Now that the latest Exchequer returns and the second quarter economic data have been published, we are entering a period of intense political negotiation around the budget, which will be announced in 12 days' time. Fianna Fáil fully accepts the imperative to continue to reduce the budget deficit until we get to the point at which the Minister for Finance of the day is able to stand up in this House and announce a balanced budget.

People welcome any evidence that there is an improvement in the economy, but the Tánaiste would be the first to admit that they are not seeing any evidence of that yet in their daily lives or in their pockets. The truth is they will not see that evidence for some time to come, because any recovery in the economy will be gradual and budgets will be tight for a number of years yet in this country. We believe it is possible to achieve our deficit target in the forthcoming budget while also protecting vital areas such as education and mental health and disability services. This will not be easy, but it can be done. It is about minimising the inevitable damage inflicted on an economy when more money is taken out of it, while at the same time protecting the essential public services on which people rely. Above all else, the budget must be fair. Unlike the last two budgets, its impact must be progressive in nature.

As the Tánaiste knows, the ESRI independently verified that the last two budgets disproportionately affected those on low and middle incomes. Those people cannot afford a repeat of that in 12 days' time. The Minister for Finance has now confirmed that the budget adjustment will be somewhat less than the anticipated €3.1 billion.

Any chance of a question instead of a lecture?

Please allow the Deputy to continue without interruption.

I welcome this. Now, it is about getting the budget right in terms of the adjustment figure and, perhaps more importantly, in terms of the detailed budgetary measures that will be contained therein.

In various interviews, the Tánaiste has stated his view quite strongly that the adjustment should be no greater than is necessary to achieve a deficit target of 5.1%; in other words, that no more be taken out than is absolutely necessary. Is that still the Tánaiste's view?

I acknowledge that Deputy Michael McGrath has agreed the economy is recovering. I also acknowledge that many people have yet to experience that in their lives. We are seeing an increase in employment - 3,000 additional jobs per month. We have seen a drop in the live register figures this week and the level of unemployment is at its lowest level since 2009, down to 13.3% from a high of 15.1%. We are also seeing improvements in areas such as construction. Over the course of the past year, there has been an 11% increase in construction activity. More significantly, we are seeing an increase in the number of planning applications, which were up approximately 37% last year. All of this indicates an improvement.

In regard to the budget, the Exchequer returns show that Ireland is now on track to meet its targets in 2013, with tax receipts on profile and expenditure under control in the year to the end of September. This highlights again the consistent improvement in the management of Ireland's public finances by the Government. The Exchequer deficit at the end of September 2013 stood at €7.142 billion, which is €4 billion lower than the same period last year. The tax base is growing and we have just under €26.9 billion in taxes collected this year, up €768 million on the same period last year - an increase of almost 3%. More significantly, income tax receipts were up by €400 million last year. Given that there was no increase in income tax last year, this reflects the overall increase in the number of people now at work in the economy. VAT is up by €80 million, reflecting an increase in retail activity.

On the broad budget issues, I have said from the beginning of public discussion that I believed it was possible for us to meet our target this year through a budget adjustment of less than €3.1 billion, which was the figure being advocated by many commentators. The Minister for Finance confirmed yesterday that it should be possible to meet our targets this year through an adjustment of less than €3.1 billion. Deputy Michael McGrath is correct in saying that budget discussions are at an intensive stage. Obviously, they will not be completed until closer to the budget and at that stage we will have a final figure for the adjustment.

If one parses what the Tánaiste has just said, that is a change in his position. He has not just been saying all along that the adjustment can be less than €3.1 billion. What he has been saying, repeatedly and clearly, is that the adjustment should be no more than is absolutely necessary to achieve the deficit target we are required to achieve. That is what he has been saying. I still do not know what that figure is. It could be €2.5 billion or €2.7 billion. The Tánaiste has not just been saying it should be less than €3.1 billion. Will the Tánaiste advise whether it is still his position that the adjustment should be whatever is required to achieve the deficit target and no more? It is important that he confirm that.

The fundamental point I want to make in regard to the composition of the budget is that it must pass the basic test of fairness.

In my view, the two most recent budgets have not passed this test. One will never have consensus on what is fair, but the best measures are whether the impact of the budget is progressive and the burden of its measures is carried by those who are most able to carry it. This was not the case in the two most recent budgets. Is the Tánaiste's position still to have an adjustment of no more than is required to achieve the figure of 5.1%? Will the budget pass the basic test of fairness which the two most recent budgets did not?

One thing that is certain about the budget is that whatever is in it the Deputy and his party, and the Opposition generally, will oppose it. That is pretty certain and let us start with it. We are entering-----

The Tánaiste was pretty good at it himself.

Of course, it is politics.

Therefore, the Tánaiste agrees with the Minister, Deputy Pat Rabbitte.

It is what the Opposition is there for.

There is no need for the chorus.

We are now entering political discourse on the budget, which is fair enough. Deputy Michael McGrath will not tempt me to tell him the budget figures in advance of the Minister for Finance and the Minister for Public Expenditure and Reform making their statements to the House.

I did not ask the Tánaiste to do so. I asked him whether his position had changed.

The position has not changed. We are on track to exit the bailout programme this year. We know we have a deficit reduction target to meet. We also know we are seeing recovery taking place in the economy and we can all look at the figures which support this. We must ensure this recovery is not put at risk, that we continue to meet our targets and that the budget meets them, continues to support employment, is directed at getting people back to work and is fair. I reject entirely the Deputy's assertion that the two most recent budgets were not fair. There were measures-----

Talk to the ESRI.

It was independently assessed.

It is factual. The Tánaiste is ignoring the evidence.

As we are over time, please let the Tánaiste finish.

It is a bit rich coming from Fianna Fáil, when it signed up to an agreement at the end of 2010-----

Remember it.

-----which prescribed what would be in the budgets for the subsequent three years.

That is not true.

It is true. Go back and revisit it. The utter hypocrisy-----

Is the Tánaiste saying the recovery is based on those decisions?

Will the Deputy please try to restrain himself?

This is total hypocrisy on the part of Fianna Fáil. It signed up to an agreement in 2010 which prescribed what would be in the budget.

Are we responsible for the recovery?

We had to change this. Now that we have succeeded in getting us to a point where we are exiting the bailout programme and seeing the economy recovering-----

Will the economy rocket?

-----it is as if Fianna Fáil wants to wipe history clean and pretend it never had a hand, act or part in the mess we inherited in the first place.

Is the Tánaiste thanking us for the recovery?