In today's Irish Examiner, Daniel McConnell reports on a new EU study showing that this Government is putting the recovery at risk by political budgeting. The report states that recent fiscal policy decisions are influenced by the current political context, which is the upcoming election and the disgraceful auction politics we are seeing from the Government. The report points out that while the Government erodes the tax base, State investment will remain well below the euro area average and, in fact, is being revised down by the Government. This means that investment in infrastructure needed to support business will not happen. Investment in public services such as health care and education will not happen.

The report is a damning indictment of the Government's pre-election politics, which is straight out of the Fianna Fáil playbook. What is worse is that the Government parties are only warming up. The Fine Gael-Labour Party election promise to eliminate USC will cut the revenue base annually by €4 billion to €5 billion. This, of course, is to be paid for by what the report describes as "strong but generally volatile corporate taxes". This is just like Fianna Fáil's tax-cutting measures, which were based on unexpected stamp duty revenues, but what the Government is proposing is even worse than that. When the recession hit in 2008, households - or most of them, anyway - were able to cut back. Businesses and voluntary groups were able to cut back and the State was able to borrow. None of those conditions holds today. The report states:

External risks are increasingly tilted to the downside as the slowdown in China and other emerging markets could affect global trade more widely. The high levels of private and public debt continue to make Ireland vulnerable to potential increases in interest rates and other shocks.

Given that the Government is eroding the tax base and the safety nets have all been used up, when the next economic shock hits from China or elsewhere as it will at some point we will be much more vulnerable than we were in 2008.

That is not true.

The economy may be growing, but all of that is being put at risk by this Government's carry-on. One cannot use unexpected revenues to lock in permanent tax cuts and one cannot properly invest in enterprise, public services and infrastructure if one wipes billions of euro off the revenue base, but that is exactly what the Government is telling the Irish people it wants to do in the next Dáil. How can the Tánaiste be so irresponsible with Ireland's finances and Ireland's future? How can she so blindly repeat Fianna Fáil's mistakes, which she decried and which led to the crash in 2008?

A number of comments in the executive summary may have escaped the Deputy's notice, so I would like to draw them to the attention of the House.

Ireland's economic rebound is remarkably strong, underpinned by an ongoing successful macroeconomic adjustment and the supportive external environment. Economic growth is projected to moderate towards more sustainable rates in the medium term and Ireland is on track to correct its excessive deficit.

All such reports have issues to raise and want to look forward to risks in the future, which is reasonable and prudential. I have no issue with that and we have those conversations with the review group on an ongoing basis. There is no problem with that. However, these comments in the executive summary recognise that Ireland has achieved a remarkable turnaround and it is the job of the Government to ensure the recovery that has been made to date is not only sustained but grown and that it extends to every single part of the country so that every family and individual benefits.

Deputy Donnelly is an economist and a consultant; he knows the story on this. We exceeded every single target set for 2015. Is there something wrong with that or can he not recognise success when he sees it? Yesterday I launched the next phase of the Pathways to Work programme, which has overseen a fall in unemployment in Ireland from 15.2% at the height of the crisis to 8.8% now.

Hear, hear.

Yesterday, we set out our plan regarding how to bring our country and our people forward so that everybody who wants a job can get a job-----

Tell that to the young people.

-----and we as a society can move to full employment.

Some 17.5% of people born here live abroad.

What in God's heaven or Earth is wrong or irresponsible about bringing unemployment down from 15.2% to 8.8%?

That is the highest percentage in the world.

That is why the Commission, in its executive report, rightly acknowledges the gains and successes of Ireland. They are not total. We know that.

They are gone very quiet over there.

I oversee the Intreo and social welfare offices, so every day of my working life I meet young people who have not yet got back to work. It is my-----

Some 17.5% of people born in Ireland live abroad.

-----passion and my mission to get them back to work. We have had remarkable success. That is our objective.

The Deputy worked in a previous life with the IMF or the World Bank on debt. When we came into office, the debt level of this country was 123% of GDP.

Hear, hear.

It is now, at the end of 2015, 97%.

Total debt was 550%, including household debt and non-financial-----

The projected debt level for the end of this year-----

Selective debt.

-----is 92% or 93%.

That is only national debt. What about household debt?

You are watching too much "Star Wars".

I know the Deputy is a policy wonk in this area, so let me say that they are the gross debt levels. They do not take into account the cash balances we have as a country and the interest the State has in the banks, which have already begun to realise cash to the Exchequer and will do so again in the future.

Is the Government going to sell them off then?

If we were to do the calculation in that way, our net debt level is heading below 80%. What is wrong with that? Can the Deputy not celebrate the fact that people and businesses are going back to work, that USC is coming down for people on incomes of between €25,000 and €70,000 and it is capped at that level? What is irresponsible about that?

Hear, hear.

Hear, hear.

Hear, hear.

It is two quotas, Tom.

I remember watching politicians on television back in 2005 and 2006.

You are one yourself.

A small number of people were telling the Government at that time that it was eroding the tax base, destabilising the country and setting us up for a fall. At that time, the Government asked what was not to celebrate, given the remarkable employment level and growing economy. At that time, the debt-to-GDP level was below 25%. Exactly that kind of discourse is going on here: "Do not worry about it". Then, as now, international organisations wrote reports like this and stated clearly to the State and the Government that the latter needed to be careful about what it was doing.

What is the Deputy suggesting?

Then, as now, the Government was saying there was no problem, as unemployment was going well and the economy was growing.

The economy is balanced.

However, it continued to erode the tax base and it stopped investing. The time it did it most was just before an election. All those things are happening right now. The difference is that there is no safety net. When Fianna Fáil did it, there were safety nets in place. We could borrow, people could cut back and businesses could cut back.

Did they work?

What safety net?

None of that is in existence right now.

There must have been a big hole in the net.

I think the Deputy's minute is up.

As the Tánaiste seems keen to quote the report, let me quote what it says about these unexpected corporate tax bonuses:

This surge is mostly explained by some multinationals re-domiciling patents to Ireland. Investment is driven by aircraft-leasing and cross-border transfers of intellectual property by a few multinationals.

Cooking the books.

That is the kind of stuff the Government is using to knock billions out of the Revenue base. The Tánaiste rightly said this is about people. On Monday night in Wicklow I met a mother with a young son who has a range of special needs. He is nine years of age and he has a handful of words. That kid could achieve a lot in his life. The last time he was given access to a speech therapist was two years ago. The last time he had access to an occupational therapist was five years ago.

I think the minute is up.

Does the Tánaiste want to cut USC for absolutely no benefit whatsoever in terms of job creation or economic growth or does she want a country that offers opportunity and dignity and where mothers and fathers do not have to deal with that?

You can give it but you cannot take it.

Do we want a country where businesses can be invested in, where broadband can be invested in properly, and where the infrastructure required to drive growth and jobs for young people can happen? The Tánaiste is not doing that. She is ignoring the reports, just like the last Government. She is pointing to the good news, which is welcome, and ignoring the risks. She should not be eroding the tax base in a high-growth economy. Just like in 2006-----

Sorry, Deputy, I have to call on the Tánaiste.

The same organisations are saying the Government needs to be careful because it is destabilising the recovery.

I am not sure the Deputy really understands what the Government is doing.

Nobody does.

The core reason-----

The executive summary of the report acknowledges the core reason, namely, that we had more than 15% of people unemployed in this country as a result of a property bubble which I warned against on numerous occasions - Deputy Donnelly is right in that respect - and which I would warn against if it were to happen again.

It was a property bubble as opposed to the recovery here, which is a jobs-led recovery in which unemployment has fallen from 15.2% to 8.8% this month.

Due mainly to our trade.

Shut up and listen.

The consequence is that tax revenues, PRSI and USC have grown very significantly. In a balanced budget there has to be scope for some tax reductions. Deputy Donnelly stated earlier that there should have been no reduction in USC. We gave a reduction in USC to benefit the lowest paid at work in Irish society-----

No, they did not.

Deputy Shortall wants to keep it.

And that is why they emigrated.

Deputy Shortall wants to increase it.

-----so as to ensure that work always pays and we then provided further relief, in terms of reducing the USC rate of 7% to 5.5% for individuals earning between €25,000 and €70,000, and it was capped at that point so that very high earners only got the same benefit as an earner on €70,000.

There was no justification for that.

Let me tell the Deputy about Ireland's current capacity to borrow. Ireland ended up inviting the men in suits from the Merrion Hotel across the road here to take control of the country's finances-----

It was the same for everybody.

-----because nobody would lend to us.

Hear, hear.

It is the same for everybody internationally.

Nobody would lend to us.

People like Deputy Mathews-----

Last week - Deputy Donnelly follows these matters and I am sure he has read it - the NTMA sold €3 billion of Irish bonds at a rate very slightly above 0.1%-----

There are negative deposit rates.

Look at that.

-----just above the German rate. We could have sold bonds-----

In Switzerland, one must pay to deposit.

-----at three times that value such was the demand.

It is no big deal. International quantitative easing, QE.

That is the difference between now and when the country lost its economic sovereignty. Of course, there are matters we must fix. I have just stated we have an ambitious target to reduce the debt even further this year.

I thank the Tánaiste.

By the way,-----

It is not being reduced.

-----if Deputy Donnelly read the executive summary,-----

I would say the Tánaiste's two minutes are nearly up.

Five years ago.

-----he would know that what they have recommended, which recipe Deputy Donnelly seems to be following, is actually to use all additional funds to pay down debt, to give no relief to workers-----

What of public services?

-----and to put no extra funding into services.

Would the Tánaiste open her eyes to the problems in public services?

We have a balanced budget which is aimed at reducing the debt and the cost of servicing the debt.

They doubled the rate of child poverty.

We have a balanced budget that is aiming at getting people back to work. We have a balanced budget that is aiming at getting more businesses back on their feet employing more people and we have a balanced budget which has an ambitious programme in my view, not yet big enough, of capital investment and significant additional investment-----

And the crisis in health and crisis in housing.

-----in health, education, agriculture and social services generally.

When Deputy Shortall was Minister of State, she did not do much about it.