Seán Haughey (Dublin North Central, Fianna Fail)

In opposing the Bill, the Government is very conscious of the fact that many in the retail sector have welcomed it and have approached Deputies on all sides of the House seeking their support for its content. It has been presented as an emergency solution to a very pressing problem. However, the solution proposed will not work in practice and is not legally tenable.

Reference has been made to the possibility that a parallel exists between the emergency action sought in this area and the legislation introduced last year to address the difficulties faced by the State with regard to the public finances. However, entirely different legal issues arise in the case of the Financial Emergency Measures in the Public Interest Act 2009, which concern the financial obligations on the part of the State. The rationale and justification for that legislation includes the overriding public interest in controlling public spending, reducing the shortfall between expenditure and revenue and reducing the unsustainable levels of public borrowing. These imperatives do not apply in the case of commercial leases entered into between private parties.

As a general principle, great care must be taken in altering by legislation the contractual rights of parties in respect of contracts which have been freely entered into where the effect of the alteration would be to impact directly upon the amount of rent which has been agreed as between those parties. Such an alteration would also impact upon constitutionally recognised property rights and great care is necessary to ensure any impact is necessary and proportionate and does not amount to an unjust interference with those rights. In terms of broad principle, legislative restrictions which affect property rights retrospectively are prima facie unjust, as they seek to alter the effect of previously completed legal transactions.

I intend to elaborate upon one point which was referred to during the course of this debate, that is, the alleged link between NAMA valuations and demands on the part of some landlords for high levels of rent increase. It has been already stated that any attempt by landlords to increase the value of their property by seeking to impose unsustainable rent increases would have no impact on the valuation placed on such property by NAMA. NAMA will purchase land, development loans and certain associated loans from participating credit institutions. The valuation of these loans takes account of the underlying security attached to them. However, NAMA's valuation experts will take account of the rents they deem likely to be realised on a sustainable basis as opposed to optimistic projections supplied by participating institutions, debtors, associated debtors or other interested parties.

Deputy Leo Varadkar referred to a reply to a parliamentary question, dated today, which indicated correspondence had been received in the Department of Justice, Equality and Law Reform concerning the impact on investment property of a retrospective change to existing leases. He drew certain inference from that correspondence. However, the Deputy neglected to refer to the second element of the reply which indicated that the decision not to apply the prohibition on upwards only rent review to existing leases was dictated solely by legal and constitutional considerations.

I refer to the way in which Government continues to be active in supporting local businesses and employment and in stimulating local economic revitalisation throughout the country at all levels. The undoubted problems of the retail sector cannot be divorced from this wider perspective. Among the actions taken by local authorities is one to keep commercial rates increases to an absolute minimum. Last year, some 34 local authorities held their rates at 2008 levels. For this year, the annual rates on valuation have decreased by a national average of 0.62%. Local authorities are also taking steps to ensure reductions in staffing levels are rot focused on front line services and are rigorously examining their costs to maximise efficiencies.

In addition, all county and city local authorities have now established business support units or equivalent arrangements in their areas. These support units are effectively a one stop shop for businesses and aim to facilitate local enterprise creation and retention. They work in co-operation with a number of other public agencies such as the IDA, Enterprise Ireland, county enterprise boards and local development companies to assist and support projects and entrepreneurs. The units also co-ordinate the services of the other council departments in areas such as planning, water and roads.

Measures have been also taken in respect of VAT to assist businesses and individuals in the current difficult economic circumstances. Thus, with effect from 1 January 2010, the standard rate of VAT was reduced from 21.5% to 21%. This reduction applies to all goods and services which had been subject to VAT at 21.5%. It is hoped that the measure will improve competitiveness and consumer confidence and give a necessary lift to business and the community.

In the energy sphere, the Government is determined to promote competition in the energy market to maximise the pressures for greater efficiencies in the sector. Government action has already seen a fall in energy prices for Irish business with reductions in 2009 of more than 15% for electricity customers and 20% for gas customers. The restoration of competitiveness is also a key factor in rebuilding our economy. There are encouraging indicators in this regard and the Government is firmly committed to exerting downward pressures on prices in all relevant areas and to build upon the significant progress made in 2009.

Overall, the Government is committed to maintaining low business taxes and a favourable regulatory environment and will work to ensure its policies keep pace with the way business is changing. Job creation is a key priority and is a driving force behind much of our work in stabilising the public finances and in getting our banking system working again.

As the Minister for Justice, Equality and Law Reform has already observed, in addition to prohibiting upward only rent review clauses in leases entered into on or after 28 February last, he has established a working group to consider the issue of rent reviews in the context of the arbitration system which operates at present and to assess the adequacy of the information available to all parties during the rent review process. The group has been mandated to report by the end of June and its establishment is a practical step towards addressing a particular problem which has been identified by the retail sector as giving cause for concern.

A Leas-Cheann Comhairle, I am happy to let Deputy Costello say a few words if he wishes.

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