George Lee (Dublin South, Fine Gael)

Yes, with Deputy Connaughton. The pre-budget outlook document, the basis of this evening's debate, outlines an amazing economic disaster as eloquently as any document could. We went from having a current budget surplus of €9 billion in 2006 to borrowing, according to this document, €26 billion this year. Without any changes, we will borrow €20 billion by next year. This is an economic disaster of monumental proportions for a country that was doing so well.

As all budgetary documents are these days, this one is a multi-year document. It shows how budgets will progress in the years to come. The document on the 2008 budget forecasted that 2010's tax revenues would amount to €55 billion. Much has happened since and income taxes have increased by almost €4 billion. Even then, we will only get €30 billion next year according to this document. Given the target of €55 billion, this is a catastrophic drop of nearly 50% on the country's revenue. Adding €4 billion to €55 billion should have given us €59 billion.

The people who led us into this situation are asking us to trust them to lead us out of it. They are also asking those of us on this side of the House what they should do. It is incredible. Trust is at the heart of this issue, but the country has seen a bonfire of trust. No one can trust the numbers of the Financial Regulator, the Central Bank or the Department of Finance. No one can trust them in terms of their stewardship of the economy, since this document states that they blew it. The Departments of the Taoiseach and Enterprise, Trade and Employment are just as responsible for economic management in terms of the direction of the economy and the country. Nowhere in that apparatus could we place our trust in the hope that what we were about to do in terms of cutbacks could lead us to somewhere positive. It is difficult to believe the same people are asking us to enter into this venture and help with the choice of who should pay the price. The Government must believe that people are stupid.

There has been bad management of the economy, with structural imbalances the likes of which no economy could have endured. No one else would have done nothing about them, but the Government tended to ignore them in recent years. With the collapse of the construction sector, we have gone from being able to make up any number for the economy and the taxes would come through to a situation in which a contraction of 1% in the economy leads to a decrease of 3% in taxes. It is an incredibly bad situation. We used to have a great deal of money in the kitty. It still has some money, but we are €26 billion short.

Now, people are supposed to pay for that incompetence and we are supposed to tell the Government who will pay. The Government must have some neck to expect people on this side of the House to go along with this idea. The Government and everyone around it are responsible. In terms of who should pay the price, the Taoiseach is responsible. He was Minister for Finance for the four years prior to this economic catastrophe. He did nothing about the economic imbalances at the basis of the report. He sits at the head of a Government that wants the Opposition to point out the way forward. What a neck. No one is that stupid. Someone should pay, that is, the Taoiseach. In this context, following the Government is difficult.

The Government brought Ireland into the single currency with great support from all sides of the House. However, this meant different rules of engagement with regard to economic management. When the country hit a recession, there would only be one way of making adjustments, namely, via the labour market. These rules were written large when we threw away economic instruments like interest rates and currency movements. It was important to manage the economy correctly.

We are in our first deep recession since entering the single currency and the only way out is through the labour market, that is, higher unemployment rates and pay cuts. This seems to be how economies adjust. It is certainly how the Government is pushing it, telling people in the public sector and elsewhere that they must take pay cuts. The threat is that, if they do not take those cuts, the IMF will come in and make big decisions for us. This is complete rubbish. The IMF will not come into Ireland because it does not enter regions of economies and Ireland is a region of a single European economy.

Europe is calling the shots. When it tells the Government to give €54 billion to the banks, the Government says, "Yes, sir". When it tells the Government to reduce borrowing to 3% of GDP by 2013, the Government says, "Yes, sir." It is a question of who is running the country and what decisions are being taken. The idea that we would be told to reduce the deficit to 3% by 2013 or all hell would break lose did not convince me in the first place. It is already clear that this target is movable for Europe. The target is now 2014. What Europe is asking us to do in terms of adjustments it has never asked of any other economy.

The report refers to a deficit of €26 billion, €13.5 billion of which is not related to the day-to-day running of the economy. In terms of our collapse, this equates to approximately 7% of GDP. This is not off the scale at all, but we are being told that we must crucify all sectors of the economy because we are supposed to live up to someone else's desire to have us crucified to a 3% deficit of GDP by 2013 or 2014.

Page 23 of the report relates to capital expenditure. It states that the Government will spend 4.5% of GDP on capital investment through the years until 2013. By that time and at 4.5% for capital investment, we will have a deficit of 3%. This means that we must have a surplus on our day-to-day running of 1.5% of GDP by 2013. Despite unemployment being the way it is, with immigration taking off and people being crucified left, right and centre through pay cuts, we are supposed to run the economy with a surplus.

The idea of economic stabilisers is important. It is also important that we be realistic about the cuts for which we are asking. The only cuts that are really important are those that Fine Gael proposed today, namely, cuts in employer PRSI. Jobs should be put at the centre of our economic adjustment so that we can have employment, not the long-term consequence of following a blind mantra on cutting everything because someone else says so.

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