Cutbacks are 'downpayment', Cowen tells Dáil

The Government's package of cutbacks is a "downpayment on a prosperous future", Taoiseach Brian Cowen told the Dáil this morning.

Speaking during a debate on the economy and the National Development Plan (NDP), Mr Cowen said the current slowdown was a “temporary period of challenge".

He said that despite the negative short-term forecast, the Irish economy was better equipped this time around than during the 1980s. The "unprecedented" capital investment over the past 11 years would be essential to returning growth to the economy in the future, the Taoiseach said.

The Government had used the good times to invest heavily in the public service, Mr Cowen stated, adding that he was determined that a “comprehensive welfare system” would support those most at need at at risk during the downturn.

Ireland today is “very different” to “dark days of the 1980s,” the Taoiseach continued, but he warned against complacency.

“By making the right decisions, we have a greater opportunity to emerge from the current difficulties within the next couple of years and return to a positive, stable growth rate as predicted by the ESRI and other independent commentators.”

“Anybody who experienced the difficulties in getting a job during the 1980s will understand why we have to take tough decisions now to ensure we continue to enjoy the fruits of our hard work,” Mr Cowen said.

He said that measures agreed by Government, such as not implementing ministerial pay increases, underlined a commitment to keeping the national finances secure and would bring savings of €440 million in 2008.

Among the cutbacks, the Taoiseach said €50 million would be saved through measures identified in an earlier review of Government Departments; €21 million from savings on advertising, PR and consultancy expenditure; and €10 million from payroll savings.

The remaining €360 million will come from savings on non front-line programme expenditure, he stated.

Mr Cowen said some €85 million arising from the introduction of the Fair Deal nursing home scheme would not be incurred during 2008, and that savings of €25 million in Social Welfare came from the ongoing anti-fraud activity of the Department;

He added that there would be savings of some €45 million this year in the allocation for Overseas Development Aid.

In his speech, the Taoiseach defended the social partnership process and said a new renewed consensus on partnership is in the best interests of the country.

But he added: “It is necessary to caution any sectional interest being elevated above the whole community. It’s incumbent on all of us to make the compromises necessary to ensure Ireland emerges undamaged . . . from the current global environment."

Mr Cowen also backed the public service against what he said were suggestions that it was inherently wasteful and, in some way, the source of the current economic ills.

He pointed out that a recent review by the OECD “shows that the Irish public service is relatively modest in size, efficient in its activities and effective in its outcomes” when compared with most with most OECD countries. Mr Cowen added that many of the services, such as the Revenue Commissioners, were world class.

However, he said the review showed there was “significant scope” for improvement in the efficiency and effectiveness of conducting public business.

In terms of the NDP, the Taoiseach said it was clear this investment was tackling infrastructure deficits; providing training and education; and supporting the enterprise and innovation sector. He pledged continued investment under the NDP, which, he said, was vital to stimulating the economy and improving people's quality of life.

During the nine-hour debate, ministers are expected to tell the Dáíl how the cutbacks will affect each department.

The Opposition claimed yesterday that the figures did not add up and that there were no details to show how the savings could be achieved.

Speaking yesterday, Mr Cowen said front-line services provided by the Department of Health and the Department of Education, which together absorb €14 billion of the State's annual €19 billion public pay, would be protected with the exclusion of these departments from the requirement pending local negotiations.

Minister for Finance Brian Lenihan denied that a cut of €45 million in the funds provided for Overseas Development Assistance (ODA) this year would amount to a reduction in the Government commitment. Because Gross National Product (GNP) will be lower this year than anticipated, it means that the commitment to provide 0.54 per cent of GNP in 2008 will be "honoured", even though it is a lesser amount.

Fine Gael leader Enda Kenny said that the measures had been "cobbled together in a haphazard fashion."

Both he and Labour leader Eamon Gilmore said that Mr Cowen had given no breakdown of how the €440 million cutbacks were to be achieved.

Mr Gilmore said that some of the measures were "headline grabbers" but there was little of nothing in the measures to give any comfort to the 54,000 people who have lost their jobs over the past year. He also claimed that the figures for savings did not add up.