Budget 2010: Motion.

Senator Liam Twomey

I move:

That Seanad Éireann:

noting that:

the budget forecasts a further cut in employment levels of 65,000 in 2010, after the estimated fall of 165,000 this year;

the OECD, the European Commission and the IMF have concluded that, after the end of the debt-fuelled property and public spending bubbles, a return to the export-led economic growth of the 1990s is the only route for Ireland out of recession and back to full employment;

the National Competitiveness Council has identified high business costs and bottlenecks in energy, broadband and water infrastructures as the biggest barriers to growth in exports;

condemns

the poverty of ambition and vision in the budget with regard to economic renewal and protecting employment;

the €1 billion cut in the capital programme which will alone destroy at least 10,000 jobs;

the use of scarce resources to cut taxes on car imports rather than to support exporters, which will lead to a diversion of money out of the economy;

the failure to provide for any across the board cost relief to struggling exporters and other businesses in areas such as employment taxes, local authority rates and energy costs; and

the lack of social solidarity in proposed social welfare cuts which will adversely impact on the most vulnerable in society.

As we approach the end of the year, it is appropriate to have another discussion on the economy and where we are going in that respect. When we had debates on the economy in this House at the beginning of the year, members of the Government parties pointed out that economic factors were mainly responsible for the mess we are in at present. It is interesting that in the first line of the Government amendment to the motion there is a recognition that we are facing the worse economic crisis since the foundation of the State. There is also a recognition that the Government parties had something to do with the mess we are in. Unfortunately, the Government is still living under a certain degree of delusion given that the Government amendment to the motion states that "the actions taken by the Government to manage our way through this crisis have been bold, decisive, innovative and effective". I will leave it to the Government spokespersons to speak about what has been bold, decisive, innovative and effective in the Government's management of the current crisis. We have not seen that type of decision making by the Government in the management of this crisis.

This might be the time for us to reflect on what actually happened. The Government has been incredibly slow to acknowledge or even discuss how we ended up in the mess we are in. The new Governor of the Central Bank said we should discuss what happened, but the Taoiseach has poured cold water on that idea.

Perhaps the former Taoiseach, Deputy Bertie Ahern, the Taoiseach, Deputy Cowen, the Minister for Health and Children, Deputy Harney and a former Minister, Charlie McCreevy, were Ireland's version of a gang of four. In the same way that China's Gang of Four utterly destroyed that country during the Cultural Revolution, our gang of four or meitheal ceathrar, to use its Irish title, has destroyed our economic future. It is time to have a proper debate on that. Perhaps it is because the Taoiseach and the Minister, Deputy Harney, are still in power that we are not facing up to what happened in this country during the past decade.

What happened when Fianna Fáil took power in 1997? On what was our economic growth built? Every Member of House knows that it was built on our exports. This country was revolutionised in the 1990s to the point that the growth in our economy was export led. The level of public spending was a great deal lower at the time but ours was one of the most competitive economies in Europe, which is the reason we earned the title, the Celtic tiger economy. We genuinely were a Celtic tiger economy in the late 1990s. Unfortunately, following the then Government's winning of the 2002 election, things started to go wrong. The first action it took was to put the breaks on the economy because there was a slight shock to the world economy. That should have been a warning to the then Government as to what could happen. It seemed to dismiss all common sense, especially in the period from 2004 and 2007, and we saw this country brought to the edge of financial ruin.

There is a need to have a strong debate in this House on what went wrong. Was it something that happened prior to 2004 or something that happened during the short period from 2004 to 2007 that landed us in the mess we are in? Was it cheap credit that put us there? Credit was cheap and it was easy to borrow money, thanks to our joining the euro currency. We got very cheap rates in regard to the economy. Was it the behaviour of the banks that caused this problem? They were lending to customers at very cheap rates. Did issues such as the granting of 30-year mortgages contribute to this problem? When I got my first mortgage in the early 1990s, one would not be given a 30-year mortgage. Twenty years was the limit. A limit applied to the amount of one's salary one could use to borrow money and, most importantly, one could not get a 100% mortgage. Suddenly the banks were lending money to borrowers. Was it that which drove prices mad? I remember hearing Ministers at the time, including then Minister for Finance, Deputy Cowen, say the values of properties in Ireland were undervalued according to international standards, yet at that time property prices in the centre of Dublin were nearly exceeding property prices in the centre of London. That was complete madness. That should have been acknowledged but was not.

Could the regulator, if it was truly independent, have stopped this? I raised the question previously as to whether the Governor of the Central Bank at that time was a little too close to the Government and whether he had a role to play in this. We need this sort of discussion about what happened to our economy. Why has it all gone so badly wrong?

We cannot move forward until we have had a comprehensive look at what went wrong in our economy in this period. We blame bankers, regulators and the Government, but we need to apportion the blame in a way that we can learn from this. That is something that has not happened. All members of the gang of four should present themselves to an Oireachtas committee to explain their role in this respect. As long as we are in denial about what happened during this period in the economy, we will not be able to move forward. If the Government members are afraid to do that, I will call on other Members on this side of the House, some of whom have written extensively on this issue. Senator Ross has written a book on this. We should start to put on the record a clear idea as to what the hell happened to our economy during this period.

We also need to get solutions to the current mess we are in, as we did for the mess in the early 1990s when we focused on competitiveness and jobs. We focused on building a competitive, export-driven economy. At that time the world economy was also emerging from recession and we were lucky to be able to ride on that wave and that is what delivered the Celtic tiger to the people of this country. We need to develop an export-driven economy. The Government parties and the Government's pre-budget statements have clearly pointed out that we need to focus on building an export-driven economy for the future, yet we have seen nothing in Government policy up to this point to suggest how we will achieve that. No clear indication was given in the budget that there will be anything to drive forward the export-driven type of economy that got us out of the mess we were in at the beginning of the 1990s. We must consider what is happening in that regard. We need to keep people working.

I wish to focus on the reform of work practices for those employed by the State. Not just Ministers but some of the senior members of the union leadership need to discuss the matter. Benchmarking was initially decided upon to improve productivity and change work practices within the public service and the Civil Service. However, there was no significant change in work practices in the past four to five years. The union management said they collapsed the partnership talks and that all bets are off in terms of implementing reform of work practices. The Government should get back into talks with the unions because if it does not, the only option open to the Minister next year will be to cut public service pay further and undermine pensions and social welfare payments.

The unions should consider the reform agenda and the changes they were proposing before the partnership talks collapsed. They should consider how to implement change in the next 12 to 18 months in order to prevent further erosion of the living standards of civil and public servants. Otherwise, the Minister will have no other option but to make further cuts. This is an opportunity to see whether the reforms and changes to work practices that were due to be discussed at that time could be implemented in order to prevent the need to increase taxes or further cut public sector pay next year. The Minister must go back to the unions in that spirit. There is too much confrontation currently for a country that is in crisis. There is a serious need for the Minister to go back to the unions and see whether we can push forward the agenda for change.

The Minister must also be brave. The Government has indicated that the pay of judgesis a constitutional matter. That is not true. The issue arises if the State tries to hinderthe Judiciary by docking its pay. That argument would not stand up under the Constitution if every single person in receipt of a payment from the State — from those on social welfare to the Taoiseach — receives a pay cut. How could that be seen as unconstitutional if themembers of the Judiciary are affected? The Minister should include that provision in the Finance Bill in February and send it to the President, who can refer it to the Supreme Court for it to be tested on the grounds of unconstitutionality. The Supreme Court can make rapid decisions on constitutionality that we are afraid to take on board. That issue needs to be addressed.

There is a need for the Minister to show he has the bottle to tackle the issue and not to be looking for quick fixes. He should just do it. That is one issue he should definitely take on board. There are solutions other than just hitting people who are vulnerable, disabled and poor and taking a carte blanche approach to attacking the public service and the Civil Service whenever the Government is short of a few bob. We cannot be that simplistic in our approach.

There is a need also to have a proper discussion on where we spend money on the capital budget. Broadband is a mess and needs to be addressed. Water infrastructure also needs to be addressed. The leaks about the budget are only superseded by the leaks from this country's water infrastructure. We also need to examine closely the green agenda and whether we can do more. For instance, if the Green Party was so keen on cars being the cause of damage to the environment, perhaps we could introduce a law to ban cars above a certain size.

The Minister must re-examine social welfare changes. I have been contacted by people outlining how difficult it is to get casual labour for building work or people to drive trucks. The reason is that it is so difficult to get into the social welfare system and equally difficult to get back into it following a job offer for a short period. That is causing problems for people who require staff on a short-term basis. Another huge problem arises in terms of carbon tax in that natural gas is not available. That is causing uncompetitive conditions for companies, especially in County Wexford. I await the Minister's response. There is a need for us to have a good look at the economy.

Senator Paschal Donohoe

I second the motion. I welcome the Minister of State, Deputy Calleary. This is the first time I have addressed him since his appointment. I was in the same class as him in college. We were both in the same room for lectures on international economics.

Senator Marc MacSharry

Did it not serve you both well?

Senator Paschal Donohoe

It served us both very well. We learned about the economics of monetary integration, labour economics and other such issues. I am delighted to see the Minister of State doing so well. I am also delighted with his portfolio. I wish him the very best of luck with it in the future. The area for which he has responsibility, especially in regard to FÁS, is important in terms of many of the issues relating to the motion that we are discussing.

I wish to pick up on the comments made by my colleague, Senator Twomey, especially his point that the only route forward for the economy is one that is export-led as that will help us to regain our competitiveness. He referred back to the 1990s as an example of how that was done. He is dead right. Many others agree with the point he made. However, there is one big difference between the situation in which the country finds itself and where we were at in the 1990s. Now, we are in the middle of a global recession but in the 1990s when our country was moving forward we were operating in a global economic environment that was benign. As we addressed our competitiveness and produced the right goods and services, the benign and positive environment ensured that others wanted to buy our goods and services, which helped pull our country forward. That is no longer the case.

We now find ourselves in a global economic slump where this country is doing far worse than it should be. One just has to look at the United Kingdom, our key export market for goods and services, and the difficulties that economy is facing in terms of cutbacks and rising taxation levels. It is on a par with us or is arguably worse. The strong export markets on which we have depended in the past are weaker than they were in the 1990s and that will pose a huge challenge to us.

The other challenge we face is what is happening to interest rates. I made a similar point in the discussion on the Social Welfare and Pensions (No. 2) Bill. When our country moved forward in the mid-1990s and up to 2003, it was doing so in an environment in which interest rates were either flat or falling, or if they went up they did so temporarily and they came down again. The likely situation that the global economy and the local economy will face is increased interest rates in the future. The other factor that will affect many of the other export markets in which we compete is that the level of tax paid by many of the consumers on whom we rely to buy our goods and services abroad will increase also. They are important points that are germane to the discussion.

We can consider what happened in the 1990s and say we need to return to that model, which we do, but that is only a start. That is the essential first step we have to take. The reason for that is that the environment in which this country is competing and looking to secure and retain our economic independence is far more challenging, difficult, insecure and volatile than has been the case in recent times, and certainly than was the case in the 1990s. The kind of measures that we need to put in place and the plans we implement must be of a higher quality and impose far greater rigour than heretofore. They also need to be more agile and nimble than they have been in the past. That is a point our party well understands.

I have made this point many times previously in debates such as this one. Before I became actively involved in politics I worked in a company that exported goods and services. I saw jobs being created and jobs being lost. If we wish to get that kind of integration in place again and make it positive what we have done in the past will not be good enough anymore. I am reminded of one of the many definitions of "insanity", that is, one does the same thing again but expects a different result. Measures taken will take the country so far, but they will not return us to the prosperity and security we all want. My party recognises this and has put in place proposals and made suggestions about how we can do it. It is important to reflect on the degree to which politics has changed for those of us who are unlucky enough to be in opposition. We accepted that savings of €4 billion had to be found; we spelled out how we would do it and brought forward specific measures. The budget was announced last Wednesday and the previous Friday my party said what it would do differently. We recognised the need for wage levels in the public service to be cut and argued how we would do it differently.

On jobs recovery, the quality of our plans, including their detail and costing, is superior to that of any of the plans the Government has. One should look at our NewERA plan and the plan to reduce employers' PRSI, how that would be funded and the number of jobs that would be retained and secured. The quality of thinking and the type of proposals being made are far ahead of what other Opposition parties are producing and easily on a par with what the Government is doing. They are more in touch with the competitiveness of the outside world and the challenges the country faces.

I refer to the plan for the smart economy which I am sure will be mentioned. Show me examples of a deadline, a specific measure, a costed plan or anything against which progress could be measured in that document? I would be delighted to see any such examples. For a plan which has been proposed to try to move the economy forward, it is sorely lacking in vision and any detail.

Having gone through my party's plans and what we want to do differently, I would like to comment on the Government's amendment to the motion. The job of such amendments is to challenge the Opposition, but this one take things a step too far in terms of its grip on reality and where matters stand. It states this is the worst economic crisis since the foundation of the State and that the Government has identified the right priorities and taken the right action. Last Wednesday's budget was the fourth attempt at a budget correction by the Government in the past 18 months. Having looked to bring in up €6 billion in taxes, it reduced the tax take by €8 billion. If that is the decisive action we are to see, we need to see less of it.

Senator Marc MacSharry

I move amendment No. 1:

To delete all words after "That" and substitute the following:—

Seanad Éireann:

noting that:

in its response to the worst economic crisis since the foundation of the State, the Government has over the last 18 months identified the right priorities and taken the right actions to stabilise the public finances and restore our competitiveness so that we can benefit from the emerging recovery in the global economy;

the actions taken by the Government to manage our way through this crisis have been bold, decisive, innovative and effective;

the Government's concern in all of its actions has been to protect jobs, to provide a functioning banking system and to return this economy to the path of sustainable growth while, at the same time, seeking to do so in a manner that is fair and that protects the most vulnerable;

welcomes

the fact that, because of these decisive actions, the Government is now in a position to stabilise the deficit;

the approval by international bodies such as the European Central Bank, the European Commission, the IMF and the OECD as well as by the international media and the international markets of the measures taken over the past eighteen months, and by the Government in budget 2010;

the provision of nearly €136 million in 2010 for an additional 26,000 training and job support placements bringing to 180,000 the total number of places available to the unemployed;

the wide range of measures taken in budget 2010 to stimulate the economy and sustain employment through the reduction of VAT and Excise; VRT relief; establishing a review of the credit system; providing €171 million to help the forestry and agriculture sectors; allocating €130 million for energy efficiency measures and boosting the promotion of tourism;

the fairness demonstrated by the Government:

in protecting older people by maintaining the state pension at its current historically high level;

in ensuring that reductions in social welfare rates were less than the fall in prices over the past year;

that welfare-dependent families will be fully compensated for the reductions in child benefit;

the Government's commitment to protect those in mortgage arrears and to extend mortgage interest relief;

and commends

the Government's strategy which is forecasted to return this country to modest economic growth during 2010, with positive annual growth being achieved for 2011 and beyond; and

the Government's commitment to develop the long-term capacity of the economy through public investment spending of 5 per cent of GNP in 2010 — one of the highest in the EU — and €5.5 billion each year for the years 2011 to 2016.

I join others in welcoming the Minister of State, Deputy Calleary. I take the opportunity to wish him the best of success. I was not in his class, but we had the opportunity to work together in the Chambers of Commerce movement for approximately five years. Therefore, I know him very well and his capabilities. The Legislature is lucky to have the benefit of his expertise, youth, determination and focus. I extend my very best wishes to him.

I thank Fine Gael for using its Private Members' time to speak on issues relating to the economy, as there is no issue more important. As is often the case with Senator Twomey, we must always look to what happened in the past. It is reminiscent of a Christmas pantomime; we have had so many debates on the economy in recent weeks and it is a case of, "Oh yes, you did; Oh no, you didn't" in terms of who blew the benefits of the boom.

I will outline my position on what happened. The volume of exports declined throughout the 1990s. They was replacement by an unsustainable transaction based tax which was fuelled by stamp duty which, in turn, was fuelled by a national and international financial regulatory regime which we now know got us into serious trouble. With the benefit of hindsight, one could say certain things could have been done differently. As for the one or two economists who have said they called it how it was or how it panned out, a stopped clock is right twice a day. All of the party manifestos will show all parties were looking for increases in expenditure in all ministerial Votes, whether it be in public sector pay, on capital projects etc. We were all looking for more.

Circumstances, however, have changed and it is incumbent on all of us to change our minds, focus and policies. That is what the Government has set out to do. The OECD, the IMF, countless economists and media publications and people involved in the financial sector have all acknowledged that the Government is following the correct policy and has the correct focus. The first thing we should try to do, in the context of our competitiveness, is get our cost base right. In the budget last week there were many serious and painful measures which all households in the country will have to contemplate. Pain will have to be endured by people who, arguably, are not best placed to take the pain the budget insists must be endured. No one would set out by design to cut levels of social welfare or public sector pay or take €1 billion from the capital budget. The reality is, however, that these measures are necessary, although considered draconian by some, as we must get our cost base right. I regret that a changed economic environment in Ireland and internationally, as other speakers said, demands that such serious measures be taken.

Since the announcement of the budget last week, those of us on the Government side have been getting e-mails from public servants, people on social welfare and genuine cases who will suffer a little as a result of the budget. I regret this, but it is necessary and further steps will have to be taken. There will be another budget next year and the year after that and they will take steps which will be unpalatable, as happened in the budgets of 1987, 1988 and 1989.

The days of large allocations to the sports capital programme are over for now. There is no room to play politics or policies exclusively focused on vote getting and self-promotion. It is about providing the right economic policies for the day. Given the change in circumstances, different policies will be required as we look to the future. I am confident the Government has taken a serious approach. In the budget, with the other measures taken in the supplementary budget announced in April and the budget announced in the previous October, substantial correct actions have been taken.

I refer to retailers. I come from a Border county where we have had a very serious problem in terms of leakage to the North. Almost €500 million in revenue has been lost. In response to this, we saw a reduction of 0.5% in the rate of VAT which we hope will help. There has also been a reduction in excise duties. I welcome these measures. In Sligo a group called the Fair Dealers, as I mentioned on the Order of Business a week or so ago, has come together and reduced prices and offered certain incentives to shoppers in order to counter the effects of cross-Border shopping. SIPTU, even on the back of the difficulties it faces with its members as a result of last week's budget, has come together with this group and called on all its members in the north west to shop locally to support employment in this jurisdiction, rather than enhance the prospects of Her Majesty's Government. It has shown remarkable leadership. I call on the trade union leadership, at least in the six Border counties, but perhaps also throughout the country, to show such patriotism. I know it is a difficult time. Notwithstanding its intention to hold strikes in the coming months in protest against the budgetary measures that had to be taken, that is the leadership the country requires from all sectors of society, not only from these Houses and the trade unions.

In terms of small and medium-sized enterprises, in the budget the Minister indicated a credit review system. We are all aware of many small businesses which are struggling to ensure they have access to necessary capital to maintain and create employment and to ensure they can continue to go about their daily business and try to make a profit. This will ensure they can continue going about their daily commerce, creating employment to try to make profit. I welcome the Minister's intention to establish the credit review system

With local authority charges a significant cost for the business community, I ask the many county managers around the country, as they focus on budget meetings in the next period of weeks, to look for a reduction in commercial rates where possible. There has been a reduction in the cost of living in the past year of approximately 6% and businesses are finding it extremely difficult. I ask that this measure be implemented. I welcome the efficiency review of local authorities, to be completed in mid 2010, which was also mentioned by the Minister.

With regard to the social welfare cuts, of course we regret that these necessary reductions have had to be made. It is important to remember that since 1997, unemployment benefit has gone up 120%. Child benefit has gone up by 330%. It is painful to cut this but I repeat that nobody would set out by design to cut the rates. It has become necessary to do so. Senator Donohoe mentioned that we all agree a €4 billion reduction must be achieved but it is how it is to be done that divides us. It is important we have difference in politics as it is otherwise just public administration.

I will finish on the issue of mortgages, although there is much I would like to have said otherwise. As Members know, I am involved with a group seeking the prevention of family home repossessions, which continues to lobby for legislation to effectively prohibit the granting of a court order for the repossession of a primary family residence. Will the Minister of State raise the issue with both the Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern, and the Minister for Finance, Deputy Brian Lenihan?

The Irish Banking Federation protocol with MABS is admirable and seems to be working so far but we must have a foundation which protects families in legislation. Organisations providing sub-prime mortgages such as Stepstone and Start Mortgages are not covered in that regard. The Minister of State might raise the matter.

Senator Feargal Quinn

I welcome the Minister of State, Deputy Billy Kelleher. Before he arrived there was an interesting chat between two past college mates, Senator Pascal Donohoe and another Minister of State, Deputy Calleary. I gather they were in the same class. I beat them by approximately 30 or 40 years and I also did national economics under Professor George O'Brien and Professor James Meenan back in the 1950s.

I mention this because we have had a little history lesson tonight, with Senator Twomey giving a long history of what went wrong. There is a certain place for history but there has been too much study of the past in recent weeks and we should look to the future to see how we will solve these problems. In 1987 there was a similar crisis and we had a major difficulty. The Government of the day indicated it would have to make some very tough decisions and the leader of the Opposition, in Tallaght, indicated his support for that. We must have something like that now. We are hearing too much from those who believe anything the Government is doing or any tough measures are wrong. I have some difficulty with that.

From that perspective I will vote in favour of the amendment supporting the budget. A business leader in good times brings his people with him, as it is easy to do so. There are profits and he can go to unions and employees to see how to share them. When there are tough times, he will outline the tough actions to be taken. I am a little worried to hear that we should be going back to social partnership and getting agreement. If unions do not agree with a course of action, a business leader must outline the tough medicine that must be taken in order to succeed.

British Airways may be losing £800 million and its unions have indicated they will go on strike for 12 days. There are times to support the Government or business leaders as well as times when we do not. A business leader may need support because times are tough, and that is so now.

I understand where Fine Gael is coming from as it is an Opposition party. I am also disappointed because everybody is feeling the pain at the moment. I would like to mention a few points in the wider context that should also be considered. In the context of introducing wide-ranging cuts in expenditure, we must not forget the economic collapse in Iceland. We can also consider what has happened to Dubai in the past number of weeks. It is a warning sign that must be heeded, and it has raised the question of whether a country could default on its debts, or bring about sovereign default. That includes Ireland. Only a few weeks or months ago The Economist was asking if Ireland could survive. It is great to see the newspaper this week state that Ireland has taken the appropriate steps, indicating that “Ireland shows the rest of Europe what austerity really means”. That means taking a tough decision at a time when it had to be taken.

Dubai is a small country but the volume of business it does is massive so it has a knock-on effect. Some economists are saying that we in Ireland could move from a fiscal frying pan to a fiscal fire. Dubai's problem could be the start of a bigger crisis so we must take some tough decisions. Dubai's problems have prompted some economists to reappraise the assumption that the EU — I suppose they mean Germany — would come to the rescue if we could not get ourselves out of our current difficulties. What we know is that we must do everything to stop our country from going bankrupt. We need to aim for a cautious fiscal policy along with transparency in order to demonstrate clearly that we are not a tin-pot dictatorship.

We need Opposition support on this occasion. Greece is experiencing severe financial crisis and many commentators believe the Greek Government is not doing enough to steady the ship. There is a perception that the Greeks are not taking responsibility or doing enough to fix their problems. Greece has a deficit of around 12% but representatives have said the public sector and welfare cuts that were announced with our budget last week would not necessarily work for them. We can see what has happened to the Greek economy.

On the other hand, many in the international community and financial journals see Ireland as taking the necessary steps with this new budget. We are seen as a country which is taking proactive measures to improve our position. The fall in Ireland's interest rate premium is a sign that bond markets are viewing the actions by the Government positively. Our unemployment rate of 12% this year is showing some signs of stabilising and our exports are also holding up surprisingly well.

The measures taken by the Minister will help our competitiveness but we need to follow up on many more measures across the board. For example, we should look at stronger competition policy and address our energy costs, which remain extremely high. A survey of multinational companies conducted by The Irish Management Institute and National Irish Bank in October found that respondents saw energy costs as their biggest concern, and labour costs in Ireland, at 81%, were rated as the second most expensive operational cost in Ireland relative to sister operations.

A quote by a representative of a multinational company published in the survey struckme:

Cost is the major challenge facing our Irish operation. Virtually all offices globally have a competitive advantage over our Irish operation. I have no doubt that if our companydid not now have a substantial presence in Ireland we would almost definitely not establish one.

That is a very worrying sentiment. It is extremely hard for businesses and Ireland is a very expensive place to live. We need to reduce costs and such moves would provide the best stimulus for the economy.

We must remember in this country that we are not down and out. Next year the economy will be back to around 2005 levels. We need politicians and the public in general to be much more optimistic about the country. Manmohan Singh, then the new Finance Minister of India, presented an emergency budget in 1991. He pointed out that the new government had inherited an economy in deep crisis. The budget deficit was more than 8% of GDP and the current account deficit was 2.5% of GDP. In the concluding part of his speech, Singh stated:

I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, "No power on Earth can stop an idea whose time has come." I suggest to this House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome. Those were Mr. Singh's words in 1991. Such positive sentiments are needed instead of the political posturing that is holding up our recovery. Mr. Singh set out a programme of fiscal responsibility and other reforms that laid the basis for the subsequent boom in India. As a result, many believe India, largely unaffected by the current recession, will become the world's third largest economy after China and the United States within 20 years. There is no reason we cannot stage a similar recovery. However, we currently need cuts to ensure our survival. Squabbling over what happened in the past and who did right or wrong is not what we need. We have to take responsibility for our own situation and show patriotism in our hour of need. There is a danger that we, in Ireland, despite the great example set during the flooding of recent weeks by people helping their neighbours and supporting one another, can be criticised for selfishness. We act in a selfish manner on too many occasions. I urge everybody to take a long-term view. If we are to succeed, we must take the tough medicine now to make us healthy in the future.

Senator Niall Ó Brolcháin

I thank Fine Gael for tabling the motion, as this is an important debate. A tough budget has been passed and we need to focus on providing a stimulus in a big way.

I welcome Senator Quinn's comments because he has great experience of recessions and been involved in setting up forward-thinking companies in difficult times. We should reflect on his experience. As a Green Party member, I will refer to the green stimulus package. The Government is bringing forward interesting initiatives and more will follow. I am sure Senator Boyle has highlighted the Green New Deal, but, according to the UN Secretary General, Ban Ki-moon, we are suffering through two great crises — one is the economic crisis and the other, the lack of energy resources. He believes both crises can be solved simultaneously. By using the Green New Deal to develop renewable technologies and create a sustainable future, we can solve them together. This presents a great opportunity for us.

I am from Galway and refer to the document, Travel to Work and Labour Catchments in the Western Region, published recently by the Western Development Commission. The number at work between counties Clare and Donegal is almost 250,000. People do not realise how many work in the west. Galway city, where I live, has 64,000 jobs, even though the city's population is not much larger this figure. Many commute to work. One of the campaigns of which I am proudest is that launched to open the western rail corridor. Commentators say nothing is happening under the Government and that there is no stimulus. The corridor was due to open on 9 January 2010, but, unfortunately, that has been put back as a result of the recent flooding in County Galway, which is another issue. It will open as soon as possible in the new year and people will be able to travel between the second, third and fourth largest cities in the country. The fact that they could not do so prior to this is appalling. The ability to travel by rail between Limerick and Galway will provide a great boost for business and be a great stimulus.

I am a great believer in the national spatial strategy. The focus on stimulating and creating jobs in Dublin alone is not the way forward. We must examine stimuli on a regional basis. I regret, therefore, that the focus on the eastern region. It is important that Senators from the west stick up for the region because the focus is too much on jobs in the east.

Senator Marc MacSharry

Hear, hear.

Senator Niall Ó Brolcháin

However, the west has huge potential for wealth creation, particularly because the currencies of the future will be water, food and energy, which are necessary for us to survive. Many countries are experiencing climate change issues such as drought, yet Ireland is suffering from a deluge of water and, by all accounts, the position will worsen. Despite the difficulties it presents, water is a fantastic resource and we do not pay sufficient attention to its value. Many businesspeople are talking about exporting water in tankers to Dubai and so on. I do not favour this, but I do acknowledge water is a valuable resource.

Agriculture is a crucial resource. Ireland does not concentrate enough on the potential of horticulture, particularly in the context of energy use. The combination of renewable energy resources and horticulture presents significant possibilities in the west. The west has the potential to meet 4% of the world's wind energy requirements, which is extraordinary.

The potential for jobs growth in the west is enormous. This year 15,422 new green jobs have been created in the State. This is the fastest growing sector and green jobs are an important part of the new economy and the Government's strategy. Significant stimulus packages were put in place for renewable energy projects and home heating and insulation schemes. Every house should have a high standard of insulation in the shortest time. The Government is hoping to properly insulate 1 million houses, which will reduce expenditure. Approximately €6 billion is spent on imported fossil fuels annually and we want to keep that money at home. I spoke to the Minister for Communications, Energy and Natural Resources earlier and he confirmed that Ireland was meeting 15% of its energy requirements from renewable resources and that we hope to increase this percentage significantly in the coming years.

Despite the negative comments made about the provision of a stimulus, the Government proposes to spend 5% of national income, twice the international rate, or €40 billion in the next six years. A stimulus package is being put in place, but I agree with Fine Gael that we need to revive the community spirit of the past. I recently watched an interesting documentary. My father worked for the Sugar Company. During the Lemass era extraordinary community spirit was displayed to stimulate the economy by getting the sugar factories up and running and building Ardnacrusha dam. We need to regenerate the latent great Irish spirit. We can and will do so now.

An Cathaoirleach

I compliment the Senator on his maiden speech.

Senator Alex White

As is the convention, the Cathaoirleach beat me to congratulating Senator Ó Brolcháin on his election to Seanad Éireann and to wish him every good fortune on a personal level in his time here. I do not want to take from my congratulation of him but listening to his most interesting contribution, none of which I could disagree with, it struck me — as some of Senator Ó Brolcháin's colleagues in the Lower House have discovered, perhaps somewhat painfully — that one cannot carve up the Government programme and identify and seek to defend solely one particular area of Government policy, whether green energy or green jobs, and I accept how extremely important is that policy objective.

The motion and counter-motion tabled today speak about last week's budget and the measures taken in it. Neither of the two parties in Government can walk away from any action of the Government. It is all very well for Senator Ó Brolcháin or Deputy Gogarty in the Lower House to seek to deal with one aspect of the budget that gives them cheer and ignore all of the other aspects of the budget that are causing real hardship and pain for so many people at this time. That is what the Fine Gael motion identifies and I congratulate Fine Gael for tabling it. It is not characterised by political posturing, as was suggested by one of our colleagues in recent minutes. I do not accept the Opposition is engaged in political posturing by attacking the budget or by producing comprehensive documents.

I speak for the Labour Party and in the week prior to the budget, as challenged by many colleagues on the other side of the House, we published proposals which formed part of the public debate. These were in the document, Jobs & Recovery, which not only dealt with the question of the deficit and how it needed to be addressed but, against the better instincts of many on the Opposition, accepted and agreed to a set of parameters put forward by the Government. The outcome of our proposals would have yielded in excess of €4 billion in savings.

I am always interested in the language used in these debates. I understood Senator MacSharry to have stated these things have to be done and social welfare has to be reduced, which by extension he also means that pay of public servants on €30,000 a year has to be reduced by 5%. I fundamentally disagree with him. It is not the same thing to state that €4 billion has to be found and then state that one has to cut the pay of people on €30,000 a year or social welfare. One does not follow from the other. In fairness to Senator MacSharry, he acknowledged that the debate is about how this is done. They were the parameters of the debate in the week or two prior to the budget. I repeat that I and my party do not accept that we have to reduce social welfare by 4% or that we have to reduce the pay of people on €30,000 a year by 5%.

I am not happy to state, as Senator MacSharry stated in response to people who might criticise it, that I am sorry about it. It is not enough for politicians simply to state they are sorry or express their personal upset about it, and I do not deny people are upset. Of course people are upset and find themselves in a difficult situation. However, that is what politics is about and it is simply not good enough to turn around and state that it has to be done. I do not accept the particular decisions made by the Government on pay and social welfare had to be made, not only with regard to negotiating a €1.3 billion cut in the public pay bill but also on non-pay savings. The Labour Party document included proposals on non-pay savings of €900 million, in case anybody thinks we were afraid or wanted to walk away from that aspect of the budget.

Every day, reports emerge from what occurred two weeks ago in the public service pay talks. At the weekend, more information came out on what was available to be agreed and that has not been denied by the Government or anybody on its behalf. It seemed that an extremely radical set of proposals was available to be agreed. I am still scratching my head about why precisely the Government pulled the possibility of that agreement at the 11th hour. That story has not been told sufficiently clearly. We are told that the figures did not add up; that it was because of the Fianna Fáil backbenchers; that there was a revolt in Cabinet and all types of things, but further clarity is essential for us to establish what occurred.

Senator Twomey stated the Government should go back into talks with the trade unions but the Minister of State knows that in any talks or negotiations there has to be a level of trust. There are no talks without trust. There is no point in Senator Quinn or anybody else telling the Government to get into talks and agree something. There is a dynamic that characterises a period of negotiation and people should negotiate in good faith with a view to making an agreement. However, one cannot order people to agree something; that is not agreement, it is anathema to agreement.

When people speak about what happened in 1987 we should remember it was done on the basis of agreement with the trade unions and the so-called "social partners". To denigrate the notion of agreement now, as appeared to be done by some speakers in this debate, is quite damaging. Either we want to have an agreement for recovery in this country and bring people with us or we do not. One party cannot state that everyone must agree on its terms because that is not agreement, it is a recipe for disaster and of course people will leave the negotiating table if they feel trust has broken down. I do not know how the Government will persuade the trade union movement to come back into talks. I do not know whether it thinks it should do so or is interested in doing so. I hope it is but I genuinely do not know how it will persuade people who were let down so comprehensively at the last minute to return to the negotiating table.

I was interested to hear Senator Quinn speak about The Economist and the fact that it had lauded the Irish budget as demonstrating to the rest of Europe what austerity was about. Obviously, some people’s test of the success of a budget is how austere it is, but it is certainly not my test. Of course the deficit has to be dealt with but the notion that one can decide how successful a budget is on the basis of how austere it is is a very deeply conservative approach and one that has won much praise, mainly from the British Tory party. I heard Norman Lamont on BBC Radio 4 getting very excited about the Irish budget. Perhaps that is why my party leader was motivated to describe one of the parties on the other side of the House as the Celtic Tories; the loudest cheer and praise for the budget came from the right wing of the British Conservative Party.

How will we return to a level of progress in this country? I respectfully state that a Budget Statement is an important opportunity for a Government not only to do the immediate job required on the public finances, and we accept that has to be done, but also to present to the public and all sectors of the electorate, not only one or other that is favoured, the possibility of a better way and to present a vision for a better economy and a better Ireland. Regrettably, that has not been done in this budget. Any initiatives that might give people hope or a sense of a positive future are lamentably absent.

I find it amazing that the Government bothered to use the word "stimulus" to describe the reductions in VAT, excise and VRT. Something far more radical and bolder is required than anything the Government has put forward. I welcome the investment of €136 million in job support and training, but it is negligible when taken in the context of our overall problem. We need something far bolder. The amendment claims the Government has been bold, effective and decisive. I believe it is none of those things.

When making social welfare cuts, we hear the argument that prices have come down. Many people who are depending on social welfare were not on social welfare a year ago. Their incomes have essentially collapsed. People who have were working but are now unemployed are facing a situation where their household income has collapsed. Telling them that prices have gone down in the past 18 months is cold comfort.

During these Private Members' debates, I sit down and read the motions which often irritates the other side. For the Government to claim that it has "identified the right priorities and taken the right actions" and to ask us to support its amendment to the perfectly reasonable motion put forward by the Fine Gael Party is simply not taking us seriously. There will be no serious progress on turning the economy around until there is a change of Government.

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

I welcome the opportunity to speak on this issue and I look forward to listening to the rest of the contributions.

We have to speak about the budget in the context of the difficulties we are facing. Senators opposite referred to the acceptance of €4 billion in savings to stabilise the budget deficit. That is very noble from the Opposition, but when it gets down to specifics, the proposals get very watery. No matter what motion the Government brought forward to the Dáil to reduce the deficit, there would be opposition from the other side of the House.

Senator Jerry Buttimer

We supported the bank recapitalisation the first day.

Seanad Éireann díospóireacht - Wednesday, 16 Dec 2009

Budget 2010: Motion.

Seanad Éireann díospóireacht -
Wednesday, 16 Dec 2009