Sean Barrett (Independent) | Oireachtas source

I welcome the witnesses, some of whom I know from Kenmare and others from the National Economic and Social Council. One of the observations I think we will agree on from the discussions of recent days is that we have a banking system and an accountancy sector that are not fit for purpose. They are at the core of the collapse of the economy five years ago. The submissions deal with the consequences rather than the causes of that collapse. I had hoped that ICTU would develop proposals on how to deal with the problem of moral hazard. Judging by the performance we saw last week, we will probably have to put a total of €90 billion into the banks. Nothing appears to have been reformed. The representatives from ICTU did not deal with the problems of debt and negative equity, which are parts of the misery they are trying to address.

On fiscal termites, yesterday we had discussions on research and development, of which everybody is in favour. Until last year, companies had to spend 75% of their time on research and development but it has now been reduced to 50%. This is yet another tax loophole. The accountants made proposals on more lenient treatment of offshore bank accounts, which shocked a number of members in light of all the problems we encountered in that regard. It was also proposed that the tax allowances introduced in respect of exports to the BRIC countries and subsequently to certain African countries should be extended to Switzerland, Japan and the United States on the basis that it took longer to travel there, the languages are different and the hotels are not as good. This is going on all the time and it will continue unless ICTU, in particular, begins to look for a different kind of banking system. We have introduced a Bill in the Seanad preventing mortgages above a loan-to-value ratio of 80% or 2.5 times income. Unless the sectors which crashed the economy are dealt with, we will continue to face these difficulties. Five years is a long time to wait. It becomes a question of whether to borrow €1 billion or less per month. Moral hazard is a huge issue, but we are dealing with the consequences rather than the causes.

The old social partners need to address the sectors that caused the problem. I give as an example ICTU's proposal on a smart public expenditure programme. What is smart? Our public capital programme is now about level with the OECD average. Previously it was double the average, with the result that it created a considerable number of assets that have now become part of the debt. Should we get rid of all NAMA's assets, including the ghost estates and empty houses, to bring down the cost of housing and make the economy competitive? We have to tackle the causes. ICTU has addressed the consequences.

We proposed that the evaluation of projects should be referred to the fiscal advisory council. Approximately 7% of the staff of the Department of Finance are qualified in economics to Dr. Healy's level. We are not yet addressing the causes of the problem, and the instruments available to us to do so are inefficient. Left to themselves, they will not reform the efficiency of public spending, we will not get a proper banking system and the stimulus package could leave the economy worse off because it will be given to the same lobby groups which got us into trouble in the first place. The fiscal advisory council has warned that a small open economy will get limited bang for the buck from a stimulus package. We have spent a lot of bucks without getting much of a bang. What do we do about NAMA, the banks, the accountancy people and the fiscal termites?

I agree with Ms O'Brien about family income supplement but it got amazingly short shrift in the Mangan report. The Mangan proposals would have left most people on FIS worse off. It is important to help low income workers and I was surprised that it was not treated favourably.

In regard to Mr. Doorley's comments, I am surprised that the number of those neither in education or training is so high. The rate of third level participation is 70%. Where is the hole in the system? I would like to help to fill it, if that can be done. Mr. Doorley also referred to bad experiences among young people who went to Canada. I was an immigrant in Canada and I thought it was a most careful country in regard to qualifications. Those of us on this side of the table encounter the problem of people smuggling themselves into the United States and subsequently looking for our assistance, but we do not encounter the same problems in respect of Canada because it has a sensible immigration policy. Perhaps we could speak later on about how to prevent the problems to which Mr. Doorley referred.

Why do we combine a high rate of unemployment with a high cost of child care? It seems there is something wrong in the system if people who could do this work are unemployed while customers are charged large sums for child care. Is there any way people could be trained for this task? Are the planning restrictions too difficult? Should HIQA do more? It seems strange that women are outside the labour force and they want this product which is for the most part provided by women.