Sean Barrett (Independent) | Oireachtas source

I welcome the Minister of State. On the Order of Business the Leader was asked to emphasise to him and the Minister for Finance, Deputy Michael Noonan, the importance of deposit insurance. Both Megan Greene who we introduced to the Minister when she attended an international conference last year and Professor Christopher Pissarides, the Nobel prize winner from Cyprus, have stressed the importance of such insurance. This is part of the crisis management in which the Minister of State, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and the Minister for Finance have been engaged for the past two years. We have been trying to stop the rain coming in through the roof, but we must also look at some of the remaining architecture. We must ask what happened to the deposit insurance which was supposed to have been in place throughout the European Union and also why it is necessary to repeatedly engage in carrying out emergency repairs.

By way of explanation and apology, I point out to the Minister of State that the final draft of the Bill reached Senators after the deadline for recommendations. As a result of the fact that the numbers of some of the recommendations may change, we may appear to be at even greater cross purposes than usual in our discussions. This is explained by the fact that we have just had a long weekend and no one can be blamed for what has occurred. I certainly do not wish to lay the blame at anyone's door. I much prefer the use of the word "recommendation" as opposed to "amendment" when it comes to discussing the Finance Bill. Recommendations give rise to a much more reasoned debate and do not simply involve trying to put the Government out of office or whatever else we might attempt to do in the context of how we normally operate.

In the context of the difficulties in which the country found itself and from which the Government, with the support of the House, has been trying to extricate it, there was a certain amount of groupthink involved. It was groupthink in favour of construction. On reading through the Bill, I became concerned by the fact that a certain level of groupthink continued to obtain. There are certain sections which we will discuss in detail on Committee Stage in which the Government is continuing to seek to bolster the construction industry. We must be extremely cautious because we did this previously and it did not work. In fact, it wrecked the country. Why are concessions included in respect of shops established adjacent to the Georgian areas contemplated in the living city initiative? As Senator Michael D'Arcy indicated, the reason there are no shops is an additional ¤10 billion has been levied in taxation. Providing subsidies in order that people might establish shops next to buildings which happen to be old does not appear to make sense.

Why is there a subsidy for a building in which to hold aircraft? The aircraft sector in Ireland is booming. How did it manage to get this concession in the Bill? It makes me fear that a feature of the Finance Bill, as Senator MacSharry and others have observed, is that lobbyists prevail. We need the promised legislation on lobbyists who were previously far too influential and after reading the Bill I fear they have been at it again. Why is film relief still provided?

I appreciate what the Minister of State and the Minister did on issues such as the promissory notes in an effort to shore up the creaking European edifice. We had a domestic problem which needed attention and to which several Senators have referred. I note that the Minister of State is nodding in agreement. The Culliton review pointed out that Ireland had far too many tax lawyers and accountants who had been too influential. There is a defensive note in the Minister of State's contribution that indicates that it was not all written on Merrion Street. I think those involved on Merrion Street should get out more and meet people. I was delighted to hear the Secretary General of the sister Department, Mr. Robert Watt, say at the Statistical and Social Inquiry Society of Ireland last week that he intended to get involved more with economists. He is leading by example.

The old property-based economy did not work. The system allowed people with more tax lawyers and accountants to obtain special tax breaks for themselves. As the Minister of State knows, we never quantified them. We did not conduct a regulatory impact assessment or a cost-benefit analysis. That has to end. We cannot have a system which benefits a handful of individuals and imposes huge costs on the rest of us when we are trying to balance the books. There is a need for a lot more regulatory impact assessments of proposals.

The Bill has two sections dealing with research and development. An bord snip nua tried to find out the results of Ireland's massive investment in research and development, but it could not get an answer. An report on innovation was published in 2010 in which Mr. Colm McCarthy again asked when we would we see a return. The amount of money poured in is unknown to us because it is done by way of tax breaks, rather than by direct expenditure. Society needs to know whether these schemes are worthwhile.

I question any attempt to push up the price of land or property. I am worried about the old sections 17 and 19. Section 21 in the old numbering provides for tax breaks for hotels, guesthouses and self-catering accommodation and we bankrupted the country building empty hotels. I, therefore, beg the Minister not to start again. I ask him to ensure some new thinking in the Department. These measures start small and are very difficult to correct. We are then back into bubble territory in which so much damage was done in the past.

Section 30 provides relief for industrial buildings for commercial aircraft. I do not know why this relief is provided for, although I appreciate what Senator Aideen Hayden said. Why should the Government become involved again in giving tax breaks for property? We have to get the economy, as well as the banking system, away from this. It is still a system based on property. We made that mistake with disastrous consequences for the country. Let us not go there again. I look forward to a full and comprehensive debate on Committee Stage tomorrow.

The ideal characteristic of the tax system is that it should be equitable. As Senator D'Arcy said, it should not distort the position on work. I was worried to see in the Mangan report the models for various forms of child benefit schemes. The benefit proposed for those on family income supplement would have left two thirds of the working poor worse off. This issue must be examined immediately. I am concerned that Mr. Dan O'Brien has noted that during the boom we reclassified many unemployed persons as recipients of disability and invalidity payments, thereby precipitating the increase, more than in any other country in Europe, in the number of houses in which nobody worked, even in a time of full employment.

Did we massage the figures? I do not think so. Perhaps generously we increased the number of people receiving disability and invalidity allowances but that had horrendous consequences later on. Senator Michael D'Arcy made the point that we need a gap between those people who work and those who do not take home pay.

The Mangan report is really weak in the way that it evaluated the family income supplement. As Senators will know, IMF studies show that Ireland spends more on social welfare, public pay and capital expenditure than other OECD countries. In order to refocus the economy we should examine those provisions in order to redress the balance. It is important that the tax system is not used to repeat the mistakes that harmed the country so much.

A former director general of the IMF now works in the University of Cambridge, Mr. Vito Tanzi. He is no relation to the much missed Mr. Paul Tansey who reported so eloquently and whom I wish was alive to comment on the Irish economy. Mr. Tanzi outlined why most countries are in trouble with their public finances and gave solutions. He quoted a former chief executive of Solomon Brothers as stating "laissez-faire is all well and good until something goes wrong." Perhaps we should make allowances and make the decision that if businesses are too large to fail then they are too expensive to rescue. The Department and the Government should say that the businesses have failed a market test and are at an end.

Mr. Tanzi was also concerned about the growth in lobbying. A lobbyist can prove that a handful of people will benefit so proper cost benefit analysis is never carried out now. We should ask ourselves whether the remaining 4.5 million people in the country will be worse off? We need legislation because it is too easy for lobby groups to succeed in this country. The casino banks did us no favours. The complexity of the tax system also means that the arm of the tax lawyer and accountant is completely unproductive. Therefore, we need some simplifying measures.

Mr. Tanzi expressed his concern at the growth in the number of lobbyists at the end of his book. We need a new beginning for this aspect of finances. I appreciate that the Government has been distracted by having to hold the entire system together. However, I am disappointed that the Finance Bill is so old hat and does not evaluate the outcomes. The country is short of money so we must ensure that the people who have been given tax breaks in the Bill are worthy recipients. It is impossible to tell unless we conduct more analysis and that is why we asked for the regulatory impact assessment.

The Bill should be referred, as the IMF intended, to the Irish Fiscal Advisory Council because we need to hear more views and guard against repeating mistakes. Some of the provisions in the Bill were contained in Finance Bills from ten years ago and look where they led us. I thank the Leas Chathaoirleach for allowing me extra time and I also thank the Minister of State.