TAOISEACH BRIAN Cowen defended social partnership and said he had recently discussed the economy with employers and unions.

"I recently engaged in discussions with Ibec and the Ictu," said Mr Cowen. "Collectively, we will bring forward an approach that will best guarantee our way through this problem."

During sharp exchanges with the Opposition, Mr Cowen accused Fine Gael of speaking out of both sides of its mouth, which, he said, was the luxury of being in opposition.

"In August, I was criticised by Fine Gael's finance spokesman [Richard Bruton] for not concluding the pay agreement," he said.

"In September, I was congratulated by him for concluding it. He then stated in October that there should not be a pay agreement."

Mr Cowen said his position was simple.

"We will continue to examine the operation of our pay arrangements in partnership with the stakeholders and not throw away partnership as Deputy Enda Kenny suggested."

The Fine Gael leader replied: "I never said that. The Taoiseach's assertion is completely false. Such comments are beneath the Taoiseach, but they are typical of him. That is the way he usually operates."

Mr Cowen said the difference between Mr Kenny and himself was that he believed the social partnership process was a problem-solving process, not a problem-avoiding process.

Mr Kenny said he also believed that.

Labour leader Eamon Gilmore said that if Mr Cowen could do his job as Taoiseach, and provide leadership for the country, in as good a way as he attacked the Opposition, they would all be better off.

He accused the Government of sending out mixed messages in recent months.

"We were informed that the Taoiseach would give a state of the nation address, but this never happened," he added.

"The Minister for Finance then introduced a budget, but the figures were wrong."

Mr Gilmore said they had been informed on Tuesday that the Government's tax revenue would be €2 billion less than it calculated only seven weeks ago in the Budget.

"The Minister for Finance indicated on radio this morning that there would not be a mini-budget and that taxes would not be increased," he added.