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Speech by the Minister for Defence, Mr Willie O’Dea, T.D., on the Dáil Motion concerning economic and budgetary matters

15.00pm - Thursday, July 10th 2008

A Ceann Comhairle, over the past year we have seen a number of negative influences on the world economy. There is an international credit squeeze. The effects of the sub-prime crisis in the US are being felt worldwide while increasing worldwide oil and food prices are putting the brake on global growth.

A small open economy, like ours, is not immune to what is happening in the rest of the world. But the reality is that the fundamentals of the Irish economy are strong. It is a reality that the more pessimistic economic forecasters seem, amazingly, to have missed.

We have over two million people in work. It is a highly educated and very flexible workforce. We have a vibrant export sector. We have had a decade of unprecedented investment in infrastructure and in our productive capacity. We have a strong welfare system to support those in need and at risk.

Welfare payment rates in Ireland far outmatch those in the UK. Contributory State pensions here are 94% higher than in the UK, job seeker's benefit here is 160% higher and child benefit rates are 60% higher. That is real progress.

Yet there are still the ill-informed voices saying that the boom has been squandered. As well as the huge investment in infrastructure, health and education, we have used the surpluses to build up our pension reserve fund to almost €20 billion and to dramatically reduce our national debt from 65% of GNP to about 25%. The reduction in our national debt leaves the economy in a much better position than if we had a higher level of indebtedness.

The underlying strength of the Irish economy gives cause for considerable optimism. Unlike any time in our past, Ireland is well positioned to deal with the consequences of an international slowdown.

All this means that the Government is well positioned to get us through the tough times. The responsible course is to take the actions needed now. That is what we are doing. We are taking the necessary corrective actions needed to put our economy on a sustainable path for the future. When international conditions improve we will be in a position to take advantage of that improvement. At the heart of the Government's strategy are two basic principles:

First, we will continue to fund current services out of the taxes received. We will not turn the clock back to the Eighties and fund day-to-day expenditure out of borrowing. The operating cost of this State must be sustainable. This means moderating our spending and driving the value-for-money agenda harder.

Second, we will continue to invest in the productive capacity of the economy. We will improve our national infrastructures even further by continuing to invest in roads, communications, education and public services.

Defence Expenditure

My over-riding priority as Minister is the modernisation of the Defence Forces. We have a modern Defence Force capable of meeting the needs of Government and the public and delivering value for money.

I have witnessed the tremendous work being done by members of the Permanent Defence Force at home and in various overseas missions, most recently during my visit to Chad. I know that everyone in this House will join me in thanking the members of Óglaigh na hÉireann and their families for the great sacrifices they make in the service of the State.

The development and modernisation of the Defence Forces over the past decade has been a major public sector success. The Defences Forces and the Department of Defence have led the way and will continue to do so. Seeking the delivery of more productivity, value for money and excellence is now part of the ethos of the Defences organisation.

The Government – and I as the Minister – are fully committed to Defence and to ensuring our ability to meet our commitments at home and on the international stage.

The Agreed Programme for Government signals this commitment and sets out our policy priorities for the course of this Government. We have already made progress on some of these. This follows on from the considerable progress made over the past few years, a number of which I want to mention here today.

As part of our policy of securing value for money I concluded an agreement with the IBF in May, 2005 to ensure that banks pay the actual costs incurred by the Defence Forces in the provision of cash escorts. This agreement runs up to 2010. From 1995 to 2004 the Banks paid an annual fixed contribution of €2.86m. This was increased to €6.03m in 2005; €6.47m in 2006 and €7.34m in 2007.

My Department continues to examine and review its property portfolio with a view to disposing of those lands deemed surplus to military requirements.

An important policy area for me as Minister for Defence has been the provision of greater opportunities for enlisted personnel to advance into the Officer Corps. I can again point to recent progress in this area with the commissioning on June 10th of 24 personnel from the enlisted ranks.

I am glad to say that the Defence Forces is seen as an extremely attractive career and popular option. The number of applications received far exceeds the number of positions available. In 2007 there were 25 applicants for every cadet vacancy and 7 applicants for every general service recruit vacancy.

Significant investment in equipment and personnel has taken place in recent years across all facets and elements of the Defence Forces. We have acquired eighty Mowag APCs since 2001 at a combined cost of some €120m.

We have invested over €13.5m in the provision of an Integrated Protection and Load Carrying System for individual soldiers. A lot of this new equipment such as Body Armour, Helmets, Back Packs (Rucksacks) and Battle Vests was displayed on the Late, Late Show earlier this year and is in use on overseas deployments in Chad, Kosovo and other missions.

Six utility AW 139 helicopters are being acquired from Agusta Westland, at a cost of €75m, inclusive of VAT. Four are already in service and the remaining two will be delivered later this year.

We have also made a number of other important reforms.

Action on equality, dignity and bullying has been implemented in a manner that would prove a useful model to other state and commercial operations. While the creation of an independent Ombudsman for the Defence Forces and the comprehensive reform of military law further advance the equality and fairness agenda.

All these important reforms and improvements leave the entire Defence organisation well placed to address the adjustments and savings needed to ensure sustainable Defence expenditure over the years to come.

To set the 2008 Defence expenditure savings in some context: the €4.6million savings we are providing this year are just slightly more than the €4.48million extra paid by the banks for cash escorts in 2007.

We will secure the €4.6million in savings under a number of headings. Approximately €2million will come from payroll savings, a further €0.5million will come from the deferral until 2010 of the proposed RDF information and recruitment campaign while the balance of approx €2.1 will be secured in savings in the building, refurbishment, equipment and administrative budgets. I can assure the house that the savings will not impact on the on-going operations of the Defence Forces at home or overseas.

The one thing we most definitely won't do is to take lessons on economic responsibility from any of the members opposite. Neither will we be taking any of their hair brained policy innovations onboard.

Last October, Deputy Deenihan was asking me to procure “a special airforce transport plane with a carrying capacity of approximately 50”. He neglected to make any suggestion as to how we might pay or what services he would jettison for the pleasure of having it spend most of its time sitting on the runway at Baldonnel.

Last December, in a proposal reminiscent of Enda Kenny’s infamous army boot camps, Deputy Deenihan was calling for army physical instructors to be used for “supervising teachers while they take PE classes”. Hardly a sensible and productive use of Defence Force resources?

In fairness to Deputy Deenihan his pronouncements have been a model of consistency when compared to those of his front bench colleagues. Last April, Deputies Varadkar and Kenny launched a document committing Fine Gael to massively reducing the number of State agencies. Unfortunately news of this important initiative didn’t reach Deputy Shatter. At the end of June he published his Victim’s Right Bill, which provides – among other things - for the establishment of guess what: another statutory agency.

Fine Gael cannot continue to speak out of both sides of its mouth. Deputy Bruton repeatedly claims that we are spending too much. Yet, everyday Deputy Kenny and his colleagues troop in here at Leader’s Questions, at the order of Business and at Ministerial questions demanding that we spend more. Which is it? Is Deputy Bruton right, or is Deputy Kenny? Maybe you should go and vote on it over the summer and decide where you stand on this issue. Fine Gael should stop being in favour of general economy and particular expenditure.

Enda Kenny’s knowledge of economics is suspect – to put it mildly. I’m reminded of what Stanley Baldwin once remarked of David Lloyd George “He spent his whole life in plastering together the true and the false and therefrom extracting the plausible.”

I would like to be able to say that this is the worst opposition ever and that the level of hectoring and political point scoring has never been lower. Unfortunately I can’t. This is not a back-handed tribute to anyone on the opposition benches, it is just a realistic reflection on the fact that your parties seem genetically disposed to negativity.

It is not a new realisation. It concurred to Sean Lemass on these benches back in December, 1962 when he said:

“Sean Lemass: There seems to be an attitude of mind in those Parties… that they have a right to attack the Government, and to paddle their Party canoes up any creek that appears inviting to them, but that it is ungentlemanly for us to defend ourselves against their attacks and outrageous for us to criticise them in turn. Political life and public office impose many burdens but they also confer a few pleasures. One of the pleasures is that of criticising one's critics, exposing their foolishness and demonstrating their errors. That is a pleasure of which I no not propose to deprive myself.”

Volume 198 Cols 1468/1469

I don’t see anyone on this side of the House depriving ourselves of that pleasure for many, many years to come.

I support this motion and commit myself to managing Defence expenditure so we can sustain our social and economic progress into the future.

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