MINISTER'S SPEECH:MINISTER FOR Finance Brian Lenihan has acknowledged the country is facing a serious economic problem and he pledged the Government would now take resolute corrective action.
He was commenting on the quarterly report from the Economic and Social Research Institute (ESRI), which shows the country has gone into recession for the first time since the mid-1980s.
"We will have to take resolute, prudent and determined action to deal with the position that is illustrated in this report.
"My department have our own figures and the crucial figures for us will come out next Wednesday when we have our mid-term revenue receipts, when we know what we've got in our own bank this year at the Department of Finance. Then we will be in a position to decide what action we need to take," Mr Lenihan said on RTÉ radio's News at One.
"The position is this: if we take the necessary corrective action now, we will put our economy on a sustainable path for the future. When international conditions improve, we will then be in a position to take advantage from it," said the Minister. "If we're to take action, we have to start taking action now, because the reality is that you cannot reposition spending for 2009 unless you start taking action in 2008."
He added he would be discussing the issue at the Cabinet. "I've made it clear that I will discuss these matters with my colleagues, and that the Government will take resolute, prudent and determined action to deal with the position that has arisen," he said.
Asked about the prospect of a public-sector pay-freeze, Mr Lenihan pointed to the social partnership structure that had helped to create industrial peace in the public service. "Clearly it has benefits to the State as well as to workers and civil servants generally. But I do want to say this of course - that we will discuss the current position with the social partners and outline the difficulties we as a Government are in, and we will all have to reflect on this at that stage," he said.
The Minister welcomed the ESRI report as "a wake-up call", although he did not accept that all of the elements in it were necessarily valid. "But I do accept that we are in a difficult economic position," he added.
"We can't have a position where we spend more on current services than we can afford. We have to ensure that the operating cost of this State is sustainable. That's the first priority. Then we need to look where we need to invest for the future," said Mr Lenihan.
Fine Gael deputy leader and finance spokesman Richard Bruton maintained that the ESRI report was a damning indictment of Brian Cowen's record as minister for finance, and showed how he had sabotaged the economy and was plunging Ireland back into recession.
"The ESRI report shows that Brian Cowen has sabotaged the capacity of the Irish economy to weather tougher economic times. People will lose their jobs in 2009 because of his inept management of the economy as minister for finance.
"The Taoiseach is now living the legacy of his botched handling of the economy. He ramped up pre-election spending on the back of unsustainable property revenues. And he ignored repeated warnings that the housing market was overheating," said Mr Bruton.
Labour deputy leader and finance spokeswoman Joan Burton said the ESRI report portrayed a grave picture of the Irish economy and that, contrary to the impression the Government has sought to present up to now, this was not the result of international factors.