In the month of March, unemployment rose in the State by 12,000, the highest monthly increase ever recorded. It is not entirely due to construction because the numbers are equal for men and women. It is not a blip because in the first quarter of this year, we have seen the highest rise in unemployment in a quarter for over 30 years. The previous high was in 1975, in the middle of the oil crisis.

In the first quarter of this year the Government took in €600 million less in tax than expected. On top of that, a report on the number of new house registrations in the month of March shows the figure has fallen to less than 1,000, down 73%. On top of that the Minister for Foreign Affairs, Deputy Dermot Ahern, told us there is not a red cent to build a new hospital. Is that true? Is it true that there is not a red cent to build a new hospital and is that an accurate summary of the state of the public finances? Is that the bottom line on the stewardship of Minister for Finance, Deputy Cowen, of the public purse that there is not a red cent left to build a public hospital?

Can the Taoiseach tell the House the new initiatives, if any, the Government intends to take to deal with the changed and changing economic circumstances in which we find ourselves? Does the Government have plans to protect employment in businesses? What plans exist to provide for those losing employment? What new initiatives does the Government intend to take to deal with the new economic times?

As it does every year, the Government will spend something in the order of €15 billion to €16 billion in the health services plus an enormous capital programme. I will not go back over the issues in health.

Regarding Deputy Gilmore's economic question, and on unemployment particularly, in responding to issues of an economic and fiscal nature we have been upfront about the risks for the past six months. It is important to remain calm and avoid taking short-term, knee-jerk reactions that could damage our long-term prospects. As I continually said in the House, when the full figures for 2007 were produced, we would see that the economy was strong, if contracting in the last quarter. We know the GDP rate for last year and that the economy grew by 5.4%, far higher than people expected.

The situation in the markets over the past month reflects international issues rather than specific Irish concerns, as we are all aware. From our economic position the fundamentals are very strong, a fact borne out by the national account figures, which are there for everyone to see. Employment continues to grow, there are very low national debt levels and we have a very flexible economy. This is not just my view but the view of most economic commentators. We are addressing the short-term challenges from a position of strength. Our medium-term prospects are favourable. The lowest economic figure for growth for this year from the economic houses is not in the negative — it is 2.2% and rising to 3.5% next year and still growing in a difficult period.

Last week's Exchequer returns indicate a very good performance in income tax, which is up 5% on the same period last year. This shows the real health of the Irish economy and reflects the most important part of economic activity, employment, which remains strong. It is a positive indicator of the resilience of the Irish economy, even at a more difficult time. We are not complacent and fiscal policy is addressing the more pressing economic situation in a number of ways. The Deputy's question is a fair one and in response I will refer to three of those ways. We are giving priority to measures that enhance our productive capacity. The continued roll-out of the national development plan at the highest level this country has ever done and far higher than any other European country at over 6% is giving us an infrastructure and investment programme that is helping the economy through a difficult period. We are slowing the rate of the increase in current spending, which is necessary, and we are removing uncertainty in the housing market through the changes made in stamp duty and increases in the ceiling for mortgage relief and interest rates.

In the past three and a half years, from autumn 2004 to spring 2008, a relatively short period, employment has grown by 243,000 or 13%, with unemployment increasing by only 15,200 in the same period. It is generally accepted that the rate of growth in the economy and in employment over the past few years could not continue at that rate. Still, we are in a very strong position. Looking back over that period, with almost 250,000 jobs created and unemployment increasing by only 15,000, the figures speak for themselves. The live register figures for March, released recently, show the number of people signing on has increased to almost 198,000. That is the highest since August 1999 and the highest at this time of the year since March 1999 and reflects these increases. Looking at what is happening in the economy and quarter on quarter growth, we are still in an extremely healthy position, but we must manage ourselves through this period. With almost 2.25 million people working in the economy, we are in a strong position to get through what is hopefully a short-term difficult position, which is how the Central Bank, the European Central Bank, the OECD and every economic analysis group here and in the European context views this.

That reply is delusory.

Hear, hear.

The message the Taoiseach is giving the House in response to what we all know are changed and changing economic circumstances — that the Government will continue to do what it has been doing — is depressing. The idea that the situation is due to international circumstances and has nothing to do with us domestically is wrong. To paraphrase our good friend, the former American President, Bill Clinton, "it is not the international economy, stupid". This is about events in the domestic economy to which the decline in revenue, capital gains tax and VAT is directly related.

The unemployment figure is 200,000. When it was 200,000 some 20 years ago, people marched in the streets about it. People are losing their jobs. The problem must be addressed by new initiatives. I will suggest a couple. First, building workers losing their jobs in residential construction could build schools. We have a schools programme that could be accelerated and the skills required in building schools are approximately the same as those required in residential construction.

Second, there could be a training and upskilling programme through FÁS and the educational institutions so that we do not make the mistake made previously, that is, people going onto the dole when they lose their jobs. We should have a system whereby people who lose their jobs can avail of opportunities to retrain and upskill.

Third, it is manifestly clear to all of us that cuts are being effected in essential public services——

Hear, hear.

——such as home help and other areas that are under the radar and do not get the type of attention they would normally receive. To make a practical suggestion, if the Taoiseach, the Minister for Finance or another Minister is considering cuts in areas of public expenditure, he or she should concentrate on cutting waste rather than essential services.

Hear, hear.

I do not want to get into a debate on last week's figures, but if the Deputy looks at the figures, which his question was about, concerning the performance of taxes he will see that income tax is up 5% compared to the same period last year and is directly related to employment, showing the real health of the Irish economy and reflecting how the most important part of economic activity, which is employment, is remaining strong in a period where there is a sharp international downturn mainly because of sub-prime lending and the fact that oil is at over $100 per barrel.

I do not want to get into a debate about the figures but, if we are talking about unemployment being at 5%, when we had marches 20 years ago, lest the Deputy forget, it was because we had managed and were lucky to keep unemployment at just under 20%. Our labour market 15 years ago when I was chairperson of the Cabinet committee on employment included 1.25 million people working. Today, we have 2.25 million people working, a substantial part of which has been an increase in recent years.

Overall, if one looks at tax receipts on income, we were €600 million or 5% behind target in the first three months of the year. Over half of the shortfall is due to the poor performance of capital gains tax, which reflects the more adverse conditions in equity and property markets. That is the analysis of those in Revenue and the Department of Finance who have looked at this issue. It is largely driven by the necessary housing market correction, which is well under way. It is a source of satisfaction to me that, for the first time since 1999, the Central Bank is saying that house prices are at sustainable levels. In no way should we feel anything other than satisfaction in that regard. If the Central Bank can say for the first time in nine years that house prices have reached a sustainable level, it supports the recent actions the Government was forced to take.

Yes, it is a fact that taxes are down in the area of development lands and that developers are not developing as much. The only ironic thing about this is that, while I have spent my entire period as Taoiseach defending the fact that it is a good thing for the economy that developers and development land were moving ahead and striving, now that it has come down for the first time, it is seen as a criticism. I am glad to see that the view articulated on this side of the House — that a construction industry, development, capital gains tax and capital-related taxes are good for the economy — is shared for the first time in the period in which I have been Taoiseach by everyone else in the House.

It might make a few schools and social housing possible.