No matter how the Taoiseach juggles the figures, the number of people out of work in this country is at a record high, at more than 400,000. There are huge consequences for the people who are out of work, including loss of confidence and self esteem and the sense of hopelessness when one cannot access employment. There are also practical consequences. They must try to survive on the subsistence level of income which they receive under the social welfare system.

Yesterday, the Society of St. Vincent de Paul published its pre-budget submission. Unlike Government Ministers and some of the hardline commentators who wish to inflict more pain on the poor, the Society of St. Vincent de Paul is in contact with people with real problems. The society reports that there was a 30% increase last year in the number of people contacting the society and one out of every four people contacting the society in Dublin is doing so for the first time. The society is now housing 560 homeless people per night in its facilities. It points out that Ireland is the second most expensive country in Europe for food and has the third highest level of poverty. The Society of St. Vincent de Paul concludes that there is no moral or economic justification for cuts in social welfare or pensions. It asks, in particular, that the Christmas bonus payment for people on social welfare, which was withdrawn by the Government this year, be reinstated.

The Labour Party agrees with the society's conclusions. Does the Taoiseach agree that there is no moral or economic justification for cutting social welfare payments and pensions? Does he also agree that the Christmas bonus payment should be restored?

While I recognise the wonderful work done by the Society of St. Vincent de Paul, the moral situation we must face is how we can provide a sustainable level of assistance to people who are on social welfare, based on our current economic circumstances. If it is suggested that the choice is that one leaves everything as it is because one wants to be in favour of helping those who are unemployed or dependent on the social welfare system as against another crowd, depicted as the Government, who are against people of that ilk, it is a totally wrong choice to put forward. During the good times we ensured, quite rightly, that people on social welfare received unprecedented increases to assist them. Anybody who looks at the successive budgets will acknowledge the progressivity in those budgets in terms of helping people on low incomes, working families and people on social welfare. We are proud of that record. In the past five years, with inflation of 11.9% since 2004, the basic jobseeker's allowance increased by 37.7% and pensions increased by 51.1%. It was correct that these increases were granted, particularly in view of the resources available to us at the time.

What about the €50 million spent on voting machines?

However, we now face a completely different situation as a result of a crisis that has developed.

The Taoiseach should outline the complete picture.

The idea that we can deal with that situation by stating that over 35% of our current spending can remain immune from consideration in all circumstances does not take into account the seriousness and scale of the problems we face.

What about all the money the Government squandered?

I am interested in providing a solution to this problem which recognises that we must assist the people who are most vulnerable to the greatest extent possible and consistent with a sustainable path forward and a sustainable budgetary position. If we do not have such a position, we will place at risk our ability to maintain the level of supports we would otherwise be unable to maintain if we do not make the necessary adjustments now. That is the truth of the matter and people are entitled to know it.

They are also entitled to know that we will do everything we can in the context of providing a response to the problem that is as fair as possible. However, I do not accept the idea that 35% of total current expenditure should remain immune from any consideration whatsoever, particularly in light of the scale of the problem we face. There is a deficit of 12% and, as previously indicated, an adjustment of €4 billion will be required simply to stabilise this in 2010. That is the nature of what we are facing.

In the past we were able to provide — and rightly so — increases that were three, four or sometimes five times the rate of inflation. However, interest rates are now lower and, for the first time since 1931, prices are falling.

They are not the only thing falling.

Last year we provided a 3.5% increase. I acknowledge that this is a difficult matter for anyone to be obliged to deal with. During the good times, however, when resources were available we ensured——

The Government wasted the money.

——that money was provided to the categories to which I refer, and rightly so. We now face a situation where, if we want to maintain levels of support into the future, we must discover a sustainable budgetary position and policy. The idea that 35% of the total current spend should remain immune from consideration does not take into account the scale of the challenge we face.

The Taoiseach did not answer the question I asked. I do not disagree with the assertion that the budgetary position must be stabilised. However, there are choices to be made.

Hear, hear.

One of the choices the Government appears to have already made — the Minister for Finance referred to it — is to rule out any tax increases for the super rich. The Government is not applying the same principle to reducing the incomes of the people who are at the lowest end of the scale. I refer here to those who are on subsistence incomes. Due to the fact that they cannot survive on those incomes — which are provided by the State — the people to whom I refer are being obliged to approach charities such as the Society of St. Vincent de Paul. These individuals are facing up to the human consequences of the economic problem.

When it comes to making a choice, the Taoiseach does not have a difficulty in stating that he will do what is needed in order to protect the interests of people who are very rich and that those who are poor will be obliged to face the consequences.

That is outrageous.

The Government had no difficulty in coming forward with a formula to deal with the banks under which it is paying more for the bad debts of those institutions than those debts are worth.

Rubbish.

However, people who are on pensions, those from whom the Christmas bonus has been taken and individuals who have lost their jobs and who are trying to survive on minimum incomes that they are going to be obliged to carry the can for what has happened.

How did they obtain their jobs in the first instance?

That is unfair and it is not the way to proceed. The approach being taken will divide society in such a way that it may take decades for it to recover.

I do not accept the contentions made by Deputy Gilmore and I wish to make a number of points in reply. I had a discussion with Deputy Kenny a few moments ago regarding the importance of providing employment in order to avoid the possibility of people's incomes falling.

In the budgets introduced in October 2008 and April of this year, we increased personal taxation to a considerable degree in an effort to shore up the position while we awaited a full review of all expenditure programmes. The latter will form the focus of many of our deliberations in the coming weeks. We increased taxation but the yield is down and unemployment has risen. If we move to a higher rate of tax of 54% as has been suggested, the marginal rate will be 63%. Are people of the opinion that this will assist in maintaining jobs that are already under threat? Are they of the view that it will ensure that people return to work more quickly?

One can make a comment and obtain a certain circulation in respect of it. However, we face a situation where employment is under threat and where we are trying to improve job security and ensure that the productive sector of the economy can be maintained. We know that export-led growth in a more competitive economy is the best way of creating jobs, extricating ourselves from the difficulties we are in and creating growth in the economy. The latter is fundamental for providing money for all public services, including those available to social welfare recipients. If the locomotive's engine is not running properly, it is not possible for it to pull the train.

The idea that there is a monopoly of compassion on the opposite side of the House and that compassion does not exist on this side is not true. What I and the Government are trying to do is ensure that we can maintain jobs to the greatest extent possible. Thankfully, there are still, according to the most recent national household survey, 1.9 million people in employment. I accept that 245,000 people are drawing jobseeker's benefit or allowance on a full-time basis and that 70,000 others are drawing these on a part-time basis. Approximately €500 million of the social welfare budget is being allocated in order to assist those engaged in casual and part-time labour to retain their jobs.

If we recognise that jobs and growth are fundamental requirements and that they must be restored quickly in order to assist us in dealing with our economic problems, then we must be very careful to ensure that we do not take decisions in the short term which will place those jobs at greater risk. It is false to suggest that we have a choice with regard to taxing one area or not spending in another. We must examine the overall position and make a decision to retain jobs.

What has the Government being doing for the past two and a half years?

To the best extent possible, we must also maintain the position of those on low incomes. There is a 12% deficit in respect of the current account. In light of the cyclical nature of things, when growth returns to the economy that deficit can be dealt with over time. However, there is also a structural deficit in the economy——

Which the Government created.

——which must be dealt with.

The Government is responsible for that deficit.

The Taoiseach, without interruption.

In the context of the deficit and what we are spending compared to what we are in a position to earn——

What has the Government being doing for the past two and a half years?

——there is a gap which must be closed.

Deputy McCormack should cease making interruptions.

In attempting to close the gap, it is necessary to consider all areas of expenditure. The size of the problem is such that the idea that we can exclude 35% of the current spend from consideration is unacceptable. There are those who say that the social welfare budget should not be touched, while another constituency is stating that the €19 billion in public service pay and pensions should be immune from consideration. In such circumstances, we must consider the remaining €15 billion which is used to provide the services on which members of the public depend. Are people seriously suggesting that we can obtain a €4 billion adjustment out of that €15 billion? That is not an option. As a result, we must consider everything.

Against the background of our purchasing power this year — during which we increased social welfare payments by 3.5% and which has been marked by an increase in inflation of 4.5% to 5% — we must, therefore——

Target the poor.

The poor must pay.

No. I am simply making the point that in that context and in this year alone, purchasing power was approximately 8.5%.

The Taoiseach is saying that the poor must pay. God help them.

When we bring forward our budget and when those opposite frame their alternatives, we must all consider what is the sustainable way forward. In light of the fact that up to the end of October the total revenue accruing was €26 billion while the social welfare bill alone stands at €21 billion, are the Deputies opposite suggesting that it will be possible to maintain all payments into next year regardless of the consequences? Are they also suggesting — demands were made of me earlier in this regard — that we should increase jobs, provide further job security, boost exports and bring the public finances back into order?

The Taoiseach should throw his hat at it.

That is not possible and the Deputies opposite are aware of that fact.

Is the Taoiseach sorry he did not take action sooner?

That concludes Leaders' Questions.