins

To survive and prosper, Irish companies must develop innovative and relevant products and services, which are targeted at the right geographic markets.

Debate adjourned.