Paschal Mooney (Fianna Fail)

Cuirim fáilte roimh an Aire agus déanaim comhghairdeas leis; bhí sé ar an raidió ar maidin fighting the good fight. It is causing great hardship and difficulty. I wish him well in this regard. When every Minister for Finance stands up on budget day there is a great degree of expectation among immediate supporters on the Government side and the general populous, particularly those involved in business, wait to see where the hammer will fall and the hatchet will be used. Everyone on all sides of the House will appreciate the difficulties faced by successive Ministers for Finance since the collapse of the banking sector and the crisis of 2008, including the late Brian Lenihan and Deputy Michael Noonan. They have had to face unprecedented challenges in framing a budget. In this regard I would not wish to convey that we on this side of the House have been irresponsible in our opposition to some of the elements of this budget.

In the current climate the question remains as to whether the line and direction taken by the Government will get us out of this period of austerity while at the same time providing a sense of hope and optimism to taxpayers and citizens. This is the challenge. Whether the Minister has achieved this is still being debated and discussed. As he famously said in another context, only time will tell.

However, in the current climate elements of this budget should be revisited and perhaps should not have been implemented, particularly the 2% increase in the VAT rate. My colleague in the other House, Deputy Michael McGrath, raised this matter on a number of occasions. The Minister of State will agree with me that any changes in VAT rates have a knock-on effect on businesses in the Border counties because of the currency exchange between North and South. We have heard much talk about the economies of scale which operate in Northern Ireland vis-À-vis its membership of the United Kingdom which make certain services and goods cheaper than they would be in the South because of our smaller market. The concern about the 2% increase was not so much about the impact it would have in the Border counties but because domestic consumption has been flat-lining and it seemed, to us at least, that such an increase would not stimulate optimism or consumption and would not encourage people to go out and spend their money. From this point of view we do not favour it.

The cry of the Government, as was the cry of the previous Government when the crisis hit, was to ask where it could get the money because it had to get it from somewhere. The Minister of State, Deputy O'Dowd, made the point repeatedly, and I agree with him, that the gap between income and expenditure is such that there must be some way of finding it. While our exports are thriving and roaring ahead and our balance of payments surplus is quite impressive in terms of our size relative to other European countries, and certainly in terms of where we are vis-À-vis Portugal, Greece, Italy and Spain, our domestic consumption is flat-lining and this is the greatest challenge for the Government.

My colleague, Senator White, has taken every available opportunity to raise the question of bank lending. I am a member of the economic sub-committee of the British-Irish Parliamentary Assembly chaired by our mutual friend and colleague, Deputy Jack Wall. Last week, an Oireachtas committee meeting heard evidence from Mr. Mark Fielding of ISME and from the Small Firms Association attached to IBEC. We concluded we were more confused afterwards with regard to the state of bank lending in the country. While ISME provided much evidence and quoted several instances from throughout the country of people refused loans, the Small Firms Association echoed the Government's view as stated in this House by the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, that bank lending targets to the end of December had been met. There is some confusion in this area.

The overall strategy may well be pointing in the right direction, but all that the Department does will be of little consequence if business does not get access to sufficient levels of working capital. If it is not available then the economic recovery will wither on the vine. The key responsibility for the Department is to deliver increased bank lending rates to SMEs. The commitment from the banks to increase levels of bank lending represents a step in the right direction. The only reliable assessment of the banks' commitment, however, will be the level of take-up of that additional finance. If onerous terms and conditions or high costs continue to act as deterrents to accessing that finance then the additional funds will have little, if any, effect.

This was not stated about the Irish Government; it is from a British House of Commons library document on an assessment of lending criteria and the state of bank lending in the UK. The point I am making is that it is not unique to this country.

What is common to both jurisdictions is that there will be no resumption of the economic recovery that all of us wish to happen unless capital is freed up. Given that its entire mandate is based on economic recovery, the Government is more keen than anyone else for that to happen. The Minister for Finance must be a cricket fan because among the many goodies that appeared in the budget was an extension to professional cricket players of the tax relief on certain income that is available to sports people when they retire. I would be interested to know where that one came from in the Department of Finance. The Minister of State will agree that there is always one every year.